Conn. Senate Dems Urge Feds For Financial Help Amid Virus

Any additional legislation Congress passes to mitigate the effects of the novel coronavirus pandemic should include legislation to help Connecticut municipalities combat the loss of tax revenue, state senators said in a letter to Connecticut's federal delegation Friday.

Connecticut's Democratic state senators have asked that the next federal aid package addressing health and economic consequences of the coronavirus pandemic also provide help to Connecticut municipalities, because unemployment and financial difficulties will likely limit local tax payments, according to a letter sent to federal Connecticut lawmakers.

The letter was sent to, among others, U.S. Sen. Richard Blumenthal and Rep. John Larson, a member of the House Ways and Means Committee.

The group of state senators, including Sen. Saud Anwar, D-East Hartford, said that Connecticut would need significant financial assistance to make up estimated revenue losses and asked federal lawmakers to support legislation to address local budgetary shortfalls.

"Even with the recent federal aid to individuals and businesses, many will not be able to make municipal tax payments or keep up with local utility fees," the state senators wrote.

They added that localities will need that revenue to maintain roads, trash collection, public safety services like police and fire departments, and other essentials.

Blumenthal supports providing additional funding for state and local governments, his office told Law360 Friday. He is a proponent of congressional Democratic leaders' proposed $150 billion for state and local governments in a bill that would increase funding for the $350 billion Paycheck Protection Program created in Congress' latest coronavirus relief package.

Federal lawmakers are pushing for a fourth coronavirus bill, which some congressional Democrats hope will lift the $10,000 cap on state and local tax deductions to help local businesses, families and first responders deal with COVID-19, the respiratory illness caused by the coronavirus. The SALT deduction cap was enacted in the 2017 Tax Cuts and Jobs Act . House Speaker Nancy Pelosi, D-Calif., has supported rolling back, at least in part, the $10,000 SALT cap as a part of forthcoming coronavirus relief.

On March 27, President Donald Trump signed into law the latest legislative package designed to help struggling businesses meet payrolls, prop up state and local relief efforts, and provide direct payments to most Americans.

Under that law, the $2 trillion Coronavirus Aid, Relief, and Economic Security Act, the Internal Revenue Service will send $1,200 to individuals and $2,400 to couples filing joint tax returns. The payments will be reduced for those with incomes above $75,000, or $150,000 for couples, and they will be eliminated for those with incomes of more than $99,000, or $198,000 for couples.

The legislation also provides a refundable payroll tax credit for 50% of employer wages for companies fully or partly prohibited from operating during the crisis. It also waives the 10% early withdrawal penalty for retirement fund distributions up to $100,000 made on or after Jan. 1, 2020, and before Dec. 31, 2020.

Representatives of U.S. senators and representatives, including Larson, did not immediately respond to requests for comment Friday.

Representatives of the Connecticut senators did not immediately respond to requests for comment Friday.

--Additional reporting by Andrew Kragie. Editing by Robert Rudinger.

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