Governor Dannel Malloy is reversing his proposal to give each taxpayer a $55.00 refund. The administration said revenue from capital gains taxes last year is hundreds of millions of dollars below what was expected.
At a press conference, Malloy defended his idea to give some of the state's surplus back to residents. "No, it wasn't a gimmick," he said. "I firmly believe, and still believe, when we have lots of money coming in, well in excess of what we predicted, it should be shared with taxpayers. My position is not different; circumstances are different. We've gone from a $3.6 million deficit. We're going to have a surplus this year. We're going to be in balance, but we're just not going to have as much money as we thought, because of one particular tax, which is an important tax, when you consider the extent of wealth in certain parts of our state."
Malloy blamed the setback on the expiration of Bush tax cuts in January 2013, which he said prompted wealthy taxpayers to claim investment income in 2012.
Minority leader House Rep. Larry Cafero, a Republican, questioned Malloy's explanation. "You screwed up," he said. "You did the wrong thing. Take it on the chin, and move on. George Bush?" Cafero said Democratic leaders in the General Assembly weren't even behind Malloy's refund plan.
The exact amount of the revenue shortfall will be known April 30 when consensus numbers come out.
Meanwhile, Malloy's budget chief, Benjamin Barnes, and the leaders of the Democratic-controlled General Assembly are currently negotiating a final budget agreement. Malloy stressed any budget surplus will go towards the rainy day fund and to support education and job creation initiatives.
This report includes information from The Associated Press.