HARTFORD, Conn. (WTNH) -- Governor Malloy says he is cutting spending and wants to eliminate the state's most unpopular tax. During his budget address today the Governor proposed the elimination for most residents of the car tax.
He's plugging the billion dollar deficit by cutting huge amounts to social services but he's increasing spending on education big time.
"In total, I am proposing more than 1.8 billion in spending reductions from our current services budget over the next two years," said Gov. Malloy. "My budget cuts 862 million dollars off the current services budget in year one and more than a billion dollars off in year two."
The biggest hit goes to the state's hospitals that will face a huge cut in the funds they get from the state to cover services provided to thousands of uninsured patients. The Malloy administration is saying the hospitals will be able to make it up under Obamacare.
More than 40 thousand state residents on Medicaid will no longer be eligible. The administration says under Obamacare they will soon be covered by private insurance but in his speech today he also tossed a bone to middle class tax payers by proposing the elimination, for most residents, of the state's most unpopular tax.
The two Republican leaders in the General Assembly who are both considering running against Malloy next year were ready to pounce.
"He claims he cut spending by 1.8 billion dollars and yet, in point of fact, over two years we're spending nine percent more than we did this year," said Rep. Larry Cafero, Republican Minority Leader.
"It increases taxes that the Governor said he would not do," said Sen. John McKinney, Republican Minority Leader.
The Malloy budget continues a 20 percent corporate surtax on business and a tax on power companies he said would expire this year.
"It is a broken promise, we are extremely disappointed in what we heard today from the Governor," said Jim Norvelle, Dominion Energy.
"Today, I am proposing that we exempt the vast majority of Connecticut motor vehicles from their property tax," said Gov. Malloy.
That's the big carrot the Governor held in front of taxpayers today. He wants to eliminate the property tax on 90 percent of all cars and trucks in the state, making it optional for cities and towns starting July 1 and mandatory starting next year.
"This is a tax relief for families who are middle class, working class and working poor," said Gov. Malloy.
City and town leaders are saying, great idea, how are we going to pay for it?
"Obviously, the loss of motor vehicle property tax revenue is going to have to be made up on higher property taxes on residential properties, industrial and commercial properties," said Jim Finley, Conn. Conference of Municipalities.
"The only taxes we have at the city level basically residential and property taxes so it's a narrow window for us," said Democrat Pedro Segarra, Mayor of Hartford.
The Governor insists it can work.
"Governor, won't eliminating the car tax just force my town to increase my home owner's tax," asked News 8's Mark Davis.
"It will save middle class tax payers a lot of money," said Gov. Malloy.
And the new Speaker of the House says there may be a way to do it.
"I think the Governor deserves a lot of credit for putting it on the table today and we'll work out these details as we go," said Rep. Brendan Sharkey, Democratic Speaker of the House.
Gov. Malloy also proposes bringing back the sales tax exemption on inexpensive clothing that he eliminated last year so that clothing that costs 25 dollars or less would be tax exempt starting in 2014 and going up to 50 dollars like it used to be, starting in 2015.
"Of course these changes won't solve all of working families problems but as we continue the hard work of reforming our state's finances and of growing jobs, they can still mean something to working families working hard to make ends meet," said Gov. Malloy.
To watch Malloy's entire budget address, watch the second video above.
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