Pushback from three of the state's biggest corporate giants sent Connecticut lawmakers scurrying late Monday night to rework tax-package components of a proposed $40 billion biennial budget that needs approval by midnight Wednesday.
General Electric Co., Aetna Inc. and Travelers Cos. pushed back earlier in the day to a two-year spending plan that would impose $700 million in increased taxes on businesses over two years.
They and the Connecticut Business and Industry Association lobbying group object to the so-called unitary tax that the state would impose on Connecticut corporations. It would require combined reporting for companies that operate in multiple states.
GE and Aetna said in statements they might rethink keeping their businesses in Connecticut.
"Retroactively raising taxes again on Connecticut's residents, businesses and services makes businesses, including our own, and citizens seriously consider whether it makes any sense to continue to be located in this state," GE, with headquarters in Fairfield since 1974, said on its website.
Shortly thereafter, Aetna came out swinging.
"Connecticut is in danger of damaging its economic future by failing to address its budget obligation in a responsible way," said Hartford-headquarters insurance giant Aetna. "Such an action will result in Aetna looking to reconsider the viability of continuing major operations in the state."
Travelers issued its own criticism of the Malloy plan while stopping short of any relocation talk.
State Rep. John Frey, R-Ridgefield, told the Hartford Courant that New York State officials have already begun pitching a move to GE executives.
Supporters of the Malloy budget cited the governor's commitment to transportation infrastructure.
Under the compromise reached in the wee hours Sunday morning, 0.5% of the state's sales tax, which would hold at 6.35%, would help initiate Malloy's 30-year, $100 billion transportation initiatives. A further 0.5% would supply aid to cities and towns.
"We're confident that Gov. Malloy and state leaders will continue their trend of making smart investments in our city and its future," said Bridgeport Mayor Bill Finch, a Democrat. His city is in line for $15 million in transit upgrades under the plan.
The budget specifically includes a $2.8 billion increase for infrastructure over the next five years, according to Malloy officials. In total over the next five years, the state will spend roughly $10 billion on transportation among this budget, planned capital spending, and federal funds.
With the agreement, said Malloy, Connecticut will spend $613 million for highways, $281 million for bridges, $101 million for bicycle and pedestrian trails, and $43 million - or a 25% expansion - of bus service.
The budget also includes funding for 161 new positions at the Connecticut Department of Transportation to help execute the ramp-up.
The spending plan would also raise corporate taxes and personal income tax on wealthy individuals, and would legalize keno gambling.
"This budget represents broken promises and a complete disregard for the warnings made very clear over the past few months. Connecticut cannot afford new taxes," said state Sen. Len Fasano, R-North Haven. "We cannot afford to rely on questionable revenue sources like keno to keep our state running."
Moody's Investors Service rates Connecticut's $15 billion of general obligation debt Aa3.
Fitch Ratings, Standard & Poor's and Kroll Bond Rating Agency rate the bonds AA.
