It’s time to produce a budget but the parties are at loggerheads

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Sen. John Fonfara, D-Hartford

As the legislature’s budget-writing panels approach their deadlines, partisan gridlock has some leaders questioning whether they might fail to recommend a complete budget.

While a proposed income tax increase on the wealthy bogged down Friday in the tax-writing committee’s Democratic caucus, the committee’s Senate Democratic chairman called for more candor, both from GOP lawmakers and Democratic Gov. Dannel P. Malloy, about the need for revenue to solve the latest budget crisis.

“We have seen nothing from the Republicans in terms of a willingness to work together, said Sen. John Fonfara, D-Hartford. We have one responsibility in this building, and that’s to pass a budget. Everything else, I think, is up for debate. And to walk away from that is an abdication of that responsibility.”

“I’m trying to still be optimistic that I can talk to some people,” said Rep. Toni E. Walker of New Haven, House Democratic chair of the Appropriations Committee. “But at some point it’s got to be about how do we do this together, with sincerity?”

But Republicans fired back that Democrats have been equally stubborn about the philosophical divide over how to close an 8 percent shortfall in the next budget.

GOP leaders say that solution simply cannot involve tax increases.

“There is no reason to believe there will be one iota of (Republican) support for any tax increases,” said Sen. L. Scott Frantz, R-Greenwich.

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Rep. Melissa Ziobron, R-East Haddam

Rep. Melissa Ziobron of East Haddam, ranking GOP representative on appropriations, said she fears Democrats will recommend dramatically more spending than the current revenue system will support.

“This is a dereliction of duty, and my concern is we’re going in this direction,” she said.

A big deficit with too many unknowns

At issue are projections that state finances — unless adjusted — will run $1.7 billion in deficit next fiscal year and $1.9 billion in the red in 2018-19.

And several of the solutions Malloy recommended are unpopular, uncertain, or both.

  • A plan to shift one-third of surging teacher pension costs onto cities and towns — involving more than $400 million in each of the next two years — has drawn widespread bipartisan criticism and fierce opposition from municipalities.
  • A $105 million middle-class income tax hike, imposed by eliminating the $200 property tax credit, also has been criticized by legislators from both parties.
  • And more than six months of informal talks with state employee unions have yet to produce the huge concessions savings — $700 million next fiscal year and $869 million in 2018-19 — Malloy’s budget is built upon. An alternative plan to order more worker layoffs isn’t expected to save even half of that $700 million target.

Further complicating matters, the two budget-writing committees are split almost down the middle.

this is a picture of Sen. Cathy Osten

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Sen. Cathy Osten, D-Sprague

The Appropriations and Finance, Revenue and Bonding committees each have six Democratic senators and six Republicans. And the Democratic margin among representatives is just one: 21-20 on Appropriations and 20-19 on Finance.

That need for House Democratic unanimity could be a death sentence for anything too controversial.

Sen. Cathy Osten of Sprague, the Senate Democratic chair on appropriations, said she would like her panel to adopt a spending plan that largely matches bottom lines Malloy recommended: $20.1 billion next fiscal year and $20.5 billion in 2018-19.

But Osten also conceded earlier this week that huge pots of money remain in flux, including: education grants to towns; spending cuts to offset the need to shift teacher pension costs onto municipalities; funding for hospitals; and what to expect from worker concession talks.

“Those are four big issues, and we’re not there yet,” she said.

If no Republican votes are available, can unified Democrats on appropriations adopt a spending plan?

“I don’t know yet,” Osten said. “We’re working on that. I’m hoping.”

Talking about tax hikes: Dangerous or honest?

Rep. Jason Rojas of East Hartford, House Democratic chairman of the finance committee, expressed hope his panel would be able to adopt a revenue plan that would match the spending level recommended in appropriations.

“I think we will need to have some (new) revenue” in the next budget, Rojas said.

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Rep. Toni Walker, D-New Haven

But with a one-vote margin, and strong Republican opposition to tax or fee increases, Rojas said he couldn’t dismiss the possibility that spending and revenue proposals wouldn’t match up.

Sen. Paul Formica of East Lyme, Senate Republican chair on appropriations, said Friday he still was in talks with Democrats, but also could not guarantee a bipartisan solution.

Formica said it was unfair to characterize Republicans as uncooperative because of their opposition to tax hikes.

“I think it is very likely that people on both sides of the aisle won’t support a tax increase,” Formica said, adding there similarly is bipartisan reluctance to shift teacher pension costs onto cities and towns.

Fonfara, the Senate Democratic chair on finance, shook up the Capitol somewhat this week when he and Rojas scheduled an April 25 public hearing on several tax increase proposals including:

  • Raising the income tax rate on households earning more than $500,000 from 6.99 to 7.49 percent.
  • Raising the sales tax rate from 6.35 to 6.99 percent.
  • And ending the sales tax exemption for sales to nonprofit entities.

Fonfara and Rojas both said the panel only is exploring all revenue options and they would prefer to avoid increasing the income tax and creating a potential drag on the state’s economy.

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Sen. L. Scott Frantz, R-Greenwich

Sources close to Friday’s closed-door caucus of Democratic finance committee members said the chances that Democrats would remain unified to recommend that tax increase were virtually nil.

But while Frantz said even discussing these tax hikes scares businesses and “gives Connecticut a really bad reputation,” Fonfara said the GOP has no credibility, given it hasn’t publicly disclosed any budget-balancing ideas this session.

“The dynamic has changed, but they have shown no interest in participating,” he said. “To walk away from your responsibilities, I think there’s a story there.”

Fonfara also said the solution Malloy presented in February to Connecticut’s budget crisis is “misleading.”

While praising the governor for creatively tackling tough issues, Fonfara said the plan was characterized as proposing just over $200 million in tax and fee hikes.

But that total did not count more than $400 million that would be raised by billing municipalities for a share of teacher pension costs, or the $213 million in local property tax bills that hospitals would face under the governor’s plan.

Once those proposals are considered, Fonfara said, the total tax-and-fee increase in the governor’s plan tops $800 million per year.

In remarks to reporters Friday, Malloy stuck to his talking points, waving off questions about potential tax increases.

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Sen. Paul Formica, R-East Lyme

“I don’t think this should be a revenue-driven solution,” Malloy said. “I think we should spend more time figuring out how to live within our means.”

With his repeated admonition against “a revenue-driven solution,” Malloy seemed to be making common cause with Republicans, who hold half the seats in the Senate and could control the budget debate in the House if four Democrats join them.

Was Malloy extending an invitation to the GOP to play a bigger role on the budget?

“That was not my intention,” Malloy replied.

Fonfara declined to predict whether a full legislative budget plan for the next two fiscal years would be in place once the committees’ deadlines arrive next week — the appropriations panel on Thursday and finance on Friday.

But he guaranteed legislators would continue making progress toward a solution.

“We will do what we have to do,” he said. “We will do what we always do.”

Capitol Bureau Chief Mark Pazniokas contributed to this story.

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