GOP says it can cut budget and still offer modest tax relief

Minority Republican legislators insisted Thursday they can shave more than $340 million off Gov. Dannel P. Malloy’s budget plan for next year, add more than 160 new state troopers and still provide modest income and sales tax breaks next fiscal year.

But later Thursday, the Appropriations Committee, in a 30-15 party-line vote, rejected the plan.

The $18.9 billion package offered by GOP leaders during a mid-morning news conference also would have ended a major new tax break for Connecticut’s working poor, relying heavily on $140 million in new savings to be found by state employee unions and a major new initiative to root out Medicaid and other social services fraud. It also would have ended public financing for state elections and longevity bonuses for senior state employees, and would have imposed 10 percent pay cuts on legislators, commissioners and other executive staff.

“Today we are producing a very different vision for the people of Connecticut,” Senate Minority Leader John P. McKinney, R-Fairfield, said during the morning news conference in the Legislative Office Building. “As Republicans we can show (Democrats) there is a better way.”

“The largest tax hike in state history was imposed on Connecticut taxpayers just six months ago,” added House Minority Leader Lawrence F. Cafero, R-Norwalk, who noted that the current budget continues to be plagued by deficit forecasts. “What has been tried is still not working so we have to insist on new priorities and meaningful cuts.”

The package was largely a political counter-statement to the $20.7 billion budget proposals offered by Malloy and by his fellow Democrats on the legislature’s Appropriations Committee.

Perhaps the biggest statement the minority made is that one year after the governor and legislature ordered $1.6 billion in new state and municipal tax and fee increases, the GOP insists that Connecticut could return $308 million to taxpayers through the income and sales levies.

Higher property tax credit

Specifically, the Republican proposal would have raised the property tax credit from $300 to $500 — the same level it enjoyed for several years until it was reduced in 2011.

The GOP plan also restored sales tax exemptions on clothing items priced below $50, and on nonprescription medicine.

But to cover the tax breaks and other new costs, Republicans had set the stage for a partisan battle that could be seen as class warfare.

One crucial component of the GOP plan is that it would have canceled the new state earned income tax credit, which gives working poor families up to 30 percent of a similar credit on the federal income tax. This would take $116 million away from a program that advocates say helps keep households off of more expensive state assistance.

Republicans also would save $25 million by requiring increased use of generic pharmaceuticals by Medicaid patients.

Republicans also maintained that by adding 12 new fraud prevention positions in the Department of Social Services, the state could reap a net savings of just over $100 million next year.

“I’m a little perplexed that none of these things were brought to the conversation” earlier this legislative session, Rep. Toni E. Walker, D-New Haven, co-chairwoman of the Appropriations Committee, said.

“This is the kind of math that got Connecticut in trouble in the first place: we can cut taxes, maintain the quality of life everyone expects, and all of this will be paid for by magic pots of money that, in reality, don’t exist,” Malloy’s senior adviser, Roy Occhiogrosso, said Thursday.

“While reducing Medicaid fraud is a laudable goal, assuming that we can find more fraud simply by hiring more investigators is like saying that a violin would sound better if it had more strings.”

Adding state troopers

Though those new tax breaks were the biggest expense in the Republican plan, the minority also tried to resolve the controversy over the state police force by spending $8.2 million to hire more than 160 new troopers, bringing the force up to the 1,248-trooper mark set in statute.

A Superior Court judge sided with the state police union earlier this year in a lawsuit that charges that the administration and legislature violated the law in not funding 1,248 positions in the current budget. That decision is being appealed.

Malloy’s office said the Republican plan doesn’t allocate enough funds to meet the trooper level it seeks.

The Republicans did adopt several proposals offered by Malloy in February and recommended Thursday by the Democratic-controlled Appropriations Committee, including increased contributions to the state employee pension fund and providing a 1 percent rate increase in January for private, nonprofit social service providers.

Unions’ savings needed

Another element of the Republican plan was aimed more at the Democratic governor and state employee unions than at the legislature’s Democratic majority. GOP lawmakers increased the savings targets set in the governor’s proposal by another $60 million, arguing that unions have not fulfilled a crucial obligation spelled out in the concessions package they approved last summer. Labor-management efficiency panels were supposed to find savings worth $170 million this fiscal year and $175 million in 2012-13.

Yet two of those panels, responsible for $130 million of the savings, didn’t even start meeting until late October. As a result, the administration largely has covered the unions’ responsibilities by freezing vacant positions, though it also has ordered agency heads to search for efficiencies.

Cafero said Connecticut still is entitled to huge savings to be found by the unions. “That’s what was contracted for and that’s what we’re going to hold the unions to,” he said.

But Occhiogrosso responded that “Anyone can say ‘reduce fraud’ or ‘let’s make the unions come up with savings ideas,’ but real hard policy choices — like the ones the governor has made to stabilize the state’s finances — are absent in this proposal.  The administration is certainly open to ideas on how to help Connecticut continue its recovery, but going back to the old way of doing business won’t get us there.  And that’s all the Republican budget represents: the way things were done around here for too long.”

Public financing for elections

The Republican plan also would have ended public financing for state elections. Both the $11 million transferred annually for elections and the $18 million currently in the Citizens’ Election Fund — a one-time source of revenue — would have been used to support ongoing programs in the GOP plan.

About $45 million would have been saved by reducing debt service accounts, a cut Republicans said could be made given recent state efforts to refinance debt and reduce interest charges. Majority Democrats on the Appropriations Committee recommended a $336 million cut in this area.

The minority party also had aimed to save $18 million annually by imposing a 10 percent cut on salaries for legislators and top executive branch administrators.