Connecticut’s state budget crisis grew exponentially more complicated Friday as three moderate Senate Democrats bolted their caucus and teamed with 18 Republicans to pass a GOP budget plan that Gov. Dannel P. Malloy vowed to veto as unbalanced and gimmick-ridden.
Not only did the vote derail what Democrats saw as their best chance in months to end the budget impasse, but it raised questions about whether Democrats still have a working majority in the upper chamber. A chastened Senate President Pro Tem Martin M. Looney, D-New Haven, said, “That remains to be seen.”
With the Senate evenly divided, Democrats’ only edge has been the ability of the presiding officer, Democratic Lt. Gov. Nancy Wyman, to break 18-18 votes in favor of the Democrats. On Friday, that advantage was lost in the stunning defection of Democrats Paul Doyle of Wethersfield, Gayle Slossberg of Milford and Joan Hartley of Waterbury.
Bolstered by the defections, the Senate voted 21-15 to adopt the Republican plan, which now heads to the House of Representatives. A spokesman for House Speaker Joe Aresimowicz, D-Berlin, said it will be brought to a vote Friday night.
Passage in the House requires just four Democrats to vote with the 72-member GOP caucus, giving the Republicans a 76-75 majority and shifting all attention to the corner office of the governor.
“I believe the amended budget that passed in the Senate today is unbalanced, and if it were to reach my desk I would veto it,” the governor wrote in a statement released Friday night. “It relies on too many unrealistic savings, it contains immense cuts to higher education, and it would violate existing state contracts with our employees, resulting in costly legal battles for years to come.”
Malloy added that if the legislature doesn’t want to adopt the compromise plan he negotiated with Democratic leaders, “then it is incumbent on the legislature to reach a new agreement soon – one that is realistic and, ideally, bipartisan.”
This all came one day after the slim Democratic majority in the House of Representatives could not muster enough support for a compromise budget crafted by Malloy and Democratic legislative leaders.
Doyle called the vote the most difficult of his career.
In a likely harbinger of the difficult times ahead, Looney and Senate Majority Leader Bob Duff, D-Norwalk, said they were ambushed, noting that the dissenters had told them they were uncertain of their intentions, yet all had prepared remarks explaining their votes.
The three moderates rejected the plan crafted by Democratic leaders and the governor, arguing that tax and fee hikes built into it — worth $684 million this fiscal year and $1.53 billion across the next two combined — simply are too much, especially given recent history.
The legislature adopted tax hikes worth more than $1.8 billion per year in 2011, and a second package worth more than $650 million per year in 2015.
“I’ve been saying for a long time now that I’m worried about the future,” Slossberg said. “Yet here we are again looking down the same path.”
She briefly buried her face in her hands after finishing her remarks and taking her seat.
“I believe our state is living beyond its means. Our future budget picture is very bleak,” Doyle said. “We need to try to improve our economy for the state of Connecticut. How do we get there? It’s my opinion we get there with a bipartisan budget.”
Hartley added she fears state finances and Connecticut’s economy simply cannot survive at this pace. “I am very, very concerned we will not be able to sustain the program upon which this is built,” she said. “Get the job done. This is no time for partisan politics.”
Republicans claimed their plan relied on no tax hikes to help close projected deficits totaling $3.5 billion across this fiscal year and next. But nonpartisan analysts reported more than $850 million in tax and fee increases.
Republicans also refused to accept the governor’s proposal to force communities to pay $280 million to the state to help cover teacher pension costs.
But the GOP did endorse a proposal from the governor and the state’s hospital association to raise taxes on the industry by $344 million per year. The state would return all of those funds to hospitals, though, as part of a larger plan to leverage hundreds of millions in new federal aid.
But Republicans also raised taxes on the working poor while reducing levies on Social Security income and other retirement earnings, insurance companies and estates.
The total Republican tax-and-fee hike was about $700 million less, though, than those recommended in the compromise budget proposed by Malloy and by Democratic leaders.
