With the state budget standoff nearing two months, Democrats and Republican legislative leaders announced plans Tuesday to unveil revised budget proposals soon.
Majority House Democrats remain focused on a sales tax hike to mitigate severe hits to cities and towns proposed by Gov. Dannel P. Malloy, and will unveil their latest budget plan Wednesday, said Speaker Joe Aresimowicz, D-Berlin.
And GOP leaders in the House and Senate, who were unable to block a labor concessions deal they still argue will hurt Connecticut in the long run, said they’re also developing a new budget that accepts the labor savings.
But after a nearly two-hour, closed-door meeting, top lawmakers said that while they still were working with the goal of adopting a new, two-year budget during the week of Sept. 11, they didn’t express any optimism this would happen.
“What I thought was most productive was just the honest discussion we were having,” said Aresimowicz, who reasserted that Democrats, who hold a 79-72 edge in the House, could pass their budget next month. That plan includes boosting the sales tax from 6.35 to 6.85 percent, and imposing 1 percent surcharges on hotel and restaurant transactions.
But would that pass in the Senate, which is split 18-18, though Democrat control the tie-breaking 37th vote in the form of Lt. Gov. Nancy Wyman, who is Senate president?
Three moderate Democratic senators already have criticized the idea of a sales tax hike and Malloy repeated Tuesday that he opposes it.
“We have broad-based but not unanimous support for that” sales tax increase, Senate President Pro Tem Martin M. Looney, D-New Haven, said.
But many Democrats and Republicans in the legislature oppose Malloy’s proposal to bill cities and towns $400 million to assist with contributions to the municipal teachers’ pension fund.
Many lawmakers also oppose the governor’s plan to end nonprofit hospitals’ exemption from municipal property taxation, which would cost that industry about $210 million per year.
But while the governor said he is “not in favor” of raising the sales tax, he was noncommittal when asked outside his Capitol office whether he would veto a budget that includes such an increase.
“Listen, I think we shouldn’t lead with discussions of revenue,” the Democratic governor said, repeating a point he has made frequently in recent weeks.
Late last week the governor released his plans to reduce and realign major municipal grants due out later this fall — if state government remains without a new budget.
The governor would cut education cost sharing payments in October by 28 percent. Other key grants that support non-education programs in cities and towns would be dramatically reduced or not distributed at all without a new budget.
If the standoff continues into October, cities and towns would have received more than $500 million less in state assistance they had gotten during the first four months of the 2016-17 fiscal year.
‘To heighten the pressure’
Looney said “the governor’s proposal was calculated to heighten the pressure” on lawmakers, adding that the dangerous consequences for municipalities have captured the attention of all legislators.
So is there any consensus about a new budget on the horizon?
“Quite frankly I’m still very frustrated with this process,” said House Minority Leader Themis Klarides, R-Derby. “We keep coming to the table and nothing actually happens.”
But Klarides also said Republicans remain opposed to using significant tax hikes to help close the projected deficit.
Analysts say state finances, unless adjusted, would run $2.3 billion in deficit this fiscal year and $2.8 billion in the red in 2018-19. Savings from new concessions deal that unions and the legislature ratified this summer would reduce those shortfalls somewhat, but still leave big gaps of $1.6 billion in the first fiscal year and $1.9 billion in the second.
So what are Republicans doing to help close the deficit?
Their earlier budget proposals rejected the concessions deal, and instead relied on changes to collective bargaining rules and benefits programs mandated by statute to achieve even larger labor savings.
Malloy, many Democratic legislators, and union leaders have charged these measures were illegal and would not survive a court challenge.
Fasano and Klarides said their caucuses are developing a new budget that incorporates the labor savings, though they still believe it didn’t provide enough in exchange for the pledges the state had to make in return.
Under the deal, the state extends its worker benefits contract from 2022 through 2027, and also agreed to greatly restrict its ability to order layoffs for four years.
“The reality is that the deal is done,” Fasano said. “We fought hard against it. We’ve got to respect the process.”
Fasano added that “to ignore it exists and say we’re not going to get involved in a budget because we don’t like that this was passed is not fair to the state of Connecticut.”
“The reality is that is what we have to deal with now,” Klarides said.
The Republican leaders did not say when their next budget proposal would be released, but Fasano said he has discussed it with his caucus members and Klarides said the House GOP would meet to review it on Thursday.