The General Assembly returned to work last week in a one day special session during which we tackled a number of important issues, agreement on which had eluded us during the regular session this year. Although it was a long day and night – approximately sixteen hours for us in the Senate – we did manage to act on four important pieces of legislation.
We were originally called into special session for the purpose of acting on the municipal conveyance tax. This tax is assessed whenever someone sells a home. Currently, it is set between 0.25 and 0.5%. This tax is collected by the municipality in which the property is located. In 2003, the legislature increased the amount that cities and towns can charge from 0.11% to a maximum of 0.5%. This was done to get extra revenue to municipalities at a time when state aid to cities and towns was dwindling because of state budget problems. At the time it was increased, however, the General Assembly promised that the increase would be temporary and that it would sunset in 2004. Well, when that time came the tax was extended. The current extension was scheduled to sunset on June 30, 2008.
I was dismayed that legislative leaders did not act on this matter during the regular session. Most cities and towns throughout the state have budgets that begin on July 1st and end on June 30th. Those towns adopt their budgets in the spring. As a former local official, I know how difficult it can be to set a budget responsibly when you do not know how much revenue you are going to receive. Legislative leaders should have acted on this matter before local towns adopted their budgets. That way, local officials could know for certain whether they could continue to count on the revenue from this increased tax. Legislative leaders did not take action and so many communities adopted their budgets for the 2008-2009 fiscal year on the assumption that because the General Assembly extended the tax increase before, it would do so again. For legislative leaders to wait until twenty days before the start of the next fiscal year to vote on whether the tax increase would stay in place – long after most cities and towns had adopted their budgets for the next fiscal year – was the height of irresponsibility in my view.
I supported an amendment that would have lowered the state conveyance tax but allowed the local tax to remain at its current rate. This compromise would have provided the tax relief that many people sought without lowering the revenue going to cities and towns. Unfortunately, the Democrat majority used technical maneuvers to block a debate and vote on that amendment. I voted against further extension because I believe that it is important to lower taxes whenever we can and because the General Assembly had made a promise that the tax increase would be temporary. People are already, understandably, cynical about government. To make this promise and then renege on it would only fuel additional cynicism. Although I was not in the legislature when the increase was enacted, I felt that it was important for the state to keep its word. In the end, however, the legislature voted to extend the current tax for another two years.
Legislative leaders decided to add three other issues for our consideration and action during the special session. The first was a technical bill known as the “deficiency bill”. This bill simply transferred funds from state accounts with surplus funds into those state accounts that were running a deficit. This did not impact the overall level of state spending in any way and was viewed as a non-controversial, administrative rather than policy matter. The other two bills were far more significant as a matter of public policy.
The first of the two finally resulted in the enactment of a new law allowing for the revocation of pensions for public officials and state and municipal employees who are convicted of committing corrupt acts in violation of the trust that is placed in them by the people of Connecticut. Various versions of the bill were voted on by the House and Senate during the regular session, but there were differences between the two versions that could not be reconciled during the regular session. A compromise was reached, and the special session was used to have the General Assembly approve the compromise bill. I voted for it, as did all of my fellow senators and most of my colleagues in the House of Representatives.
The final issue was the one that probably garnered the most attention – gas taxes. As I have written before, the state has two taxes on gas. The first is a flat twenty-five cent per gallon tax. The second tax is known as the Petroleum Products Gross Receipts Tax. It is based on a percentage of the wholesale price of gas. For many years, that tax remained at 5%. In 2005, the legislature enacted a series of annual increases to the tax to a maximum rate of 8.1%. The current rate is 7% and that rate was scheduled to increase again to 7.5% on July 1, 2008. The tax increases were sold as a way of funding much needed transportation projects. The wholesale price of gas is so much higher today than it was in 2005 when the rates were increased that the state is now taking in far more revenue from this tax than the state had ever expected. In fact, the state is taking in far more than it is putting into the Special Transportation Fund to finance these projects. After a powerful outcry from the people, the Governor and the Democrat leaders of the General Assembly finally agreed to do something about this tax. They agreed to stop the increase to 7.5% this next fiscal year. The Governor and these leaders had opposed any changes along these lines earlier this year. I for one was happy to see their change of heart.
However, they could have done more. I have been able to show, using data from the state’s nonpartisan Office of Fiscal Analysis, that we could reduce the Petroleum Products Gross Receipts Tax back down to its historic 5% level and still fully fund our transportation projects. I offered an amendment to that effect last year, which was defeated. I offered the same amendment again during the special session last week. However, the Democrat majority used technical maneuvers to prevent a vote and debate on the amendment. As with other issues I believe in, I will continue to push for this reduction until it passes because I believe that it is one of the only things that the state can do to help provide relief to consumers at the pumps.
As always, I welcome opportunities to discuss these, and other, issues that affect our state. Please feel free to contact me at my legislative office in Hartford at 860-240-8800, or via e-mail to sam.caligiuri@cga.ct.gov.
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