The General Assembly began its review of Gov. Dannel P. Malloy’s new two-year budget Friday with a strong, bipartisan pushback from the Appropriations Committee.
Lawmakers challenged proposals to reallocate local aid, open nonprofit hospitals’ real property to municipal taxation, continue dedicating some sales tax revenues to transportation, and close 40 percent of next year’s deficit with state employee concessions.
Malloy, who met with Capitol reporters at a separate press conference, said legislative resistance comes as no surprise.
The governor, who highlighted several key aspects of his plan in the days leading up to its full presentation on Wednesday, acknowledged there are a lot of difficult choices.
“I’m not sure every member of the legislature followed that discussion every time we had it, day after day, so I think there is a certain amount of digestion that has to go on,” he said.
Perhaps the governor’s plans to restructure municipal aid drew the most concerns.
“This really decimates our town,” Sen. Gayle Slossberg, D-Milford, told Malloy’s budget chief, Office of Policy and Management Secretary Ben Barnes.
Slossberg’s community was one of those hardest hit under the governor’s plan.
It would lose almost $11 million in education cost-sharing grants, and its total revenue from all state grants would drop from from $14.7 million to $8.7 million. In addition, Malloy’s proposal to bill communities for one-third of the annual contribution owed to the municipal teachers’ pension fund would cost the town another $5.6 million next year.
Milford would be given the option of taxing its local hospital, which could bring in $1.5 million.
The overall impact of all of these changes is a drop from $14.7 million down to $4.6 million in one fiscal year.
When Slossberg asked Barnes why her community should bear such a cost, he noted most towns are being asked to sacrifice in the governor’s budget. And Milford’s position on the Connecticut coastline has left it in better shape than most other communities.
“Towns on the waterfront have seen their grand list (the total value of all taxable property) grow better than the rest of the state,” Barnes said.
Rep. Noreen Kokoruda, R-Madison, whose community also takes a significant hit in the governor’s budget, said while that is hard to defend, her objections would be tempered somewhat if the urban centers that gain funds would dedicate all extra resources to their schools.
“Can I guarantee my taxpayers that those extra taxes they’re going to be paying now is going to those kids?” she asked Barnes. “I think that’s an important thing to be able to say.”
But the budget chief said cities struggle with some of the highest property tax rates in the state. Hartford, which has the highest, taxes commercial property at 74.29 mills.
“It’s only reasonable that they should be able to use some of that money to keep their taxes low,” he said.
Sen. Mae Flexer, D-Killingly, who represents eight towns in the state’s northeast corner, questioned why several of her communities also were losing state aid.
Windham County has one of the highest regional unemployment rates in the state, its grand lists are lower than those in most other regions, while its reliance on state- and Medicaid-subsidized health care is relatively higher.
But Barnes said some Windham County communities have property tax rates well below those of Connecticut’s poor urban centers.
“A low mill rate is generally indicative of a higher ability to pay,” he said.
“Not in Northeastern Connecticut,” Flexer responded, adding that many of her communities insist upon a “bare bones” level of services because they can’t afford higher property taxes. That means no townwide police or fire department, and, in some cases, no municipal trash collection.
Another key indicator of wealth is the amount of state income taxes owed, per person, in each community. In other words, if a household owes less in taxes, it generally has earned less income.
In seven of the eight towns in Flexer’s district, per capita taxes owed were 58 percent of the statewide average — or less — in 2015, according to a Department of Revenue Services statistical report.
In the eighth community, Mansfield, taxes owed topped the statewide average by less than 3 percent.
Rep. Michael France, R-Ledyard, questioned why the governor’s budget continues to dedicate revenues from one-half of 1 percentage point of the 6.35 percent sales tax to transportation.
This was approved in 2015 to fund the first five years of what Malloy envisioned as a 30-year transportation rebuilding program.
But neither the governor nor lawmakers have proposed revenue options — such as tolls or gasoline tax increases — to cover the final 25 years.
Nonpartisan analysts say the transportation fund, even with the sales tax receipts, will begin running annual deficits starting in July 2018.
“Why are we not re-evaluating the governor’s transportation plan?” France said, adding that Connecticut cannot afford to pay for it right now. “As if somehow, magic manna from heaven is going to fall down and pay for it?” he added.
But Barnes said Malloy hasn’t given up on the transportation initiative. The legislature first must endorse a constitutional “lockbox” amendment to safeguard transportation revenues, the Democratic governor has said.
Connecticut has been plagued for several years by slow economic growth, Barnes said. “The best solution to our fiscal problems is to increase the underlying growth,” he said, adding that a transportation program is key to that goal. “I think I’m talking out of the Republican Party play book.”
Sen. Joan Hartley, D-Waterbury, said as grim as the governor’s budget choices are, things will get worse if the administration doesn’t secure the labor concessions for which it is aiming.
The governor’s budget assumes savings of $700 million next fiscal year and $800 million in 2018-19 from worker givebacks.
Hartley pressed for reassurances legislators would know soon if there will be a deal with the unions.
“We are actively engaged,” Barnes said. Now that the governor’s budget has been released, he said he would turn his full attention to labor talks.
“I will not be showing up at the Capitol so much,” he said, adding that, “I will commit to trying my best” to reach a tentative deal before the Appropriations Committee’s April 27 deadline to recommend its own budget.