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Budget Deal Set

Tentative Accord Increases Spending For Health Care And Education, But Keeps Property Tax Credit As Is

June 19, 2007
By CHRISTOPHER KEATING, Capitol Bureau Chief

State budget negotiators reached a tentative agreement Monday night on a deal that would provide large spending increases for health care and public education, but little relief for taxpayers.

The deal, which the House and Senate must still ratify, calls for keeping the popular property tax credit at the current maximum of $500, according to a person familiar with the negotiations.

If enacted, that would represent a blow to Democrats who have pushed for months to increase the credit to $1,000. The agreement also does not include any increase in the state income tax rates, which Democrats had sought.

The agreement includes "historic increases in health care spending" and "historic increases" in educational cost-sharing funds that are sent to cities and towns, according to the person familiar with the negotiations.

The increases involve millions of dollars, but precise totals were not available Monday night.

One setback for taxpayers would be a 33 percent increase in the state's cigarette tax to $2 per pack, up from the current $1.51 per pack.

One aspect that remains unclear Monday night was a trade-off between creating an earned income tax credit for the working poor and phasing out the estate tax for those who die with more than $2 million.

Gov. M. Jodi Rell and Republican legislators had pushed for the estate tax phase-out while Democrats had pushed for the earned income tax credit.

No date has been set for a possible vote.

Although Democrats hold more than two-thirds of all seats in the legislature, they have not been able to generate enough votes for a veto-proof margin to enact a progressive income tax. Rell has fought against higher tax rates for the rich, and so far she has prevailed.

The two sides are trying to reach a final agreement before the new fiscal year begins on July 1.