Fasano said the defection of the moderate Democrats may have begun in late May when they grudgingly voted to ratify a union concessions deal that limited the state’s right to impose layoffs and extended the existing worker benefits contract until 2027.
Hartley, Doyle and Slossberg all warned they would not support the next state budget if it didn’t incorporate a series of fiscal reforms they proposed.
Some of the reforms sought by the trio would restrict in statute benefits the state could offer in contracts after 2027.
Others would end automatic cost-of-living adjustments to pensions, remove overtime earnings from pensions calculations, and restrict future benefits contracts with state employee unions to no more than four years in duration.
The moderates also wanted arbitration awards to better reflect the state’s ability to pay increased wages and benefits.
Fasano said he added all of these reforms to his budget while the compromise package reached by Malloy and Democratic leaders left many out.
“I respect what they did and what they’ve said,” Fasano added. “They believe the same thing that we do, that there has to be structural change in the future. It takes courage what they did.”
Despite Friday’s developments, Fasano said, “I believe the balance of power in the Senate remains unchanged.” He said didn’t know in advance how moderate Democrats would vote, nor did they discuss their plans with him beforehand.
House Minority Leader Themis Klarides, R-Derby, said she remains convinced the GOP budget “is certainly the option that is best for the state of Connecticut.” And while she didn’t predict any outcome, she said it might be appealing to some House Democrats wary of growing taxes in the state.
Duff, the Senate majority leader, scoffed at the notion that the vote would place the General Assembly on track to a bipartisan budget resolution.
“Let’s be frank about this,” Duff said. “This budget is not some sort of fairy tale ending to a budget crisis.
The Republican budget has faced its fair share of criticism.
It incorporates savings from the concessions deal unions and Malloy struck earlier this year, as does the compromise plan reached by the governor and Democratic leaders.
But while that concessions deal also locks the state employees’ benefits package into place through 2027, Republicans said Connecticut can save even more money now by limiting the pension benefits offered after that date.
Those new limits would reduce required pension payments by $119 million this fiscal year and by $151 million in 2018-19.
Many Democratic leaders, the governor and union leaders have questioned whether the state can make these changes unilaterally or whether that would violate collective bargaining rules.
The Republican budget also includes less than one-fifth of the extra funds Hartford Mayor Luke Bronin has said he needs to keep the capital city out of bankruptcy this fall.
Bronin asked for an additional $40 million this fiscal year while the GOP plan adds $7 million in Education Cost Sharing funds.
But Fasano said he personally believes the city must make some sweeping changes before he would support a special state bailout.
“You have to talk about not having Dunkin’ Donuts Park,” he said, referring to the new stadium the city built and leases to the Hartford Yard Goats, a minor league baseball team. “You don’t belong in that business.”
Fasano said that the city also should be ready to discuss getting rid of the XL Center arena it owns, but the state operates and effectively controls, in downtown Hartford.
“That’s not a core function of government,” Fasano said. “If you get rid of those two things… we can have a conversation.”
“I have always had a lot of respect for Len Fasano and I believe that he is an honest guy, so I’ll chalk his comments up to fatigue,” Bronin replied. “He has never said anything to me about Hartford ‘not having Dunkin’ Donuts Park’ – actually, I’m not even sure what that means – and he never said that addressing Hartford’s structural issues was in any way connected to the XL Center, which is operated by a state entity.”
Bronin added that “the Republican budget passed by the Senate today would make bankruptcy the only path available to Hartford.”
Some Democrats also object to the Republican budget because it reduces income tax credits for the working poor far more than the Democratic compromise plan does.
Looney said the vote only “will prolong this contest which is so damaging. It will drag on much longer.”
Connecticut has gone 11 weeks into the new fiscal year without an adopted budget. Absent a budget, Malloy has said he has no choice but to reduce major general government and education grants to cities and towns on Sept. 30 and Oct. 1.
That’s because surging debt and retirement benefit costs, which are fixed by contract, must be paid, and also because state income tax receipts have faced significant decline this calendar year for the first time since 2009.