Updated at 6:30 p.m.
Saying Republican legislators are dragging their feet on budget talks, Democratic legislative leaders tried to re-kindle negotiations Tuesday with Gov. Dannel P. Malloy and explore crafting a budget without the GOP.
“If they (Republicans) don’t want to get in the room, we’re going to go down to the office in the corner and have to negotiate with the governor,” House Speaker Joe Aresimowicz, D-Berlin, told Capitol reporters before Tuesday’s House session. “We’re going to explore all of the options. It’s not going to be because of us that there was no budget.”
Aresimowicz issued his warning shortly before noon, and by 5:10 p.m., House and Senate Democratic leaders were meeting with Malloy and his budget director, Ben Barnes, in Lt. Gov. Nancy Wyman’s office.
“I’m prepared to talk to Democrats, Republicans, anybody,” Malloy said after the 30-minute meeting broke. “I just thought it was appropriate to touch base with the Democratic leaders.”
How did Democratic legislative leaders and the governor leave things after Tuesday’s meeting?
“Up in the air,” Malloy responded.
“There was talk of budgets and how he could be helpful to our caucuses,” Aresimowicz said afterward, adding that other bills were discussed as well. “Is it budget negotiations? No. But it was general discussion of ‘Hey, we have seven days left. What are we going to be doing?'”
The relationship between Malloy and his fellow Democrats has been somewhat strained since last September. That’s when Democratic legislators — trying to break gridlock over the budget — agreed with Republicans to exclude the administration from negotiations. A bipartisan deal was struck in late October.
“I’m happy to talk to Republican leaders if they want to have such a meeting,” the governor said, adding that both parties are “running out of time” to address budgetary concerns. “There’s work to be done.”
The regular 2018 session ends on May 9, and legislators from both parties have said several adjustments must be made to the preliminary budget adopted last fall for the fiscal year that begins July 1.
These changes include:
- Reversing or mitigating cuts to the Medicare Savings Plan, which helps poor seniors and disabled patients pay for medications.
- Restoring aid to cities and towns. Malloy reduced municipal grants by more than $90 million this fiscal year to achieve budgetary savings targets mandated by the legislature.
“There are must-haves on all sides,” said House Majority Leader Matt Ritter, D-Hartford.
Also, despite pledges from both parties going back to late November that they would close a deficit in the current fiscal year — a gap that has grown to $387 million — lawmakers have done nothing to mitigate that shortfall to date.
There also are more resources available to legislators this year than they’ve had in nearly a decade — but they come with a catch.
A new report Tuesday from the legislature’s nonpartisan Office of Fiscal Analysis and from Malloy’s budget staff concluded income tax receipts tied to capital gains and dividends exceeded expectations by almost $1.3 billion this fiscal year and will elevate the emergency budget reserve to $1.5 billion.
Even after the projected $387 million deficit is covered, the reserve should have more than $1.1 billion available once this fiscal year is over on June 30.
Analysts also projected that a smaller portion of this spring’s robust income tax windfall was not due to one-time circumstances and will happen again in 2019. The new report assumes an extra $410 million in investment earnings-related receipts in the 2018-19 fiscal year.
But a new “volatility cap” enacted by legislators last fall requires Connecticut to save these funds rather than spend them. Income tax receipts tied to investment earnings are among the most volatile components of the state revenue stream, historically changing by wide margins, sometimes in double-digit percentages, from year to year.
Aresimowicz and some other Democrats have suggested suspending cap requirements to use a portion of these funds to cover “crucial” programs such as health care for seniors and the disabled, municipal aid and the state’s cash-starved transportation program.
Republicans are wary of utilizing the new income tax receipts other than to build reserves and pay down state pension debt.
They also have objected to a revised 2018-19 spending plan Democrats offered last month, noting that it would require about $375 million in new revenue — presumably to come from the income tax windfall.
Still, Aresimowicz’s threat to develop a budget without Republican cooperation is problematic.
Democrats hold slim margins in both chambers and couldn’t keep their membership united to pass a budget last year.
They currently hold a 79-71 advantage in the House. The Senate is split 18-18, although Lt. Gov. Nancy Wyman, the Senate president and a Democrat, could cast a tie-breaking 37th vote.
House Minority Leader Themis Klarides, R-Derby, said Republicans remain open to talks but remain focused on key fiscal principles.
And if the speaker wants to negotiate with the governor? “That’s his prerogative,” Klarides responded.
The speaker noted that if Republicans aren’t committed to striking a compromise budget deal, he also could adjourn the House session earlier than May 9 — and many priorities for both parties would fall by the wayside.
“I’d say don’t push fate. I’ll adjourn us sine die,” he said, citing the Latin term that means the session has ended without any future date set to reconvene. “And all of the things they (Republicans) want will die too.”
“We saw how threats worked for him last year,” Klarides added. “I don’t think threats are necessary.”