Sending Out Rebate Checks In September Would Cost $1.72 Million

by Categorized: 2014 Election, General Assembly, Gov. Dannel Malloy Date:

The state will be spending $1.72 million to send out tax-rebate checks in mid-September if the rebate plan is approved by the legislature, officials said Thursday.

An estimated 2.1 million checks would be mailed to Connecticut residents, including some Social Security recipients whose names and addresses are not on file at the state tax department because they do not pay state income taxes, officials said. Those names would be obtained from the federal government and then added to the list of state tax filers.

The costs include postage and the time spent by an outside vendor to create a computer program to mail the checks, said Ben Barnes, the state budget director.

Gov. Dannel P. Malloy is calling for tax rebates of $55 for individuals earning less than $200,000 per year and $110 for families earning under $400,000 per year that would arrive in mailboxes about two months before the November gubernatorial election.

The checks will be sent automatically, and residents cannot request a debit card or an electronic deposit to their bank account, said Kevin Sullivan, the state\’s tax commissioner.

Malloy\’s fiscal plan also calls for eliminating the 6.35 percent state sales tax on over-the-counter, non-prescription medications, which had been originally imposed by Malloy and the Democratic-controlled legislature in 2011. That would save taxpayers a combined $22 million. House Republicans had announced their support regarding the sales tax before Malloy unveiled his proposal.

On Thursday, the tax-writing finance committee discussed the issue during a public hearing that marked another step in the legislature\’s analysis of Malloy\’s budget. The committee is expected to vote by its deadline in early April, and then the full budget is expected to be considered by the General Assembly before the regular legislative session ends on May 7.

The proposed changes represent adjustments to the second year of the state\’s two-year budget.

Rep. Christopher Davis, an Ellington Republican, said the tax bill that is pending before the legislature does not mention when the checks would be sent to taxpayers. Barnes said that it would not happen until after the state\’s books are officially closed by the state comptroller in September.

When asked how the total of $55 per individual was determined, Barnes said there were numerous proposals on the size of the proposed refunds and who would be eligible before Malloy decided on the current plan as \”the most benefit in the fairest way to the most people.\’\’

Taxpayers are \”extremely likely to spend that money\’\’ and stimulate the economy through retail purchases, Barnes said. \”The most efficacious way to stimulate the economy is to provide payments to people who need money. … Some people will put the money in a shoebox and never spend it.\’\’

State Rep. Sean Williams, a longtime Republican legislator, asked Barnes about paying down interest on unemployment compensation funds so that small business owners could receive a short-term tax break. As unemployment skyrocketed during the recent recession, the state spent all of the money in the unemployment compensation fund by the end of 2009. The state then borrowed more than $800 million from the federal government. The assessment on businesses was introduced to pay the interest on the loan, and the interest remaining on the loan is about $60 million.

Barnes said his staff is analyzing the Republican idea in light of the state\’s projected surplus for the current fiscal year that ends June 30.

\”We obviously have many demands on those surplus funds,\’\’ Barnes said, adding that using some money for workers\’ compensation is \”a reasonable use of those funds.\’\’

But Barnes said that Malloy\’s immediate priorities include adding money to the \”rainy day fund\’\’ for fiscal emergencies, placing $100 million into the state pension fund, and using about $155 million for the tax-free rebates.

\”As we come out of the hole, we should let them reap some of those benefits,\’\’ Barnes said of taxpayers who will receive rebates.

Williams asked Barnes to be open to the idea of paying down the interest on the special assessment for one-time, high-interest debt, saying that a firm in his district owes about $70,000 in special assessments.

Citing statistics from an economist at the University of Connecticut, Barnes said that the $55 rebates would create an estimated 1,000 jobs.

Sullivan, the tax commissioner, then stepped to the microphone and said that Barnes had wanted to speak briefly before taking many questions. But Sullivan said he was hoping to reverse it.

\”I\’m actually going to drone on and avoid your questions if at all possible,\’\’ Sullivan joked as the legislators laughed.

\”That was some pretty interesting droning, and it raised a couple of questions for me,\’\’ Greenwich Republican state Sen. L. Scott Frantz said after Sullivan finished his opening remarks.

\”We are able to give a dividend back for those difficult decisions,\’\’ Sullivan said of the tax rebate.

Regarding the higher-than-expected total received from tax amnesty, Sullivan said the state received $193 million that helped to restore money to the rainy day fund.

\”It was the broadest amnesty that the state has ever offered,\’\’ Sullivan said, adding that those who were being audited were eligible for the amnesty for the first time.

\”During the soft economic years, a lot more taxpayers got in trouble\’\’ with paying their taxes, he said. As a result, they came forward during the amnesty to pay the taxes that they did not pay in the difficult economic years that included the Wall Street crash following the bankruptcy of Lehman Brothers in September 2008.

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