Budget milestone: Agreement near on tax increase package

Gov. Dannel P. Malloy is speeding toward a budget milestone as the legislature’s Finance, Revenue and Bonding Committee prepares to amend and approve his record $1.5 billion tax increase.

Malloy: Proposed nuke tax will fail

The administration and legislative leaders are negotiating final changes, which are expected to include the restoration of sales-tax exemptions sought by several industries, such as aviation, car dealers and the marine trades.

The Democratic co-chairs of the committee, Sen. Eileen M. Daily of Westbrook and Rep. Patricia M. Widlitz of Guilford, said Monday the panel could vote as early as Tuesday. It was unclear how the committee would make up lost revenue from restoring sales-tax exemptions.

Daily and Widlitz declined to identify winners and losers, other than acknowledging that some industries were successful in their lobbying efforts.

“I think that’s sort of above our pay grade,” Daily said.

“We know it’s tease, but we just are reluctant to say anything until everyone sings kumbaya, then we can tell you,” Widlitz said.

Widlitz and Daily may not be ready to sing kumbaya, but they are humming a happy tune, a marked contrast to the Democratic majority’s scuffles with Republican Gov. M. Jodi Rell.

“There is no comparison to the recent past,” Daily said. “Much more progress is being made. The give and take is much better.”

The New Haven Democrats who are co-chairs of the Appropriations Committee, Sen. Toni Harp and Rep. Toni Walker, gave much the same answer when asked about the spending side of the budget.

Final details should be negotiated in a time for a committee vote this week, they said.

Malloy announced his recommended revisions last week, callling for an adjustment that would shift some of the income-tax increase from middle-class to wealthy taxpayers and restore $300 of a $500 property tax credit originally slated for elimination. His revisions would cost $123 million.

The governor did not identify sources of replacement revenue, but the administration is widely expected to scale back an earned-income tax credit for the poor.

His senior advisor, Roy Occhiogrosso, declined to comment on likely changes.

“The governor said from the beginning of the budget process it was the first step,” Occhiogrosso said. “He is working with the legislature and understands there will be compromises.”

While taking viewer questions Monday on WTNH, Channel 8, Malloy did make one pronouncement on taxes: He predicted that a controversial proposal to impose a tax on nuclear power would fail to pass the legislature, een though the legislature’s Office of Fiscal Analysis has said it could raise $335 million.

“That’s not my tax. That’s not a tax I have publicly supported, nor is it a tax that I think is going to come out of the legislature,” Malloy said on the air. As he exited the Capitol, Malloy declined to say if that prediction was based on assurances from legislative leaders.

Malloy has proposed a more modest tax on nearly all electric-generating plants that would raise about $50 million. He said that that tax might be increased slightly.

Once the spending-and-tax packages clear the Appropriations and Finance committees, attention will shift to the administration’s continuing talks with state employees over Malloy’s demand for $1 billion in labor savings.

“We’re still talking,” Malloy said told his WTNH audience.

Malloy is the first governor since William A. O’Neill, who left office 20 years ago, to craft a budget with a legislature controlled by the same political party.

On the table is the state’s largest tax increase, though adjusted for inflation it is smaller than the tax increase adopted in 1991 after Gov. Lowell P. Weicker Jr., an independent, proposed the state’s first broad-based income  tax.

The legislature’s Republican minority hopes to make that tax increase a little harder for Democrats to digest by presenting an alternative budget without tax increases.

The Republican leaders, Sen. John P. McKinney of Fairfield and Rep. Lawrence F. Cafero Jr. of Norwalk, said Monday evening that their version will be presented at midday Tuesday.