Are tax cuts and COVID relief enough to offset inflation?
After a spring of high gas prices and a summer when inflation topped 9%, Connecticut Democrats are reminding voters this week of the dollars the state is pumping back into family budgets.
But even as Governor Ned Lamont reminded shoppers to enjoy another sales tax-free week and to watch their mailboxes for child tax refund checks, Republicans noted that the toll of the State of gate assistance is patchy at best.
A program to help essential workers who have caught COVID has disbursed less than 2% of its funds after seven and a half months.
A second relief scheme for essential workers is hugely popular – but looks likely to start cutting grants due to a lack of funds.
And even the child tax refund, the linchpin of the Democrats’ summer relief package, has left $32.5 million — 26% of the refund’s $125 million budget — unclaimed.
“Christmas in August”
“It’s Christmas in August,” Lamont said Wednesday as he stopped at Fleet Feet, a West Hartford athletic shoe and sporting goods store, to promote the sales tax exemption. which will take place from Sunday August 21 to Saturday August 27. “That represents real savings.”
“Governor Lamont and I are continually working to find ways to make our state more affordable,” said Lt. Governor Susan Bysiewicz, who was expected to join Democratic candidates for treasurer, secretary of state and the General Assembly. Thursday afternoon in Hartford for all affordability initiatives.
The week of duty-free sales on most clothes and shoes priced under $100 — normally offered every August — is the second that Lamont and his fellow House Democrats have ordered this year.
The first — which saved shoppers about $3 million — happened in April, around the same time Democrats also suspended the 25-cent-per-gallon retail gasoline tax. April to June.
They would follow that in May with a $660 million relief package that ordered the second sales tax-free week in August; extended the gas tax holiday until November 30; and established a mix of one-time and ongoing tax cuts.
In addition to child tax refunds, there has been a temporary increase in support for working poor families, an expansion of the state income tax credit that offsets property tax bills local and statewide car tax rate freezes increased from 45 million to 32.46 million (one million collects $1 for every $1,000 of estimated property value).
Democrats rightly noted that it was one of the largest tax cuts in state history and was complemented by other programs to help Connecticut recover. of the coronavirus.
GOP: Democrats have shared a tiny part of the windfall of the State
Republicans, who had proposed a $1.2 billion tax relief package, argued that the Democratic agenda fell short for several reasons.
About half of the tax relief was one-time, though the GOP also included some temporary measures.
But the main Republican objection was that of context. The national inflation rate had exceeded 8% in May and would exceed 9% earlier this summer. And even though gasoline prices have fallen here since peaking at $4.98 a gallon on June 14, the AAA’s Wednesday price of $4.09 topped the national average by 15 cents a gallon.
And as economic forces crushed consumers, Republicans countered, the tax relief offered by Democrats was only a tiny fraction of the staggering and unprecedented $4.3 billion surplus that the US government has. The state benefited during the fiscal year that ended June 30.
“If it’s ‘Christmas in August,’ they give people a lump of coal,” said Senate Minority Leader Kevin Kelly, R-Stratford. The Republican plan, centered on the first income tax rate cut since 1995 and a temporary reduction in sales tax rates, was designed to provide widespread and easy-to-access relief, Kelly said.
Programs struggle to get funds
Ease of access has hardly been a hallmark of any Democratic platform this summer, Republicans argued.
The COVID-19 Assistance Program for Essential Workers was launched in January with $34 million to help frontline workers who have lost wages or incurred medical expenses due to the coronavirus. But the program has stalled due to a complicated application process that requires workers to gather medical and employment data from two years ago.
Until Monday, the program – which was due to end on June 30 but was extended until December 31 – had distributed less than 2% of its funding, only about $ 560,000, according to the Office of Comptroller Natalie Braswell, whom the legislature charged with administering the program he had designed.
Democrats trumpeted a second COVID relief effort, the Premium Compensation Package, when it launched two weeks ago. This was supposed to give $1,000 bonuses to private sector frontline workers. Illness or loss of pay didn’t matter. It was just a way of saying thank you.
But the Governor and Legislature only budgeted $30 million, meaning the program could not – by simple math – provide more than 30,000 bonuses of $1,000 each.
As of Tuesday morning, the comptroller’s office had received more than 121,000 applications, four times the maximum number of $1,000 bonuses that can be awarded. And the application period does not end until October 1st.
In the event that the number of approved applications exceeds demand, Lamont and lawmakers have stipulated that grants will be reduced proportionately. To make the money work, workers at gas stations and staff at soup kitchens and pantries and the like weren’t considered essential workers.
Union advocates warned earlier this summer that this would happen, predicting workers would receive far less than the $1,000 bonus that has been suspended. As evidence, they noted that Massachusetts had budgeted $500 million for a Premium Pay program for private and public sector workers.
The child tax refund fared better, but the program still required families to apply for the relief. Some supporters of tax reform said a better alternative would have been to use older tax data to identify most eligible households, then send aid directly without an application process.
“These programs and their misadministration are consistent with the Governor’s philosophy of ‘let them eat the cake,'” said House Minority Leader Vincent J. Candelora, R-North Branford. “He doesn’t really care about the impact these programs have on people’s lives. He only cares about headlines.
“Governor. Lamont is mostly concerned with making a bunch of promises to get re-elected, and he doesn’t care about running those programs and getting money for people who desperately need it,” he said. added Madison businessman Bob Stefanowski, the GOP gubernatorial candidate.
Democrats: GOP has lots of critics but few ideas
But Democrats counter that Republicans have been woefully silent when it comes to offering specific relief efforts for those battered by the coronavirus pandemic.
And while the GOP points to its tax relief plan as a response to pandemic pain, Democrats note that Republicans never offered a minority budget in the last legislative session.
In other words, the GOP dangled tax cuts without explaining in detail how it would pay for them — other than saying the state government could afford them easily given the surplus.
“From raising the minimum wage, to establishing paid family and medical leave, to promoting 18 straight months of job growth, to giving families money they can used to offset back-to-school expenses, Governor Lamont’s responsible fiscal management has resulted in relief, opportunity and justice for families across the state,” said Lamont campaign spokeswoman Onotse Omoyeni.
Stefanowski is a former CEO of a payday loan company whose high-interest loans are illegal in Connecticut, and Omoyeni added that “As Governor Lamont continues to serve families across the state , Stefanowski dreams of bankrupting them”.
Chris Collibee, spokesman for Lamont’s budget office, also noted that the governor and legislature spent almost all of this year’s surplus, about $4.1 billion of $4.3 billion. , to pay off Connecticut’s huge pension debt accrued, mostly between 1939 and 2010.
That deposit, coupled with an additional $1.7 billion in excess funds that Lamont and lawmakers used to cover pension debt between 2020 and 2021, is expected to save taxpayers $12 billion over the next 25 years. .
“Make no mistake about it,” added Collibee, “we are making a real difference in improving the lives of Connecticut families.”