From a new plastic bag tax to health care savings: here’s a look at what’s in the state budget deal.

May 31-- May 31--On the campaign trail last year, Gov. Ned Lamont promised a budget vote would happen before the end of the legislative session.

The governor and lawmakers took a big step toward making that happen Thursday, agreeing in principle on a two-year, $43 billion budget that closes a projected deficit of $3.7 billion.

"We're going to get this budget balanced without raising tax rates on anybody," Lamont said, reiterating another campaign promise not to raise the sales tax rate or income tax rate.

Many specifics were not shared during a press briefing Thursday, but here's what we know about the deal so far.

Sales tax expanded, but no soda tax

A plan to expand the 6.35 percent sales tax onto dozens of new items and services has been significantly scaled back. The specific items that will be taxed were not discussed Thursday, but Melissa McCaw, Lamont's budget chief, said the new taxes would raise $50 million in the second year of the budget. That's down from $505 million in Lamont's original proposal. A proposal to tax sugary drinks has also been dropped.

Taxes on the wealthy, businesses

A 2 percentage point surcharge on investment income for the state's wealthiest residents was dropped from the final budget agreement. Liberals in the legislature had been pushing for the tax but Lamont resisted, saying boosting taxes on the wealthy would drive them out of the state and stifle economic growth. The so-called mansion tax, a statewide conveyance tax on expensive homes, is included in the agreement. Lawmakers also expect to raise $50 million by reducing a tax credit claimed by pass-through entities, limited liability corporations and other businesses that pay taxes through the owners' income tax bills.

Dipping into the surplus

Lamont had initially resisted dipping into the state's rainy day fund as a way to close the state budget gap but agreed to use money from this year's budget surplus for two one-time expenses: a refinancing of the teachers' pension fund that avoids spikes in payments but will cost more over time and to pay to settle a lawsuit Connecticut hospitals brought over a tax enacted by then-Gov. Dannel P. Malloy. McCaw said $160 million from the surplus would go toward the hospital settlement and $381 million toward the teachers' pensions fund.

Health care savings

Lamont's office said the budget includes $185 million in expected state employee health care savings over the next two years. State Comptroller Kevin Lembo would negotiate a maximum price the state would pay for procedures at hospitals and the "Smart Shopper" program encouraging state employees to use lower-cost providers would be expanded.

Teacher pensions

Absent from the handshake agreement is a controversial proposal to ask towns to pick up a portion of their retired teachers' pensions. Under the current system, the state picks up the entire employer portion of pension contributions. Last month, the plan had been for cities and towns to pick up a total of $73 million of that cost next year, with wealthier towns paying more than poorer cities. Instead, Lamont said educational funding for local communities will be boosted by $40 million in the first year of the budget and $80 million in the second.

Tax breaks for retirees

Also stripped from the final agreement was a plan not to move forward with tax breaks that seniors and retirees in the state had been expecting. A budget deal reached in 2017 called for phasing out the state income tax on Social Security and pensions, but Lamont had proposed putting a pause on that tax cut to help balance the budget. The tax cut will move forward as planned.

Plastic bag tax

While some legislators are pushing to ban single-use plastic bags, the budget agreement calls for a 10 cent tax on the bags which would raise $30 million in the first year of the budget. Some lawmakers expressed concern that money will be short-lived as consumers change their habits, leaving a future General Assembly to find new money to plug the hole.

Nursing homes and Medicaid

The budget framework includes funding to assist Connecticut's nursing home industry -- workers who had not received raises in years threatened to strike if their pay was not boosted -- and raises the eligibility limits for the Husky A Medicaid program for working poor adults with children to allow about 4,000 more residents to receive health care.

Information from The Connecticut Mirror is included in this report.

Russell Blair can be reached at [email protected].

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