Sen. Kane: Gov. Malloy’s tax hike philosophy “doesn’t work.” (CT Mirror)

As legislators struggle with human services cuts, are tax hikes coming?

Besides living with a sense of panic and staying up at night worrying, Marina Derman has been in advocacy mode lately – testifying, writing emails, trying to convince lawmakers to salvage the program she says saved her family from crisis.

buttonShe’s one of many people making appeals as legislators try to come up with a new two-year budget. In her case, it’s for the state’s voluntary services program for young people with both mental health diagnoses and autism or an intellectual disability, many of whom receive intensive services to allow them to live with their families. Derman’s 19-year-old son is one of them; he has autism, an IQ in the 40s, limited language and mood swings that are sometimes violent. Before he got into the program, he injured himself and often attacked his parents. Once, Derman was at the beach when a bystander saw the bruises on her arms and tried to give her information on a women’s shelter.

Now, with support from the program, her son – who thrives on activity – can spend time out in the community. His tantrums are less frequent and less intense. He’s happier. Derman considers it life-changing for both her son and the rest of the family.

Gov. Dannel P. Malloy’s proposed budget would cut the program by 60 percent.

“On one hand, we’re sitting there trying to figure out what will happen if the cuts hit,” Derman, of Westport, said. “What nobody knows is what amount of the cuts stay and what amounts might be restored.”

The task of developing a state budget for the next two fiscal years is now in the hands of legislators, who must propose their own spending plan and then negotiate a final deal with the Malloy administration. Legislators from both parties have not been shy about bashing the governor’s plan, which relies heavily on cuts to health and social service programs.

But so far, it’s not clear how legislators will solve the projected $1.3 billion budget deficit in the upcoming fiscal year while avoiding spending cuts some of them have called untenable. Malloy’s proposal already bumps up against the state’s spending cap — which is possible to exceed legally, if not politically. Malloy won re-election last fall after pledging not to raise taxes and has said he’s loathe to do so, although his proposal already effectively increases some taxes, and some members of his party have called for tax hikes.

Sources have said the Appropriations Committee’s various subcommittees have explored close to $600 million in potential restorations to Malloy’s $40 billion, two-year budget. But that doesn’t mean the full budget-writing panel will recommend that much in add-backs when it proposes its spending plan later this month. Committee leaders typically pare back the subcommittees’ recommendations before finalizing their proposal.

Co-Chairwoman Sen. Beth Bye didn’t discuss specific amounts, but acknowledged there is strong interest among many legislators in adding back huge sums above the governor’s bottom line, particularly in social services and health care.

“I can’t say til the subcommittees are done where we’ll be,” Bye, D-West Hartford, said. “But I expect we’ll be short. So a lot of it’s going to depend on the public will and the will of this legislature to find additional dollars.”

Bye said this year’s challenge is beyond what lawmakers have faced in the past.

“If we passed the budget as it is, it would not be the Connecticut we all know,” Bye said. “We are generally a state that is very good to people, and we are generally a state that takes care of our environment and our museums and theaters and those quality of life things. It’s sort of who we are.”

But Benjamin Barnes, Malloy’s budget director, said the proposal leaves the state’s human service infrastructure “very-well funded,” if not ideally so, and cautioned against additional spending.

“Ultimately, if we do not find ways to limit our spending to what we can afford, we jeopardize our ability to provide the excellent human services that we do provide in the future,” he said. “A generation from now, if we can’t figure out how to balance our budgets, we are going to significantly deteriorate the state of Connecticut’s ability to support the human service environment that we have today.”

Sen. Joe Markley, R-Southington, believes Malloy proposed a budget with no intention that it would be passed, filling it with politically impossible cuts.

And Markley thinks the governor is leaving it to his fellow Democrats in the legislature to propose tax hikes.

“The legislature is going through an agonizing exercise of trying to figure out what to do about the cuts,” Markley said. “But I believe at a certain point they will restore a number of his cuts and increase taxes, but it will be, I believe, purely on Democratic votes. And that’s something the Republicans will be happy to make an issue in the fall of next year” – when legislators seek re-election.

What’s different this year

Some version of this process happens every year: the governor proposes a budget, people appeal for funding restorations, and, often, legislators restore many of the cuts.

But Bye said this year is different, in both the “last straw desperation” of people testifying and the questions that need to be addressed.

“I just think this year’s different because we’re at a crossroad in this conversation of how much taxes is too much and on whom, and what services are critical for the state to provide,” Bye said. “And I would say even those now we know are critical – widely agreed, bipartisan – we’re having a challenge finding the funding for.”

Others say this year is different because of the scope of the proposed cuts to safety net programs. In 2011, by contrast, Malloy relied largely on tax hikes and employee union concessions to close at $3.7 billion budget gap.

But Sen. Rob Kane, R-Watertown, pointed to what hasn’t changed since he was first elected in 2008.

“Every single year it’s been a bad budget year, and it’s become the new norm, and that in of itself is very sad,” he said.

Kane noted that Malloy raised taxes by $1.8 billion in his first year as governor, but the state still has a budget shortfall.

“That philosophy doesn’t work,” Kane said.

Under Malloy’s proposal, approximately 34,200 parents and pregnant women would lose Medicaid coverage and health care providers would face hundreds of millions of dollars in reduced payments. The governor’s plan cuts burial funds for the poor and spending money for people in nursing homes. There are cuts to rape crisis services, a respite program for caregivers of people with Alzheimer’s and a separate one for families of children with special health care needs, whose current 11-month waiting time for respite services would rise to 23 months.

