Senate & House Republicans Release Revised No-New-Tax Increase State Budget Proposal

September 12, 2017

Hartford – Today Connecticut Senate and House Republicans joined together to release a revised two-year state budget proposal with no new taxes that would put a stop to the governor’s executive order, restore funding for education and core social services, and provide stability for towns and cities.

The revised budget includes no tax increases and rejects the governor’s proposal to shift teacher pension costs onto towns and cities that would further burden municipalities and lead to increased property taxes. The Republican budget proposal combines elements of the Senate and House Republicans’ multiple prior budget proposals, feedback from Democrats, and factors in the legislature’s passage of the state employee labor concessions deal that is now law. The original Republican budget was first released in April and updated throughout the year as the state’s financial situation changed.

“Connecticut is at a crossroads and we are facing one of the greatest financial challenges our state has ever seen. In this time of hardship, it is imperative that we send a clear message to the people of Connecticut that we are moving our state in a new direction. We cannot do that with a budget that increases taxes by nearly $1 billion and continues the same policies that have failed our state in the past. We have to rebuild people’s confidence in Connecticut by sending a strong message that we are pursuing change,” said Senate Republican President Pro Tempore Len Fasano (R-North Haven) and House Republican Leader Themis Klarides (R-Derby). “Connecticut Republicans are once again offering a complete, balanced budget proposal that does exactly that. We are offering structural changes to achieve savings in the long term. We are prioritizing funding for the core functions of government, education, transportation and services for individuals with disabilities. We are fairly funding education with a real formula that factors in population, poverty, and need. We are creating stability and predictability for our cities and towns. And we are doing all this by making strategic reductions in the size of government, not by increasing revenue with new taxes on the backs of working and middle class families or our state’s healthcare providers.”

“Republicans have once again demonstrated that the state’s multibillion dollar deficit, caused by runaway spending and high taxes that stymied economic growth, can be eliminated without raising taxes or gutting social services for the needy. While the SEBAC deal further tied the hands of lawmakers and took many long-term structural changes off the table, there are still steps we can take today to rein in costs, reduce future spending, and create an environment that promotes economic growth and opportunity for all people. That is what this budget proposal seeks to do. Budgeting is about priorities and the Republican budget prioritizes the core functions of government, makes tough choices to reduce spending, and avoids increasing taxes – a strategy that has only created bigger deficits over the last six years.”

“We believe it is in our state’s best interest for lawmakers to come together and pass a bipartisan budget, which is why we have worked for months to try to negotiate a deal with Democrats that truly moves our state forward. But Democrat legislators made it clear they would rather work with Gov. Malloy than their Republican colleagues and pass a budget that relies on the same policies that have failed our state in the past,” the  Republican leaders added.

“Republicans want a bipartisan solution, but we cannot vote for something that will only bring us right back into deficit in a few months time. Unfortunately that is the path Democrats are choosing to pursue. They have rejected our proposals to implement long needed structural changes such as an enforceable state spending cap and effective bond cap. Nevertheless it is our responsibility to continue working until the very end and pushing for the policies that we were elected to fight for. That’s why we are yet again offering our ideas in a complete budget and a better path for the people of our state that we hope Democrat rank and file lawmakers will see the value in.”

The budget proposal released by Republicans today includes the following:

No New Taxes

The Republican budget contains no new taxes. It does not increase or expand the sales tax, hospital tax or income tax. It also rejects the governor’s proposal to shift teacher pension costs onto municipalities as such a policy change would likely result in property tax increases.

Reduces Taxes

The Republican budget enacts two policies that will reduce taxes for retirees by phasing in a tax exemption for Social Security and pension income for middle income families. In addition, the Republican budget also restores the entire $200 property tax credit for all qualifying families and individuals. Under Governor Malloy’s tenure this tax credit has been reduced from $500 and we believe that property owners deserve a break on their taxes.

