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April 14, 2009

State revenue increases need to solve state budget woes
By Brian Lockhart
Reprinted from The Stamford Advocate

Democratic Stamford Mayor Dannel Malloy, who is exploring a gubernatorial run in 2010, said Wednesday he supports a progressive income tax that would increase rates on high earners.

But he would not commit to a proposal by state Democrats that set the "high earner" mark at $250,000 for a household.

He and other members of the Connecticut Conference of Municipalities were rallying at the Capitol to urge lawmakers to preserve aid to municipalities and, in some cases, increase it, even though the state is grappling with a potential $8.7 billion budget deficit for fiscal years 2009-10 and 2010-11.

Democrats last week unveiled a proposal to increase income taxes on a sliding scale from the maximum 5 percent to a range of 6 percent to 7.95 percent for households earning more than $250,000.

New Haven Mayor John DeStefano, a Democrat, said he supports the tax package. Malloy was less specific and initially avoided answering questions.

"I want to be very clear. There's no doubt revenue's going to be part of the solution," Malloy said. "There's no way out of this (fiscal) mess other than to make appropriate adjustments in revenue."

Afterward Malloy said, "We're going to need a progressive rate adjustment" but he still would not say whether he embraced the Democrats' plan.

"I don't think we're going to end up with the Democrats' bill," he said.

Malloy's answer was similar to comments made last week by Democratic state lawmakers from Stamford who criticized their party's proposed income tax hikes but acknowledged it was likely some higher rates would be part of a final budget deal.

"We in Fairfield County need to do our part and ultimately will," state Sen. Andrew McDonald, D-Stamford, said at the time. "But we don't need to do every other county's part, too."

Malloy lost the party's 2006 gubernatorial primary to DeStefano.

Asked whether he backs the party's cuts to the $500 property tax credit enjoyed by many middle-class residents, Malloy said, "If I say no, the obvious question is, Where's the money coming from?"

If the credits were cut, it would have a troubling effect on households facing higher property taxes, Malloy said.

Last week, Stamford's Board of Finance cut Malloy's spending plan to reduce the city property tax increase from 6.8 percent to 3.61 percent.

"So you won't get a credit, and your taxes still will be higher," Malloy said.

He and other municipal leaders said cuts in state aid would create higher property tax hikes, but they had a hard time explaining where the cash-strapped state would find the money to preserve municipal grants.

Asked what municipalities can sacrifice to help the state close the deficit, Malloy said, "We're going to play the role we always play," and he expected some aid would be cut.

Lawmakers could pass legislation allowing municipalities to make up the lost revenue, he said.

Malloy said he backs CCM's call to allow municipalities to levy a hotel or lodging tax.

Republican Gov. M. Jodi Rell, who has said she does not want to raise taxes, and the legislature's GOP minority have criticized Democrats for not trying harder to restructure and reduce the size of government.

Asked whether his party did enough to slash spending, Malloy said, "maybe not." But he repeated Democrats' continued assertion that Rell did a "disservice" to the state by presenting a budget with no tax increases that relied on an outdated deficit estimate of $6 billion.



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