More than 300 high-school graduates with developmental disabilities would be left without funding for day programs. Seniors would have to pay nearly twice as much to receive home care, and mental health and substance abuse treatment providers would see a projected funding shortfall of more than $18 million.

Barnes said the administration tried to make cuts to services for which there were alternatives. Those losing Medicaid, for example, could buy federally subsidized coverage from the state’s health insurance exchange.

“We focused our energy on preserving the most important broad-based programs that impact the most people,” he said.

Taxes on the table?

Bye said many of the cuts in Malloy’s proposal effectively increase the financial burden on many state residents.

“I think in many ways, this budget does tax people,” she said. “It taxes college students by increasing their tuition. It taxes people who have someone at home with Alzheimer’s, because how are they going to pay someone so they have a break? It taxes parents who are waiting for some place for their child with a developmental disability. It taxes the workers in nursing homes, and certainly, blatantly taxes hospitals.”

“And in many ways, in the hits to the vulnerable population, we’re taxing the most vulnerable,” she said.

Several prominent Democrats have either proposed tax hikes or said tax increases should be on the table.

Republican legislators have also criticized the human service cuts, but said the state can’t afford more taxes.

“The state economy cannot withstand additional tax increases, which are going to have a bad impact on business in the state, that are driving productive people out of the state, that are discouraging entrepreneurs from locating or starting up here,” Markley said.

And raising taxes would allow state leaders to avoid making major changes to spending, Markley said.

Instead, he and Kane said there are other places to cut. Kane suggested putting the contract for health care for the correction system to bid, examining the salaries of top administrators at state agencies, and targeting $130 million budgeted in 2017 for salary increases.

Markley suggested looking for savings through changes in state employee contracts, the Board of Regents for Higher Education and reducing employee overtime.

But Bye took issue with Republican leaders opposing tax hikes while simultaneously objecting to deep social service cuts, without yet disclosing how they would preserve services without relying on taxes.

“They have to give us their own budget – a real line item-by-line item budget,” Bye said, a reference to past GOP budgets, several of which avoided tax hikes by relying on questionable proposals.

And although some see concessions from state employees as a ripe source for savings, legislators have little power to make them happen. Union leaders said during last year’s gubernatorial campaign that workers weren’t interested in granting concessions for a third time in six years.

Senate Minority Leader Len Fasano, R-North Haven, was cautious about whether Republicans would disclose their budget plans.

He and House Minority Leader Themis Klarides, R-Derby, have said their caucuses have ideas, but they want to discuss them in bipartisan negotiations.

“Every time we have done a budget, the Democrats have never, ever… commented other than to say that budget is bad,” Fasano said. “They just dismiss our ideas. We aren’t interested in that.”

Asked about his openness to new taxes, Barnes said he supports the governor’s budget, although he would look at legislators’ adjustments with an open mind.

“We think that the general level of spending that was proposed in the governor’s budget is the appropriate level of spending for the state given our spending cap limitations and the limitations that we have on revenue that are being driven by our economic conditions,” he said.

Unmet needs in developmental services

Many legislators have cited the developmental services budget as a particular concern.

The voluntary services program – which serves Derman’s son – faces a particularly steep cut. Malloy’s plan calls for a $20.9 million cut to the $32.7 million program next fiscal year.

Many clients receive intensive services. For Derman’s son, the program provides about 20 hours of services per week that allow him to get out in the community and be active. It gives her and her husband a break, giving them more energy to parent him and their older son, who is 21 and also has autism.

“Before we received VSP support, we were a family in crisis. Since the advent of these supports, we are a calmer family, with greater capability to support our two special-needs children,” she wrote in testimony to legislators.

Developmental Services Commissioner Morna Murray told legislators last month that if the voluntary services cut goes through, the department would try to keep it from affecting those with the most needs. But she noted that nearly all families in the program have significant needs.

“It puts a great strain on families, and the message that we get consistently is that the Voluntary Services Program can be a lifesaver for their family and allows them to function in a way that they can stay together,” she said.

Barnes said one factor in the cut was that voluntary services is not income-based.

“We chose to focus on preserving the most important parts of our programming, so we clearly made every effort to maintain resources in the other major components of the DDS system,” he said.

During a public hearing last month, Jennifer Carroll of Glastonbury implored legislators to restore funds to another part of the budget, day programs for new high school graduates. Her 20-year-old son, who has cerebral palsy and an intellectual disability, will be one this year, and Carroll said their family hopes Jamie’s adult life will include spending time with peers, activities and working.

“There’s no way that would be possible without a day program and without this funding,” she said.

Instead, her son would spend all day at home once he finishes school. Carroll or her husband would have to stop working to stay home with him, making it difficult to continue to afford education costs for their three daughters.

Carroll predicted the cut would lead some families to seek DDS residential services for their young adults sooner than they otherwise would have.

“I know that some families will make the difficult decision to drop their child off at the emergency room,” she said.

Derman said the cuts to DDS, particularly the voluntary services program, affect some of the most vulnerable young people in the state

“This is a group who can’t help themselves, and so we have to be there for them as a society,” she said.

But as she waits, worries and tries to impress upon lawmakers the need to preserve DDS services, she recognizes the challenges legislators face.

“They feel for us. They clearly sympathize, but they’re left with a lot of different people coming and saying the same thing: Don’t cut mine, don’t cut mine, don’t cut mine,” she said. “Everybody has a story that sounds really important.”