Senator Frantz Voices Concern Over Increased Borrowing in Governor’s Budget Proposal [Connecticut Post]

February 6, 2013

Article as it appeared in the Connecticut Post on February 6, 2013

Malloy pushes $43.8 billion budget

By Ken Dixon

HARTFORD — Gov. Dannel P. Malloy on Tuesday asked the General Assembly to approve a “steady path to progress” as the state continues its struggle to emerge from the recession.

Malloy wants lawmakers to reconfigure the state’s constitutional cap on spending, extend some taxes scheduled to end this summer and prolong borrowing to support a two-year, $43.8 billion budget.

He proposed continued levels of aid for towns and cities, but also asked lawmakers to end local car taxes, saving residents about $560 million a year that towns and cities, paradoxically, would have to absorb.

In a 38-minute noontime address to a joint session of the House and Senate, Malloy asked for further investments in education, workforce development and attracting new jobs to a state where the recession lingers.

“Connecticut families have had to buckle down, make tough decisions, pay their bills, make sacrifices and find compromise, and at the same time, keep doing whatever they can to invest in their future,” Malloy said. “And so must their government.”

He said his proposal deals with a multi-billion dollar deficit and is balanced without new taxes.

The overall proposal, which the General Assembly will now dissect before creating its own two-year spending plan to present to the governor before an early June deadline, got mixed reviews.

Democrats and minority Republicans alike criticized ending the car tax. A similar proposal failed under former Gov. M. Jodi Rell.

Minority Republicans also charged that the budget is $900 million dollars over the current spending cap.

Lawmakers from both parties admitted it’s unlikely, at this point, for Malloy’s budget to get the three-fifth’s majority votes in the House and Senate needed to approve the change in the annual cap on spending.

“What the governor has done is make up a new definition of the spending cap,” said Senate Minority Leader John McKinney, R-Fairfield, adding he might be willing to agree with the governor’s plan to exclude new federal health care funding from the cap.

Stamford Mayor Michael Pavia said he’s happy that municipal aid seems to remain at current levels.

Danbury Mayor Mark Boughton, standing next to Pavia in the historic Hall of the House following Malloy’s speech, said ending the car tax would mean a net $10 million revenue loss in Danbury.

“With no plan to supplant that, it’s absurd that he would even raise it as an issue,” said Boughton, a former House member who is interested in running for governor in 2014. “There’s no way the big cities can afford to do it. He wants middle-class tax relief, but he wants to do it on the backs of cities and towns.”

Bridgeport Mayor Bill Finch agreed that the governor’s budget includes overall revenue losses of $27 million that would be “disastrous” for the state’s largest city.

“The Governor should be applauded for his historic investment in education and in the areas of our state, such as our city, that need it most,” Finch said in a statement mixed with support and criticism. “The budget also makes an important investment in critical infrastructure through capital improvements.

“If these cuts are implemented in full, there would be disastrous consequences for our residents, and potentially, one of the largest local tax increases ever as the state tax burden shifts to our residents.”

Veteran Rep. Bob Godfrey, D-Danbury, said that historically, the Legislature looks closely at budgets from governors, then goes its own way.

“We’ll be doing our own investigation,” Godfrey said. “There are a few issues we have to look at.”

He said there are already changes in the works on a Malloy proposal that would end state payments to towns and cities that host tax-exempt properties including prisons and colleges.

“As we did into the actual budget documents, we’ll have to start making the early judgments, and then, the later judgments as the discussion goes on,” Godfrey said. “We got a vision today and that’s what these are supposed to be about.

“Where the governor’s priorities are, I share them. Dealing with the elderly, dealing with the middle class, dealing with people who are looking for jobs, dealing with people who are facing foreclosure, dealing with education, dealing with investments in the future. Those are all positive things, but now we have to look at them line-by-line.”

State Sen. L. Scott Frantz, R-Greenwich, ranking member of the tax-writing Finance Committee, said he’s discouraged by all of Malloy’s proposed borrowing.

Frantz is also discouraged by Malloy’s pitch to extend payments for the bonds sold to bail out the 2009 deficit, and to sell $750 million in bonds for the state’s move toward Generally Accepted Accounting Principles and using the money for operating expenses.

“Yes, interest rates are at historic lows, but we’ve got to pay it back over a specific period of time,” Frantz said.

Rep. Themis Klarides, R-Derby, deputy minority leader, said the spending cap idea is probably a non-starter in the 52-member House minority. The 99 Democrats would need about 15 Republicans to get the three-fifths vote in the House and all 22 Democrats in the 36-member Senate.

“(Malloy) says he’s under the spending cap, but he just moved $900 million from one place to another to say he’s under the spending cap,” Klarides said. “We have a projected $2.5 billion deficit, spending is increasing by almost 10 percent. That in and of itself doesn’t make sense to anybody.”

McKinney called it “ridiculous” that Malloy proposes removing about $500 million in retirement payments from the spending cap equation.

“It makes it a more-dangerous position if we exempt that from the cap because it gives us a less-honest picture of what your true employee costs are,” said McKinney, who is also interested in running for governor. “He had a responsibility to submit a budget that lives within the spending cap as it currently is under law and he failed to do that.”

Spending on some programs would be reduced by $1.8 billion over the biennium, including about $470 million in spending cuts approved by Malloy and the General Assembly last year that will extend into the biennium.

Malloy proposed offering $500 tax credits for people switching over to natural gas, and 5-percent reductions in electric service for as many as 800,000 customers through a statewide auction for providers.

“This plan will help us take advantage of enhanced energy efficiencies to drive down energy costs for families and for businesses,” Malloy said. “We’ve gone far too long without understanding the connection between high-energy costs, protecting our environment and making Connecticut businesses more competitive. These issues are linked and, finally, we’re going to treat them that way.”

Malloy also asked lawmakers to approve a previously announced commitment to science, technology, engineering and math at the University of Connecticut campuses in Stamford, Storrs and Hartford.

“Together, we will fuel Connecticut’s economy with new technologies and new employers, with more highly skilled graduates, more patents, more licenses, and more high-wage jobs,” Malloy said.

He also asked lawmakers to change the way revenue from the state’s two casinos, Mohegan Sun and Foxwoods, is divided among towns and cities.

The next fiscal year starts July 1. The legislative session ends at midnight June 6.