State legislative leaders are exploring whether to call a special session shortly after the November elections to extend Connecticut’s gasoline tax holiday through the winter months, House and Senate leaders confirmed Wednesday.
The Democratic majority in both chambers also would use a session in late November or early December to add money to a badly underfunded bonus program for private-sector workers who staffed essential services during the coronavirus pandemic.
House Speaker Matt Ritter, D-Hartford, and Senate President Pro Tem Martin M. Looney, D-New Haven, said the fuel tax holiday, which began April 1 and expires at the end of November, has been a tremendous success.
“Inflation is still here,” Ritter told the CT Mirror. “It’s still coming.” And if waiving Connecticut’s 25-cents-per-gallon retail tax on gasoline can be done without weakening the state’s transportation budget, he added, “that’s a debate and a conversation worth having.”
The holiday, which was initially set to run from April 1 through June 30 and was eventually extended to Nov. 30, also included fare-free service on Connecticut transit buses.
That element has helped push transit use back to pre-pandemic levels, Looney said, adding that all elements of the holiday have helped low- and middle-income families cope with a national inflation rate that topped 9% earlier this year.
“There’s interest in our caucus in extending the gas tax holiday,” he said, adding that it’s been particularly successful in stimulating business in Connecticut’s border communities.
The AAA reported an average retail price of regular gasoline Wednesday afternoon at just below $3.32 per gallon in Connecticut, a price that would have been $3.57 without the tax holiday. That’s well below Wednesday’s national average of almost $3.77 per gallon. It’s also cheaper than fuel prices in New Jersey, at $3.46; Massachusetts, $3.54; New York, $3.65; and Rhode Island, $4.
Neither Looney nor Ritter committed to a specific date, but both said the extension their caucuses are considering likely would keep the gas tax holiday in place through February or March. And if federal funding for winter energy assistance programs isn’t enhanced, Democrats also would consider boosting state resources in this area, legislative leaders added.
Gov. Ned Lamont’s office was noncommittal when asked about Democratic legislative leaders’ goals to extend the fuel tax holiday.
“Addressing inflation caused by global forces is a focus of the Lamont administration, and we will review potential proposals based on the price of gas and the impacts on the Special Transportation Fund as we approach the end of November,” said Chris Collibee, spokesman for the governor’s budget office.
If gas prices plunge between now and late November, extending the gasoline tax holiday might not be necessary, Ritter and Looney said.
But that’s not all they have to consider. The health of the state’s $1.8 billion Special Transportation Fund is another factor, although right now it also looks good, at least in the short term.
Just three months into the new fiscal year, early projections from Lamont’s administration show the STF on pace for a healthy $327 million surplus. And that’s considering the gas tax holiday that costs the state about $30 million per month in revenue.
But with the national economy at risk of recession and interest rates rising, Connecticut also must keep an eye on Wall Street.
Connecticut pays for roughly half of the state’s highway, bridge and rail upgrade program with borrowing, specifically by issuing bonds. It uses those proceeds to leverage hundreds of millions of additional dollars in federal transportation grants.
And to secure the most favorable interest rates, Connecticut long has tried to maintain a ratio in its transportation fund of $2 of revenue for each $1 of debt payments it owes on that borrowing.
That also looks very healthy right now. About $840 million of the STF’s resources will be spent on debt payments, while projected revenues top $2.1 billion.
But Republicans say the reason the transportation fund is flush despite the holiday is because gas prices are still relatively high.
Even though gasoline prices dropped steadily this summer in Connecticut, the $3.32 per-gallon price on Wednesday was 11 cents higher than the statewide average one year ago, according to AAA.
Lamont and his fellow Democrats in the legislature are campaigning on a $660 million tax relief plan they approved back in May, one of the largest tax cuts in state history.
Besides the extended fuel tax holiday, it includes a temporary income tax rebate for households with children, an ongoing expansion of the income tax credit that helps offset local property tax bills and a one-time payment of federal funds to working poor families.
But the GOP, which pushed for nearly double that tax relief, a plan worth $1.2 billion, says the Democratic initiative was too modest given the high inflation — and that the state closed the last fiscal year with an unprecedented $4.3 billion surplus worth almost one-fifth of the budget’s entire General Fund.
The top Republicans in the legislature said Ritter and Looney’s statements on the gasoline tax are political pandering as the state election season moves into its final six weeks.
“Democrats are sprinkling breadcrumbs to try to lead voters down a path for re-election,” said Candelora, who renewed the GOP’s call for the first cut in state income tax rates since the mid-1990s. “Republicans would rather offer a loaf of bread that’s permanent by reducing the income tax.”
Kelly noted the GOP began calling last May for a special session to beef up the tax relief package.
“The fact that we’ve finally got a special session on their radar, I think, is a win for the people of Connecticut,” he said.
Ritter: Funding for pandemic bonuses will be enhanced
Another group that could win after the election involves front line workers at nursing homes, hospitals, grocery stores and others in the private sector who provided essential services during the worst of the pandemic.
The legislature and Lamont approved a program to provide bonuses of $1,000 for full-time workers in these jobs who earn $100,000 or less annually. Full-timers making between $100,000 and $150,000 qualify for grants ranging from $200 to $1,000. And part-timers can apply for a $500 bonus.
But state officials budgeted just $30 million for the program, far too little to meet the demand. By simple math, no more than 30,000 grants of $1,000 each could be issued.
According to Comptroller Natalie Braswell’s office, more than 173,000 people have completed applications for grants through the state’s online portal. The application period closes on Oct. 1.
To make the dollars stretch, Lamont and lawmakers stipulated that all qualified applicants would receive funds — but the grants would be reduced proportionally.
Depending on how many completed applications are approved, and also depending on how many applicants seek the full $1,000, grants could be divided by a factor of four or five to make the math work.
Labor advocates have long warned they feared funding was too little and that workers would be teased with the idea of a $1,000 grant but actually receive something closer to $200 or $250.
Ritter and Looney said the state may not be able to deliver full grants to all qualified members, but they also believe the reduction should be far less than some fear.
The state set aside $34 million for a second program to help essential workers who lost wages or incurred medical expenses during the pandemic. Because of a complicated application process, more than $33 million of those funds remains unclaimed.
Ritter said by reassigning those funds to the $30 million Premium Pay program, officials could effectively double that program’s budget right away.
Connecticut also has about $200 million in unassigned federal COVID-19 relief dollars. And while legislators are expected to dedicate much of those for health care and education programs, Ritter said $30 million or $40 million might be available to further expand funding for Premium Pay.
Asked on several occasions this fall, the Lamont administration has not said whether it will support additional funding for this program.