Budget panels not expected to drift too far from Malloy’s $43.8 billion plan

The legislature’s two budget-writing panels on Friday will unveil their counter-proposals to the $43.8 billion, two-year fiscal plan Gov. Dannel P. Malloy offered in February — but don’t look for any huge changes in the bottom line.

Leaders for both the Appropriations and Finance, Revenue & Bonding committees have said they have tried to keep their spending and revenue plans, respectively, close to the governor’s because the alternatives are scarce.

“Our target is to work within the parameters of the governor’s proposed budget,” Rep. Patricia Widlitz, D-Guilford, co-chairwoman of the finance panel, said Thursday. “This is going to be another very tough year.”

Widlitz declined to discuss which revenue proposals the legislature’s tax-writing committee might endorse Friday. But the Guilford lawmaker has said previously that she personally opposes enacting any major tax hikes this year, given that a record-setting $1.5 billion in tax increases was enacted just two years ago to close a deficit of historic proportions.

Malloy insists he didn’t propose any tax increases, though his new budget does rely on extra revenue to close more than one-third of the $1.2 billion projected deficit in the fiscal year that begins July 1.

But others argue that the governor’s plan does ask for more, including from those least able to afford it.

Malloy would allow a corporate tax surcharge, an electricity generation tax and a limit on insurance premium tax credits to continue. All were set to expire next fiscal year. The finance committee recommended Tuesday that the generation tax be allowed to expire as planned and that government use additional borrowing and delay repayments of existing debt to cover the $70 million revenue loss next fiscal year.

Malloy also has proposed reducing the credit’s value from 30 percent of the federal EITC to 25 percent — a change that would cost working poor families about $18 million this year. The administration has defended this suggestion, noting that Connecticut still would have one of the most generous earned income tax credits of any state.

Sources said the governor’s controversial plan to phase out the municipal property tax on motor vehicles likely won’t be considered by the finance panel before its deadline — but that doesn’t mean the proposal is dead in this General Assembly session.

Members of the finance and Planning & Development committees have been talking with administration officials and a government efficiency panel created by House Speaker J. Brendan Sharkey to see if a compromise can be reached this session.

The principle objection legislators have raised to the governor’s proposal is that it does nothing to replace the more than $600 million in property tax revenue communities collect annually from motor vehicle levies.

“The entire rationale behind this proposal was to begin a conversation about how we can provide middle and working class families with some measure of tax relief,” Gian-Carl Casa, spokesman for the governor’s budget office, said Thursday. “We’re glad that conversation has started, and hope we can reach some kind of resolution with the General Assembly this session.”

On the spending side of the budget, the Appropriations Committee also is expected to craft a plan that falls close to Malloy’s bottom line, though some changes are likely.

Sen. Toni Harp, D-New Haven, co-chairwoman of appropriations, has said that there has been considerable pressure from rank-and-file lawmakers to restore at least a portion of the cut the governor proposed for Connecticut’s 29 acute care hospitals.

The facilities stand to lose more than $400 million in the governor’s biennial plan, and hospital officials warn it would force service cuts, job losses — and possibly some closures.

The Malloy administration counters that this would be offset, in part, by increased patient revenue.

Since the state moved its health-care program for poor adults without minor children under the federal Medicaid umbrella in 2010, enrollment has grown from about 45,000 to 86,000.