Increases Education Funding

The Republican budget rejects the governor’s devastating education cuts contained in his budget proposal and executive order entirely. It instead includes a fully revised Education Cost Sharing Formula that takes into account factors regarding CCJEF and Meskill court decisions, enrollment, poverty, wealth and number of English Language Learners, among other factors. This budget dedicates $33.6 million more to education in FY 2018 and $136.6 million more in FY 2019 and phases in a new formula over 10 years. It also establishes a council to analyze and make changes to the new formula within the next year if deemed necessary. In 2018 all cities and towns’ base ECS grants will either be held harmless or gain more funding.

Municipal Support and Mandate Relief

This budget provides predictable municipal aid so that towns and cities know what they can count on from the state. This plan rejects the Governor’s proposal to force towns and cities to pay hundreds of millions in teacher pension costs. It implements significant mandate relief for cities and towns to help municipalities achieve efficiencies, foster cooperation between school boards and local government, and pass savings on to taxpayers. Instead of drastic and deep cuts to core municipal aid that towns rely upon each and every year such as education funding, and instead of adding new expenses, this budget would eliminate the unsustainable MRSA diversion, and stabilize funding so that towns know what they can count on each year. This comprehensive approach will establish predictable and sustainable aid for small towns and large cities and take into account the challenges faced in all communities.

Funds Core Social Services

This revised budget maintains Republican proposals to restore funding for core social services and programs that benefit people most in need. It fully funds day and employment services for individuals with intellectual and developmental disabilities, reopens Care4Kids, protects funding for SAGA that supports disabled residents who are unable to work, funds school based health clinics and family resource centers, restores funding for mental health services among many other programs.

Prioritizes Transportation

The Republican budget recognizes the importance of a safe, modern transportation system to public safety and economic growth throughout our state. Therefore, this budget prioritizes the state’s transportation needs and stabilizes funding without tolls or new taxes. It implements the Republican “Prioritize Progress” transportation funding plan and stabilizes the state’s Special Transportation Plan by dedicating transportation-related revenues to fund transportation needs and protects monies in the state’s Special Transportation Fund from being diverted for other uses.

Supports Seniors

The Republican budget lowers taxes for retirees by immediately eliminating the tax on social security and phasing in an elimination of taxation of pension income for single filers with an AGI below $75,000 and joint filers below $100,000. It also helps seniors age in place by restoring funding for programs such as Meals on Wheels, the personal needs allowance, non ADA dial a ride, and the CT Home Care Program.

Employment and Day Opportunities for the Intellectually Disabled

Our budget fully funds employment and day opportunities for new high school graduates over the biennium, nor does the Republican Budget carry forward reductions imposed by Governor Malloy to employment and day opportunities services for the intellectually disabled. 

Funds State Parks & Tourism

Acknowledging the multiplier effect that tourism has on our economy, the Republican budget proposes to transfer 1.5% of the current hotel occupancy tax to a new Marketing, Culture and Tourism account. This is not a new tax as Democrats have proposed. Rather, it dedicates a portion of the current tax for its intended purpose to boost tourism funding. This budget also implements the Passports to Parks program that has garnered bipartisan support in the legislature.

Reduces Size of Government

The Republican budget proposal implements overtime savings of 10 percent, a hiring freeze on non-24-hour non-union positions, and makes cuts to the legislature such as reducing the number of legislative committees. The budget also makes targeted spending cuts, 10 percent reductions to certain agency accounts, and rolls forward lapses made last year except for cuts to core services such as grants for mental health and substance abuse and youth service bureau funding.

Includes Structural Changes

In addition to balancing the budget over the next two years, this budget includes policy changes that roll out into future years to achieve significant savings. Changes include items such as a spending cap, bonding cap, municipal mandate relief, and other policy changes for long term savings. The budget also implements pension reform beginning after the SEBAC deal ends in 2027 to achieve $270 million in savings over the biennium from the following changes to state employee benefits: requiring workers to pay the national average towards their retirement benefit, eliminating COLAs until the fund balance of the state employee retirement system is deemed healthy by national standards, eliminating overtime from calculation of final average salary, ceasing the current practice which allows higher paid employees to receive a larger portion of their final average salary as lower pain employees, commonly referred to as a break point.