Democrats’ deficit plan going to the legislature Tuesday

House Speaker Brendan Sharkey and House Majority Leader Joe Aresimowicz discuss the deficit-mitigation bill that will be presented to a special session of the legislature next week.

Claude Albert / CtMirror.org

House Speaker Brendan Sharkey and House Majority Leader Joe Aresimowicz discuss the deficit-mitigation bill that will be presented to a special session of the legislature next week.

Leaders of the Democratic majority in the House of Representatives affirmed Friday they expect to vote Tuesday on a bill to mitigate state budget deficits, restore some cuts to hospitals and social services and offer modest tax relief to businesses.

House Speaker J. Brendan Sharkey, D-Hamden, and Majority Leader Joe Aresimowicz, D-Berlin, also said they expect the Democrat-controlled Senate and Gov. Dannel P. Malloy to support it as well.

The administration, Democratic leaders and top GOP lawmakers had been meeting for the past month on a deficit-mitigation plan. That ended late Thursday when Republican leaders left the talks, saying they couldn’t reach agreement with Democrats on structural reforms to control state spending in the long-term.

And while Sharkey and Aresimowicz said Friday that a major structural issue divided leaders from both parties, multiple sources told The Mirror it was a battle over implementing the constitutional spending cap — which recently has fallen into legal limbo.

Full details of the Democrat-sponsored budget bill were not available Friday, but Sharkey said it would address the deficit this fiscal year and “make a downpayment” on the projected shortfall for 2016-17.

The Malloy administration estimated this year’s deficit at $118 million, while the legislature’s nonpartisan Office of Fiscal Analysis pegs the shortfall at $254 million. OFA estimates a larger deficit of $552 million for next fiscal year.

It was unclear whether the Democratic plan would eliminate the larger deficit estimate.

That’s because some of the savings Democratic leaders and the governor have identified would be used for other purposes, including reversing a portion of earlier cuts to hospitals and social services.

Sharkey said the bill would restore about half of the $62 million the governor cut from hospitals back in September. Funding for social services was not disclosed.

Rep. Andy Fleischmann, D-West Hartford, co-chair of the Education Committee, said the cuts that were initially proposed to the state-run vocational-technical high schools will be largely restored. Leaders of that school system earlier this week warned that if the $6.6 million proposed cut moved forward they would have to consider closing one of the 17 high schools in the system or cutting enrollment.

“My leadership ameliorated those cuts,” said Fleischmann.

Millions in savings also would be achieved by reducing state spending on charter and magnet schools. Those savings are possible because those schools enrolled fewer students than the adopted state budget anticipated.

Sharkey said the bill also would provide some of the corporation tax changes Malloy proposed last month.

The governor, who estimated these moves would save companies between $10 million and $20 million annually, wants to raise the limit on research and development and certain other credits companies can claim against the corporation tax.

Malloy also proposed allowing companies to claim a larger portion of operating losses as a corporation tax exemption — a move designed to encourage companies to launch new ventures.

Republican leaders said Thursday night that they also support these tax cuts, but nonetheless were leaving the budget talks because they believed not enough was being done to control long-term spending.

Sources said the GOP wanted assurances Connecticut officials would move swiftly to ensure state government has a working constitutional cap.

Attorney General George Jepsen wrote in an opinion last month that the cap, often a major weapon in political and policy fights, is unenforceable because of the legislature’s failure to formally implement the measure.

The cap has been particularly controversial over the past decade as rising retirement benefit costs ate up much of the allowable spending growth.

This prompted governors and legislatures to either move expenses outside of the cap system, or to exceed the cap legally — both of which frustrated many fiscal conservatives.

Sharkey said Friday that Democratic legislators also want to control spending over the long-term.

And though he didn’t identify the cap issue by name, he said, “There were some very, very major policy initiatives that the Republicans were proposing and wanted to do in the special session without the benefit of a public hearing, without the benefit of the committee process, and that was really the big divide between us.”

Aresimowicz said Democrats offered to introduce a series of bills to begin a debate on Republican proposals during the regular 2016 legislative session, which starts in February.

But Sharkey acknowledged that Republicans, who will be in the minority in the 2016 session, wouldn’t have the numbers to force a vote to implement the constitutional spending cap next year.

“Which is kind of why it was not clear to me as to why they walked out of the room,” the speaker said. “They will never have more leverage than they have right now.”

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