Democratic Budget Plan

Passes Connecticut House

By Susan Haigh

Associated Press

HARTFORD (AP) — The House of Representatives gave final legislative approval late Tuesday night to a two-year, $40.1 billion state budget that Democrats believe will help Connecticut rebound from the recession and Republicans claim is financially devastating taxpayers.

It marked the first budget deal the General Assembly has reached with a Democratic governor in two decades. It’s also one the earliest budget agreements in recent memory, even though a key component — the $2 billion in labor savings assumed in the tax-and-spending plan — has not yet been reached with state employee unions.

“We have a choice to turn that corner, to do the hard work so we can move on, move on to what we all want to achieve over the next couple of years,” said House Majority Leader Brendan Sharkey, D-Hamden, who praised the plan for fully funding pension obligations, not borrowing money to cover operating expenses, and not relying on one-time revenues.

The House passed the bill on an 83-67 vote after nearly 10 hours of debate, with 15 Democrats joining the unified Republicans in opposition, many concerned about the level of taxes. The Senate already passed the plan early Tuesday morning on a 19-17 vote.

Throughout Tuesday’s debate, Republican lawmakers tried to make a last-ditch effort to discredit the budget deal recently reached between Governor Dannel P. Malloy and the Democrats, arguing that Connecticut taxpayers can’t afford the tax increases.

House Minority Leader Lawrence Cafero, a Republican from Norwalk, pleaded with the majority House Democrats to think about their middle class constituents who are still struggling from the economic recession before supporting a budget that raises taxes by $1.4 billion in the first year and $1.2 billion in the second year.

“They’ve suffered enough. It’s government’s turn,” Cafero said. “Today we have an opportunity to exercise good judgment on behalf of the men, women, and children we represent. I implore you to listen. I implore you to think about what we’re doing today.”

But Malloy called the plan an “important step toward much-needed fiscal responsibility.” It was unclear when he planned to sign the bill, which attempts to address a projected $3.3 billion deficit as of July 1.

Besides raising taxes, Democrats said the budget reduces spending by approximately $3 billion over two years, a figure that includes $2 billion in labor savings that has not yet been reached. The bill also creates $1 billion in surplus over the next two fiscal years, money Malloy said can be used to replenish the state’s Rainy Day Fund and begin paying off debts.

Republicans offered a variety of amendments, including their own no-tax-increase budget and proposals to scale back the tax increase, which failed along party-line votes. Republicans in the Senate suffered a similar fate during Monday’s debate. The Senate ultimately passed the budget unscathed on a 19-17 vote following 11 hours of debate early Tuesday.

The long list of tax increases includes raising the sales tax from 6 percent to 6.35 percent; increasing the marginal tax income tax rates at $100,000 for joint filers, $50,000 for single filers and $80,000 for heads of households, making the increase retroactive to income earned since January 1; reducing the $500 property tax credit against the income tax to $300; raising the hotel, alcohol, diesel fuel, cigarette and tobacco taxes; and eliminating sales tax exemptions on everything from yoga studios to the first $50 of clothing and footwear.

With passage of the budget, attention will next focus on the closed-door talks that have been going on since March between Malloy’s administration and the State Employee Bargaining Agent Coalition, which represents 13 state employee unions. Mark Ojakian, Malloy’s lead negotiator, said last week that he hoped a deal on labor savings could be reached sometime this week. However, both sides have not revealed whether that will actually happen.

Legislators have speculated that by passing a budget which assumes $2 billion in labor savings will accomplished, the General Assembly and Malloy are putting pressure on the unions to capitulate. Malloy has said that if a deal is not reached, thousands of layoffs could be possible. Malloy has also said that he’s unwilling to raise taxes any further.

“We all feel a sense of urgency to get the job done. The negotiations are continuing and as long as they’re talking, they’re talking,” said Roy Occhiogrosso, the governor’s senior adviser. “To the extent that [the budget passage] helps to move the negotiations along, that’s great.”

In the meantime, Malloy’s administration expects to issue the first round of layoff notices on May 6 to a yet-to-be-revealed number of state employees. Occhiogrosso said certain unionized state employees and nonunion managers will receive notices effective July 1.

Representative Toni Walker, D-New Haven, co-chairwoman of the legislature’s Appropriations Committee, said the budget passed Tuesday also reduces the state work force, estimated to be about 45,000 people, by 280 in fiscal year 2012 and 135 people in 2013. The plan also reduces state agencies by 30 percent.

The budget increases spending by about $500 million next fiscal year compared to the current year. But Democrats said that increase is due to the additional federal reimbursement the state is expects to receive.