The General Assembly's Finance Committee has approved a progressive income tax increase. It's part of the Democrats' plan to close the state's $8.7 billion deficit for the next two years.
Governor Jodi Rell says the proposal is unacceptable and she would veto it.
The Democrats' budget would increase the state income tax from five to six percent for couples making over 250-thousand dollars. The rate would increase incrementally up to nearly 8 percent for couples make over a million dollars.
"That would still keep us over a percent below New York, and it would be below what Rhode Island and Vermont are at," said House Finance Chairman Cam Staples. "So we would still be below most of the states in the region."
The Democratic plan also rolls back the state property tax credit. That move was blasted by the Republican lawmakers and the governor.
"The taxes that are being proposed are going to hit everyone across the board, every income level here," said Rell. "And some of those are people are the ones who could least afford it right now."
But Staples said nrew regionalization legislation, including proposed financial incentives for cooperating towns, may end up lowering local property taxes.
"It's going to require everyone to participate regionally to access the funds. If they don't do that, they don't get the funds," Staples said.
The Democrats' budget restores funding that the governor had proposed cutting in areas including health care, higher education, and clean energy development.
Democrats said their budget cut spending below even what the governor proposed in her budget, but she dismissed their proposals as "phantom cuts."
"They added back hundreds of millions of dollars and simply listed hundreds of of millions of dollars more in unspecified cuts--unidentified, unspecified cuts that will nto be achievable," she said.
The Democrats budget does call for deeper concessions from state employee unions than the governor did. Their budget also targets administrative positions for trimming - particularly in the Department of Children and Families, which would see a 25 percent cut to managerial staff.
House Appropriations Chairman John Geragosian said those cuts would come through early retirements and attrition -- not layoffs.
"The negotiation with the employee bargaining unit is going to require no layoffs," he said. "Job security is one of the issues they're holding out on. We don't want front-line employees that deliver services to be laid off, but we believe that there's a lot of bureaucracy that needs to be trimmed."
Withdrawals from the rainy day fund and federal stimulus money close the remaining 36 percent of the Democrats' budget.
As for the deficit that remains for this year, Democrats say they may borrow up to $500 million to close it.
The governor levied her harshest criticism on this proposal. "In a way, I feel like they've just given up. Just ring it up on the state's credit card. No cuts needed. No questions asked," she said. "It is the most fiscally irresponsible scheme I have seen in all of my years here at the state capitol."
When asked by a reporter if there was anything she liked about the Democrats' budget, she said "not much."