Legislators announce tentative, bipartisan budget deal
State legislative leaders declared Wednesday they had crafted the framework of a bipartisan deal to end Connecticut’s 110-day budget impasse, while conceding some key details, including distribution of town aid, remained to be resolved.
Gov. Dannel P. Malloy, who was not a party to the talks, expressed skepticism that the talks had produced a deal that would survive close scrutiny of rank-and-file lawmakers or his administration.
Anticipating the skepticism by Malloy and others in light of the dearth of details released by the lawmakers, Senate Republican leader Len Fasano of North Haven said the story of the day was how far the bipartisan talks had come, not what work remains.
“A lot of people said, ‘You won’t get there.’ And we did,” Fasano said.
After more than four hours of talks, Democratic and Republican leaders of the House and Senate said at a joint press conference they would begin discussing the framework with rank-and-file members in closed-door caucuses starting Thursday with the goal of voting on the plan sometime next week.
The lawmakers say they have abandoned a GOP plan to claim huge savings now on pension reforms that would take place in 2027, but they offered no details on how they would replace those savings. Money to save Hartford from bankruptcy was part of the framework, but the lawmakers were vague on other issues of state aid. A Malloy proposal to require municipalities to contribute to the pension fund for their teachers apparently was not included.
“We’ve come to a deal on the major issues that were before us on the budget,” House Speaker Joe Aresimowicz, D-Berlin, said. “Over the next couple of days staff and others will be working through the details. … But we are in a very good place. We are confident that we can come to a budget document to be voted on in the near future.”
House Minority Leader Themis Klarides, R-Derby, sounded more cautious, warning she was not predicting eventual approval or rejection of this framework.In other words, she isn’t certain how her caucus of 72 House Republicans will react.
“We said that we have a tentative agreement on major issues,” she said. “There are details that need to come out. We need to talk this over with our caucuses and see how they feel about the pros and cons and decide what the bottom line is. Is it worth more? Did we get more than we gave?”
Senate President Pro Tem Martin M. Looney, D-New Haven, positioned himself between the optimism of Aresimowicz optimism and caution of Klarides: “What we can say is that we have reached a tentative overall agreement that we will advocate to our caucuses is the solution to our ongoing budget problem.”
Aresimowicz made a point of saying the leaders hoped the deal would be acceptable to 101 House members and 24 senators, the two-third margin to override a gubernatorial veto. But he declined to identify any budget provisions they feared would invite a veto by the Democratic governor.
Malloy, who immediately met with reporters after the lawmakers’ news conference, said he would veto any budget that was overly reliant on one-time revenues and other gimmicks. But he said his veto promise — and skepticism about whether the budget framework would blossom into a deal — should not be seen as his rooting for failure.
“If I have left that impresion, that’s not what I intend,” Malloy said. “I am truly hopeful that between now and Friday, they will actually have a deal.”
Democrats said Malloy would be part of the process.
“We will be talking to him in greater detail,” Looney said. “This is a budget in the end that I hope that he will sign and won’t be adversarial with it.”
Looney said that limiting negotiations only to lawmakers was not done as a slight to the governor. “Many of the members in our caucuses wanted a bipartisan product, and this is one we can present him with,” he said.
Aresimowicz said the administration had a voice even when the governor’s staff wasn’t in the room.
“We’ve been meeting with the governor consistently since June. The issues haven’t changed,” the speaker said. “Many times in the room an issue would come up, we’d start discussing it and we’d know what the governor’s position was, and we’d voluntarily put it on the table.”
Looney, who has expressed concern for months that Republican leaders might participate in bipartisan talks, but then not urge their colleagues to vote for a budget that includes tough choices, said he hopes to see “a substantial number of favorable votes from all four caucuses, and I’m certainly hoping that that’s going to be the end result.”
Klarides said that legislators should recognize Connecticut is in an unusual situation, having gone three and a half months into the new fiscal year without an adopted budget. Certainty about what to expect in state spending and aid to municipalities has its own value, she said.
“We have to deal with towns and cities, children and parents, education suffering day-in and day-out,” Klarides said. “There are going to be people that love this, there are going to be people that hate this. But the majority of the people, towns and cities…want us to come to a place where, where at the very least, if they are getting cut, they know it is going to happen, and they can plan accordingly.”
