Malloy gives up on higher gas tax, clearing way for budget votes

Gov. Dannel P. Malloy and Democratic legislative leaders have agreed on a revised budget that will forgo a gasoline tax increase sought by Malloy, clearing the way for Senate and House votes on Monday and Tuesday, top legislators said Sunday.

The revised plan also makes clear that the legislature will return to implement any concessions and other labor savings obtained by Malloy – or to vote on further spending cuts Malloy imposes if the labor talks fail. The governor is seeking $1 billion in savings in the fiscal year beginning July 1.

Donovan Williams

Sen. Donald Williams (l), Rep. Chris Donovan.

Another revision will end a controversial, 11th-hour plan to shift control of the state’s public financing of campaigns from the non-partisan State Elections Enforcement Commission to a partisan elected official, the secretary of the state.

“SEEC is staying a separate agency, with all its parts,” said House Speaker Christopher G. Donovan, D-Meriden.

Under a version of the budget approved by the Appropriations Committee, the functions of the elections enforcement commission would have been split among three entities, with half its staff being assigned to the secretary of the state, along with control of public financing, the Citizens’ Election Program.

Good government advocates had been scrambling last week to convince legislators to scrap the plan to break up the SEEC, an idea with an uncertain provenance. A long list of key players at the Capitol denied in interviews withe The Mirror being responsible for the idea, which suddenly appeared in the budget language approved by Appropriations.

The two issues that generated the most opposition to the budget among Democrats was the gas tax increase and the idea of ceding responsibility to the governor concerning the $1 billion in the proposed budget that is now attributed to unspecified labor savings.

Donovan and Senate President Pro Tempore Donald E. Williams Jr., D-Brooklyn, said Sunday the 3-cents-a-gallon increase in the gas tax was ill-timed with the price of fuel skyrocketing.

But the rapid increase is one reason the legislature can afford to skip the tax hike: An existing 7 percent tax on the gross receipts of wholesale fuel purchases is producing more money as the price of gasoline rises almost daily. Malloy says the state needs the gas-tax revenue to stablize a special transportation fund that pays for highway infrastructure and maintenance.

The Senate intends to vote Monday on a combined tax-and-spending plan, with the House vote coming on Tuesday. On Friday, when Malloy already was aware of the likely change in the gas tax, the governor said he considered anticipated revisions to be within his budget framework.

The tax and spending packages are now separate bills, one in the Senate and the other in the House. They will be combined into one emergency-certfiied bill that can immediately be placed before the full Senate.

With the budget votes behind him, Malloy’s last remaining challenge in erasing an inherited $3.2 billion deficit will be the labor savings. His administration indicated last week that the talks could conclude this week. Any concessions woiuld face ratification votes by 28 bargaining units.

“I know they worked yesterday,” Donovan said. “I don’t know what happened. I know they were talking yesterday.”

Donovan and Williams each attended a May Day labor rally Sunday in Bushnell Park in Hartford, as did Lt. Gov. Nancy Wyman. Malloy was invited, but he was out of state on a previously planned trip to North Carolina for an education-policy meeting.

At the rally, most if not all the speakers avoided criticism of Malloy’s demand for labor savings, focusing instead on the broader challenges labor is facing, including a move in several states to limit collective bargaining for public employees. Malloy has not sought such limits.

Later Sunday, Donovan, Williams and Malloy issued statements in a joint press release about the updated budget agreement.

“The legislature should be commended for moving forward with an up-or-down vote on the budget. In doing so, they are taking an important step to stabilize our state’s finances and get our fiscal house in order,” Malloy said. “With an agreement on the final few details, this budget remains within my framework and relies on neither gimmicks nor tricks. This budget is the real deal, and I’m pleased we’ll have an up-or-down vote early this week.”

“With Democrats working together, we’ve been able to complete a budget agreement earlier than in recent memory, one that is honest and shares sacrifice in a fair way in resolving the deficit. We were able to stay within Governor Malloy’s framework while ironing out final details. In eliminating the gas tax increase, we were able to help ease the burden on Connecticut residents at a time when prices at the pump are already putting a strain on them,” Donovan said.

“Connecticut’s economic crisis – like nearly every state – has been long and severe. Monday we will take the first step in turning the page and setting the foundation for economic growth. The budget has no gimmicks, no borrowing, and no cuts to municipal aid. With the recent increases of gas prices it was also important to avoid any increase to the gas tax – and that’s exactly what we did. By consolidating agencies and departments and cutting bureaucracy we also begin to reshape Connecticut state government. There is more work to be done but this week marks an important first step,” Williams said.

The gasoline tax was the major objection raised last week during a caucus of the House Democratic majority, sparking further budget talks between the Democratic governor and the Democratic leaders of the House and Senate.

The budget votes come as the state’s revenue picture is brightening, perhaps easing the pressure on Malloy and the state employees to agree on the $1 billion in labor savings demanded by the governor in February.

On Friday, the administration and the legislature’s non-partisan Office of Fiscal Analysis increased the revenue estimates for the coming fiscal year by $282 million. The Republican minority intends to press during the budget debates for the new revenue figures to be reflected in a smaller overall tax increase.

Malloy proposed a $1.5 billion tax increase in February, but he recently reduced the request to $1.4 billion.

“The Democrats’ reversal on the gas tax hike due to public pressure is a positive step, but their refusal to cap the gross receipts tax that rises every time the price of gas increases means Connecticut motorists will still pay higher gas prices than motorists in Massachusetts and other neighboring states,” said Senate Minority Leader John P. McKinney, R-Fairfield.