With a budget centered on middle-class tax relief largely finalized Thursday, protesters occupied a crossroad outside the state Capitol, still demanding more spending on wages for striking caregivers and an expansion of Medicaid for the undocumented and disabled.
A protest that ended with more than 50 arrests came as Gov. Ned Lamont confirmed that a deal on a $51 billion spending plan for the next two years was essentially done, providing what Lamont said would be “the biggest middle-class tax cut in the history of the state” but falling well short of protesters’ demands for “a moral budget.”
“We’ve got a deal. Now it goes to the bean counters. They’re making sure all the numbers add up,” Lamont said. “This will be voted on, I believe, early next week. It will be an honest and balanced budget. It will keep within the fiscal guardrails established by the legislature.”
Staying within those guardrails in a time of historic surpluses has set the Democratic governor and legislative majority at odds with vocal elements of the Democratic coalition: a major union, SEIU 1199NE, and advocacy groups representing state-funded nonprofit service providers and their clients.
[RELATED: CT union calls group home strike while pay demands look unlikely]
Lamont can claim victory on crafting a budget that largely meets his criteria, especially living within fiscal caps aimed at flattening Connecticut’s spikes in spending that wax and wane with volatile income tax revenues. But he acknowledged that authorship comes with responsibility, if not blame.
“I’m the guy at the end of the day that has to put together a balanced budget that adds up,” said Lamont, whose administration met the previous day with representatives of striking group home workers, members of 1199. “I think we’re doing the right thing for these folks, and I gotta convince them every day I appreciate the hard work they do for folks with special needs.”
As he watched his members and others prepare to be arrested, Rob Baril, the president of 1199NE, said the governor can convince them of his appreciation by using the state’s stronger fiscal condition to make a leap forward in a time of economic strength, not incremental progress.
“This is not a time when the state of Connecticut should hide behind the idea of fiscal discipline, keeping us from addressing critical needs,” Baril said. “For 15 years, working class folks in the state have been asked to wait. They’ve been told there’s nothing for them. They’ve been told that they’re not at the end of the line, they’re not even in the line.”
Tamir Capehart of Norwich, a Black woman who cares for a disabled neighbor, said the fight for better wages is a battle for recognition of people of color who tend to be overlooked.
“We are not invisible. The services we provide are not invisible,” she said.
[OPINION: The human cost of the SEIU 1199 strike]
While the focus has been on Lamont, the governor and legislative leaders had largely agreed on the spending increases that would go to nonprofit providers. Supportive legislators told the protestors that there still was time to make revisions.
“The ink is not dry on this budget,” said Sen. Derek Slap, D-West Hartford.
On Thursday, it became clear that the focus on tax relief would go to reducing the two lowest marginal rates in an income tax that has not been cut since its passage in 1991.
[RELATED: Gov. Ned Lamont pitched an income tax cut in CT. Here’s an overview of his proposal]
The 3% rate imposed on the first $10,000 earned by singles and the first $20,000 by couples would drop to 2%. And the 5% rate imposed on the next $40,000 earned by singles and the next $80,000 by couples would become 4.5%.
But while most of that relief is aimed at the middle class — the administration estimated most would save an extra $300 to $600 annually — a significant number of wealthy households also would benefit.
The current income tax system doesn’t fully phase out the lower marginal rates until an individual makes more than $540,000 per year and a couple tops $1,080,000.
Though full details of the new budget agreement weren’t available Thursday, sources familiar with negotiations said only singles making less than $150,000 and couples earning less than $300,000 would get the full benefit of the new rate reduction.
The new budget also will include Lamont’s proposal to bolster the income tax credit for Connecticut’s working poor from 30.5% of the federal Earned Income Tax Credit to 40%. This is expected to provide, on average, about $210 more annually for more than 200,000 households that generally earn less than $60,000.
Sources also said the package will include a proposal to expand an exemption for certain pension and annuity earnings. Currently, this exemption is available only to individuals whose overall income from all sources is less than $75,000 per year and to married couples whose overall income is less than $100,000.
Even with that cap, though, the planned tax cuts would benefit roughly 1 million of Connecticut’s 1.7 million income tax filers.
Budget vote likely won’t happen until next week
Both Lamont and House Speaker Matt Ritter, D-Hartford, said Thursday that the budget for the biennium that begins July 1 was largely set, though neither would rule out relatively minor adjustments.
The administration and legislative leaders largely had agreed last weekend on a bottom line, which should hover around $51 billion across the biennium, Ritter said.
The legislature’s nonpartisan Office of Fiscal Analysis is reviewing all proposed expenditures to ensure the package complies with the spending cap and prepare related fiscal notes.
The remaining challenge, Ritter added, is to negotiate all of the policy measures necessary to implement the new budget, particularly new programs and program expansions.
“Do we have a deal and all that stuff? We do,” he said, adding that last-minute adjustments need to be resolved soon.
It’s still possible the House could begin a budget debate Saturday if all loose ends are resolved Thursday, otherwise a Monday debate is more likely, he said.
“At some point, pens go down,” the speaker said. “So it might be a point where we don’t agree on one or two items in the implementer. But we have to have a hard deadline, and that hard deadline is probably sometime today or tomorrow.”
Lamont has insisted his approach will encourage stable growth that in the long term benefits the caregivers, their clients and others who rely on government services and spending.
In his first year as governor, Lamont supported passage of a law that raised the minimum wage of $10.10 in increments, reaching $15 on Thursday. Future raises will be pegged to inflation.
Lamont has previously defended the minimum wage against critics, saying no one who works full time should live in poverty. Baril, the union leader, seized on that statement, saying the governor and lawmakers have the power to obtain that goal.
“We are asking for transformational change that can lift people up and out of poverty,” Baril said. Referring to his members, he said, “Our legislative leadership and governor have an opportunity to legislate an end to poverty for this work force.”
Organizers expected 58 protesters to be arrested in a demonstration coordinated with police. For the safety of the demonstrators, Hartford and state police had blocked off motor vehicle access to the intersection before they occupied it. Those arrested were given citations for obstruction and immediately released to appear in court later this month.
The protesters came from a coalition broader than the striking 1199 members.
They included advocates for an expansion of Medicaid to provide coverage for more undocumented children and to revise eligibility rules that discriminate against people with disabilities.
HUSKY C, the Medicaid program for older people who are totally disabled, is the most difficult Medicaid program for which to qualify. Its income limit is well below the federal poverty level.
[RELATED: Connecticut is weighing several changes to Medicaid. Here’s a look at some of them]
A coalition of nearly two dozen groups wrote a letter Thursday to Lamont and legislative leaders saying the discrimination violates the state constitution.