Despite widespread complaints by Republicans, the Democratic-dominated finance committee Thursday approved Gov. Dannel P. Malloy's fiscal package that would increase the state's income, inheritance, corporation, gasoline, alcohol, cigar, and cigarette taxes.
Minutes later, the budget-writing appropriations committee approved Malloy's spending package.
The 32 to 20 vote on the tax package came mainly along party lines, but Senator Edward Meyer of Guilford and Rep. Charlie Stallworth of Bridgeport - both Democrats - voted against the package.
Republicans complained bitterly about the Democratic-written proposal, but their amendments were rejected on party-line votes.
The Republicans offered an amendment that included their entire no-tax-increase budget that they had unveiled earlier this week. They said it would provide a sharp contrast to Gov. Dannel P. Malloy's overall $1.9 billion tax increase that covers a wide variety of items from taxes on individuals to hospitals.
Republicans mocked several of Malloy's recent statements, including that "Connecticut is open for business'' and that there should be a "shared sacrifice'' to solve the state's projected $3.5 billion deficit. They said that the increases in corporate taxes by an additional $81 million over two years contradicts the idea that the state is open for business, and they said the middle-class would still be hit hard as part of the shared sacrifice.
Republicans complained that the increase in the state's inheritance tax is retroactive to January 1, meaning that it would affect people who have already died. In addition, the state's "luxury tax'' of 7 percent on high-cost items is lower than Malloy originally proposed, but lawmakers said that an unintended consequence is that the tax would be imposed on a wedding gown of $1,000 or more. The luxury tax focus had mainly centered on high-end cars above $50,000, yachts above $100,000, and jewelry items above $1,000.
Rep. Sean Williams, the ranking House Republican on the tax-writing finance committee, said there is a better way, adding that the Democratic budget would kill jobs during a sluggish economy that is still struggling to recover.
Although he did not vote for Malloy in the November election, Williams told his colleagues during the committee meeting Thursday that he was excited by the change that was promised in January when Malloy took office. But he said that Republicans were written off and ignored during the budget process over the past two months.
"We took him at his word and believed this would truly be a bipartisan effort,'' Williams said, adding that talks with the governor's office were simply perfunctory exercises. At the same time, he said, legislators "would see OPM staff come in with lots of file folders under their arms'' as they headed to important meetings with the Democratic co-chairs of the budget and tax committees.
"This is a Democrat-only budget, a Democrat-only tax package,'' Williams said. "And that's a shame. ... There has been no real reaching out. ... The governor said publicly and privately that he didn't expect one Republican vote for the budget.''
"Where is the sacrifice, folks? You know who is sacrificing? The middle class and the small business community,'' Williams said. "We haven't created one net new job since 1989. ... Everywhere I go, people ask me, 'What are you doing up there?' ''
"We need to go back to the drawing board. We need to work together,'' Williams said. "The guy who makes $60,000 a year and has a mortgage and a kid in college. Does this help him? ... The bottom line is we have to create jobs and create opportunities in the state, and this doesn't do it.''
But the committee's co-chairwoman, Sen. Eileen Daily of Westbrook, defended the Democratic package and criticized the Republican budget alternative that includes a proposal to eliminate the Chester-to-Hadlyme and Rocky Hill-to-Glastonbury seasonal ferries across the Connecticut River.
"Since the Republican budget came out, my phone has been ringing off the hook because of the proposed cancellation of the ferries,'' said Daily, a Democrat.
She noted that Malloy, after using the word "celebration'' on Wednesday, had said that it was the wrong word to describe the agreement, which is Senate Bill 1007.
"I think we've put together a good package, a balanced package,'' Daily told her colleagues. "It is the shared sacrifice that the governor has been talking about.''
Rep. Patricia Widlitz, the committee's co-chairwoman with Daily, also defended Malloy's budget by saying it is a carefully negotiated, balanced proposal that would put the state back on the correct fiscal track.
"It certainly is a tough budget. It does raise taxes,'' Widlitz said. She referred to the Republicans' no-tax-increase budget as "a last-minute attempt to throw some numbers on the table.''
The remarks by Daily and Widlitz were echoed by two Democratic senators, John Fonfara of Hartford and Gary LeBeau of East Hartford, who both supported the budget.
When asked by Republican Rep. Richard A. Smith of New Fairfield to justify why the tax on gasoline will be going up by 3 cents per gallon, Daily responded, "We're in as bad a shape as we ever have been. We borrowed beyond any borrowing that we should have done. ... On three cents on gas, I'm sorry that anybody has to pay it. I'm sorry I have to pay it. ... Our money is going to good use. ... With this administration, we can be sure that our money is well-spent. ... I know it's difficult, and I know that some people will feel some pain.''
Smith, a freshman lawmaker, said he did not understand the earned income tax credit that will be created for the first time in state history. Only citizens who receive the federal income tax credit can qualify, and the state credit would be 30 percent of the federal credit. Many of those receiving the credit earn about $20,000 per year, and a reduced credit - on a sliding scale - is available for those earning more than $40,000 per year.
"They are working people. They have to submit federal tax forms,'' Daily responded. "They will receive a check.''
Overall, the earned income tax credit would cost the state about $110 million per year. Nationwide, about 24 states have a state earned income tax that is in addition to the federal credit.
"The governor said in his inaugural address, and I was there, that the state is open for business,'' Smith said. "I was applauding then.''
Smith said he is no longer applauding because the state's corporation tax surcharge would increase under the tax package from 10 percent to 20 percent for the 2012 and 2013 tax years.
"We can't say the state is open for business and then increase the corporate tax surcharge by 100 percent,'' said Sen. L. Scott Frantz, a Greenwich Republican who said that the governors of New York and New Jersey had done a better job in handling their budget crises than Malloy.
"If we're speaking about being open for business, let's be open for small business,'' added Rep. John Shaban, a Redding attorney in his first year as a legislator.
Both the finance and appropriations committees held key meetings on the budget package Thursday as legislators rushed to finish their work before the Good Friday and Easter holidays.
The budget still must be approved by the full House of Representatives and the Senate before it goes to Malloy for his signature.