Legislators, Malloy hovering on brink of a state budget deal
What do you call something that falls just short of a tentative deal on the next state budget?
On one hand, legislators and Gov. Dannel P. Malloy’s budget staff still were hammering out the details of key tax issues late Thursday night. But the governor also was expected to visit the Capitol overnight to be briefed on the near-deal before leaving Friday for a political event in Oklahoma.
Majority Democrats in the House of Representatives gave their Republican counterparts a courtesy warning that a Saturday vote on the budget was anticipated.
But sources also said the soon-to-be-complete spending and revenue proposal for the next two fiscal years will face a very stiff test when it gets presented to House Democrats in a closed-door caucus — something likely to happen Friday or Saturday before any public floor debate. Moderate Democrats are expected to object to hundreds of millions in new taxes while liberal caucus members plan to push back against cuts to social services.
Tentative budget deals can unravel in caucus — and have in the past.
So just what has been agreed upon in this still incomplete outline of the next budget?
Very few details on the spending side of the plan have been disclosed to date, though all parties acknowledge the bottom line will be less than the $40.5 billion, two-year plan recommended by the legislature’s Appropriations Committee.
That proposal would spend $236 million more than Malloy recommended in the 2015-16 fiscal year, and $279 million more than the governor wanted for 2016-17.
Most of the latest talk has centered on the taxes and other revenue needed to balance the budget. This debate has been heating up since early May, when the Finance, Revenue and Bonding Committee recommended more than $2.4 billion in new tax revenue for the coming biennium. The governor had sought about $840 million in revenue from a combination of tax hikes and the postponement or cancelation of previously approved tax cuts.
According to multiple sources close to the talks, here are a few revenue details upon which negotiators have agreed.
Capital Gains: A finance committee plan to re-establish a separate rate on capital gains will not be included in the final budget.
Sales and Property Taxes: A Senate Democratic proposal to bolster sales tax receipts by more than $1 billion and then channel 70 percent of those dollars to cities and towns to ease property tax burdens survives — but in a very different form. Sources said the overall sales tax increase will be less, and the proceeds will be divided among two initiatives. Besides the property tax relief effort, a significant portion will go to support Malloy’s long-range program to rebuild Connecticut’s transportation infrastructure.
Corporation Taxes: The controversial corporation tax surcharge, originally scheduled to expire in the next budget, will be continued. And though full details were not available, corporations also will pay more in taxes due to tighter limits on the use of tax credits.
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