Every Connecticut governor’s budget is a work-in-progress.
From the minute they get the document in February, legislators routinely spend the next three or four months tweaking, re-writing and discarding huge portions of the plan.
Even when there’s agreement between the branches of government, all it takes is one good dip in income tax receipts after the April 15 filing deadline — and everything changes.
But the $43.2 billion, two-year plan Gov. Ned Lamont submitted Wednesday is even more fluid than most of his recent predecessor’s proposals.
And that’s how the new governor wants it.
On several key issues — tolls, recreational marijuana use and sports betting — Lamont used his fiscal plan and budget address to start a conversation with legislators rather than recommend a specific blueprint.
His budget also relies heavily on cost-savings that will need the cooperation of labor unions.
“I can’t fix this chronically broken budget without each and every one of you,” Lamont said Wednesday in his budget address. “The legislature is a co-equal branch of government and I need you at the table, helping me explain to business and labor, our mayors, our boards of education, and most importantly our taxpayers what we are doing and why. When we differ, don’t hold a press conference. Come talk to me! Let’s take a breath, and suggest a better alternative.”
When it comes to tolls, Lamont offered two alternatives for lawmakers to ponder — though they were far from equal.
One is the only option he supported on the campaign trail last fall — tolling just trucks.
The other, which his budget argues is far more likely to provide the revenue needed to upgrade Connecticut’s aging infrastructure, involves tolling all vehicles.
Republican legislative leaders said the Democratic governor will find any tolls pitch, but especially a plan that includes cars, a tough sell.
“I don’t care if you call it a toll, a fee, a tax — you can call it anything you want, that means there is less money in your pocket as a Connecticut resident when you go to sleep at night than there was when you got up in the morning,” said House Minority Leader Themis Klarides, R-Derby.
Senate Minority Leader Len Fasano, R-North Haven, was dismayed by more than the governor’s change of heart on tolls, however.
Lamont’s budget also would undo a bipartisan compromise lawmakers reached in 2017 to shore up transportation finances, at least for a few years, with extra bonding and sales tax receipts.
“I want him to succeed,” Fasano said of Lamont. “I’m looking for a silver lining in his budget address. It’s very difficult to find.”
But the Senate GOP leader added he’s pleased the new governor seems ready to collaborate. “I hope he’s being forthright in saying he wants to have conversations,” Fasano said.
Many were also surprised when Lamont’s budget made no reference to potential revenue from legalizing and taxing recreational marijuana use or from imposing fees on sports betting.
As a candidate last fall, Lamont expressed a willingness to discuss the pot issue. And he proposed fees on sports betting last year as a means to expand property tax relief for poor and middle class households.
But while his budget documents were silent on sports betting and marijuana, the governor made clear in his address that the subjects were far from closed.
“We must enact new sources of revenues, such as sports betting and internet wagering,” he said. “Legalizing recreational marijuana like our neighbors will make for a safer market that will be carefully regulated and taxed.”
Senate President Pro Tem Martin M. Looney, D-New Haven, who supports both marijuana legalization and fees on sports betting, said “I think the governor responsibly addresses the concerns. We need some additional revenues.We also need to make sure we have an economic development plan that keeps the state moving forward.”
Lamont said Connecticut cannot move forward unless it redistributes the crushing legacy of pension debt current taxpayers inherited from more than seven decades of poor financial stewardship.
Between 1939 and 2010 Connecticut governors and legislatures routinely short-changed contributions to pension programs for state employees and for municipal teachers. Those costs are projected to continue surging and place enormous pressure on state finances through the early 2030s.
The governor’s budget proposes to realign the payment schedules so those contributions will still grow, but not as rapidly as anticipated, over the next decade-and-a-half.
But that also means another generation of taxpayers will have to make up those contributions and more, starting in the mid-2030s and likely continuing into the late 2040s.
Lamont can’t make those changes to state employees’ pensions without the permission of the unions. Connecticut, unlike some other states, collectively bargains both pension benefits and the schedule by which the state saves for that obligation.
The new governor irritated labor leaders this week when he also announced he would propose new restrictions on cost-of-living adjustments to pensions for future retirees.
“We are disappointed that Governor Lamont has broken his campaign promise to not seek further givebacks from state workers after they made concessions three times over the last decade,” said Connecticut AFL-CIO President Salvatore Luciano, who praised Lamont for supporting a $15-per-hour minimum wage.
But labor leaders also said they remain ready to work with the new governor.
“We want the best Connecticut possible,” said Jody Barr, executive director of Council 4 of the American Federation of State, County and Municipal Employees. “One way we get there is to make sure everybody pays their fair share of taxes to fund state and local services, and to reduce our chronic over-reliance on property taxes. … We look forward to working with the governor and the legislature to achieve those aims.”
Connecticut Business and Industry Association leader Joseph F. Brennan said the business tax relief Lamont proposed “is not overwhelming,” but the governor took “an important step in the right direction” by beginning a discussion with labor about restructuring and curtailing pension costs. “It’s good to hear a governor talk about these things.”
Lamont has ruled out raising state income tax rates, and labor leaders aren’t the only ones who remain hopeful the new governor’s open-door policy will extend to discussing a more progressive state income tax system.
“We’re still early in the process,” Rep. Brandon McGee, D-Hartford, chairman of the legislature’s Black and Puerto Rican Caucus. “We still have an opportunity to discuss with the governor his plans to raise revenue and we look forward to those conversations.”
Lamont also wants to broaden the state sales tax, eliminate Connecticut’s gift tax and continue a phase-down of the tax on inheritances by the wealthy.
Longtime Rep. Robert Godfrey, D-Danbury, a vocal critic of Connecticut’s heavy reliance on a regressive, local property tax system, said this “isn’t a budget for my district. This is a tax for rich people.”
But Godfrey also said “I take the governor at his word that we can talk about this.”