While state legislators were upbeat after a second round of budget talks Tuesday with Gov. Dannel P. Malloy, they conceded that a proposal to offer retirement incentives to state workers — though not dead — had been weakened considerably.
But while Malloy was most reserved, legislative leaders from both parties also announced they were hopeful enough that a deficit-mitigation plan would be resolved soon to tentatively schedule a special session for the week of Dec. 7.
“We’re moving substantially closer to an agreement, I think,” Senate President Pro Tem Martin M. Looney, D-New Haven, said after lawmakers ended about three hours of closed-door negotiations.
Negotiations, which began one month ago, have progressed slowly as competing philosophies have — at times — divided Democrats and Republicans, House and Senate members, and the executive and legislative branches.
“We’re hopeful about the discussions today,” Looney added. “We think we have narrowed a lot of the differences between us.”
Though lawmakers wouldn’t commit to a special session the week of Dec. 7, Senate Minority Leader Len Fasano, R-North Haven, took it as a positive sign that a tentative time had been set aside. “It’s always good for the legislature to have a targeted time,” he said.
When the process began last month, Malloy and legislative leaders agreed to search for spending cuts to save between $350 million and $370 million per year, to serve three purposes:
- To mitigate projected deficits in both the current fiscal year and the next two.
- To enable restoration of at least some of the emergency cuts Malloy ordered in September to hospitals and social service programs.
- And to further scale back some business tax hikes ordered last June — tax increases that have produced a strong backlash from major corporations and the business community in general.
- The governor said afterward that providing further tax relief is a priority of equal importance to balancing the budget. “We should do everything in our ability to accomplish that,” he said.
Malloy has asked lawmakers to increase corporations’ ability to claim research and development and other tax credits that encourage businesses to test new ventures and expand. These changes would cost the state about $20 million per year.
But while there has been bipartisan support for the concept of delivering some business tax relief, one of the sharpest points of contention centers on a plan to cut state employee salary costs in the budget — at the expense of the long-term health of the pension system.
House Republicans and Senate leaders from both parties have proposed offering retirement incentives to encourage senior workers to retire. House Democrats and Malloy have opposed such a move, which results in more retirees drawing benefits from the pension system, and fewer employees working — and therefore paying into the pension system.
Fasano and Looney both said a revised estimate from the legislature’s nonpartisan Office of Fiscal Analysis downgraded the anticipated budget savings from about $80 million to just over half that amount.
“That has been a little twist, if you will, that has caught us all by surprise,” Fasano said.
“The new number is substantially lower,” Looney added.
But none of the legislative leaders nor Malloy said retirement incentives are out of consideration.
Lawmakers wouldn’t say the $350 million-to-$370 million target for new savings was unachievable, or if they were aiming for something less. But when pressed on whether they still expected to achieve that much, they responded cautiously.
“That’s why we’re continuing to talk,” Looney said.
“We’re close enough to go forward (with talks) another day,” Klarides said, adding that leaders and Malloy agreed to continue negotiations early next week.
“We have a good direction,” added House Speaker J. Brendan Sharkey, D-Hamden.
But the governor, also a Democrat, was even more restrained in assessing the progress made to date.
Tuesday’s talks were more boisterous. “It was, as we call it in diplomatic terms. a frank exchange of ideas,” Malloy said.
“I don’t think we made, before today, nearly enough progress,” the governor added, before quickly qualifying his statement. “Potentially, progress has been made.”