MALLOY TO PROPOSE TAX CREDIT FOR WORKING POOR; ALSO WANTS TO CHANGE THE RULES ON STATE PAYMENT FOR SCHOOL CONSTRUCTION

In a sign that his budget and tax proposals may hit even the poorest families in Connecticut, Gov. Dannel Malloy will propose an Earned Income Tax Credit (EITC) to soften the blow, the Hartford Courant reports. It would be the first such tax credit in Connecticut’s history. Although it has been proposed many time in the past, Republicans in the legislature and the governor’s office have shot it down, saying it gives money to people who don’t pay income taxes.

The Courant reports the tax would provide a maximum of nearly $1,700 for poor, individuals and working families that earn below $21,500 per year. Families with three or more children that earn as much as $48,000 per year could still be eligible for a reduced credit that would be far below the maximum. The state EITC would be 30 percent of the federal credit.

The driving force between efforts to pass a state EITC in past years was state Senate Majority Leader Martin Looney (D-New Haven). Looney came close in more recent years, only to be foiled at the end by Gov. Rell.

On another critical issue, Gov. Dannel Malloy has said many times that with the exception of the safety net for the most vulnerable members of society (see above), everything is on the table in the effort to fill the nearly $4 billion hole in the state budget. Administration officials now say part of the solution will include reducing what the state kicks in for new school construction including magnate schools. However, the new rules won’t save any money in the first two years.

The Hartford Courant reported in its Sunday edition that the changes in what the state pays for school construction will be part of the budget Malloy will unveil in his address to the General Assembly Wednesday. Currently, the state pays, on a sliding scale depending on the relative wealth of the town, anywhere from 20 to 80 percent of new school construction. Malloy wants to change that to between 15 and 65 percent. For new magnate schools, Malloy’s plan would drop the state’s share from 95 percent to 80 percent (it will remain at 100 percent in Hartford under a court order). The percentages of state contributions to pay for school renovations wouldn’t change, providing an incentive to renovate instead of building new.

Because new school construction takes years to plan and executed, no savings are expected in the new two-year budget. Any school construction project that has not broken ground before April 1, 2012, would be subject to the new rules.

The school construction payment formulas are the latest pieces of Malloy’s budget plan to emerge. Previously reported are restructuring of state higher education and consolidation of state agencies.