Town aid cut modestly, Hartford gets a boost
Top lawmakers released few details of the tentative framework but said that, while overall municipal aid would drop under the plan, grants to cities and towns would not fall as much as they would have under previous budget proposals.
Leaders confirmed the new budget would include the additional funding Hartford Mayor Luke Bronin has requested to keep the city out of bankruptcy.
“I would like to thank everybody in that room who understood what a priority it was,” House Majority Leader Matt Ritter, D-Hartford, said. “Hartford will be on a brighter path when we get this budget passed.”
Aresimowicz downplayed any last-minute adjustments likely to be made to municipal grants.
“There may be a couple formula tweaks, especially for the larger cities to ensure they’re getting they need,” he said. It’s only a couple of million dollars here and there. The majority of municipal funding has been agreed upon.”
It seemed, however, that every city and town would be protected against losing education aid they receive through the state’s primary education grant, the Education Cost Sharing grant, at least for this fiscal year.
“We feld strongly about hold harmless,” Klarides said. The leaders said they were still waiting to see the town-by-town aid figures, but they said the state’s lowest-performating school districts would receive some increases.
Legislative leaders confirmed the new deal does not shift any of the skyrocketing contributions owed to the teachers’ pension onto cities and towns as proposed by the governor, and eases mandates on municipalities.
“We are encouraged that the agreement — which does not include a municipal contribution to the Teachers’ Retirement Fund — will be presented to each legislative caucus,” Connecticut Conference of Municipalities Executive Director Joe DeLong wrote in a statement, adding that the organization still needs to see specifics of the tentative framework.
DeLong also said, “We are pleased that a proposal to assist struggling municipalities in remaining solvent, is included. This is in the best interest of the state. We await greater definition on changes in state aid and mandates relief.”
Leaders would not say whether Republican legislators would accept any new tax or fee increases beyond the two significant revenue proposals in their last partisan plan.
Those were a $334 million-per-year increase in the hospital tax — designed to leverage hundreds of millions of dollars in new federal Medicaid reimbursements — and reductions in an income tax credit for the working poor, which would add about $75 million per year to the state’s coffers. Malloy said the tax is in jeopardy if legislators produce a flawed budget that he vetoes.
Avoiding sales and income tax increases was a goal
Hours before the tentative budget framework was announced, about three-dozen advocates for health care and social services for the poor and disabled confronted Malloy and legislative leaders, urging them to consider hiking income taxes on Connecticut’s wealthiest households to avert cutbacks in these programs.
Advocates walked the halls carrying signs that read “cuts equal death” and “stop killing poor people.”
Some of the state’s most vulnerable citizens “have been at a severe disadvantage” during this budget impasse, Aresimowicz said, “and we’re sorry that it has taken this long. The state has some dire fiscal issues that we’re trying to deal with in the best possible way.”
But after major tax increases in 2011 and 2015, legislators from both parties and Malloy resolved to try to close major projected shortfalls in the new budget without increasing income or sales tax rates.
Cutting pension contributions ‘a deal-killer’
Republican leaders tried to push both sides toward a compromise this week when they dropped their hotly contested proposal to cut state employee pension benefits in 2027 and reap big savings now. That would have cut pension contributions by $321 million across this fiscal year and next combined.
“That would be a deal-killer,” Fasano said.
It was unclear, though, whether the budget will order future pension benefit reductions. The leaders said they would not reduce state contributions to the retirement program in the new budget, a major demand of the governor.
Malloy, state employee union leaders and many Democratic legislators have argued the pension proposal would not survive a court challenge.
They say the state cannot unilaterally reduce benefits — even in mid-2027 — that were earned and vested before that time. Most state employees are vested for full pension and other retirement benefits after 10 years of service.
Republican legislative leaders insist the cutbacks are within the state’s authority.
Legislative leaders said they also plan to consult with Malloy before any tentative deal is brought to a vote.
Lawmakers have struggled since February to close major projected deficits. Analysts say finances, unless adjusted, will run $1.6 billion in deficit this fiscal year and $1.9 billion in the red in 2018-19.
Malloy, who has managed state finances by executive order since the fiscal year began July 1, has withheld hundreds of millions of dollars in municipal aid to compensate for surging retirement benefit and other debt costs — which are fixed by contract — and declining income tax receipts.
Trying to break the impasse, legislative leaders have excluded the administration from the negotiations since shortly after Malloy vetoed a GOP-crafted budget that narrowly passed the legislature in mid-September with eight Democratic votes.
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