(Hartford Courant) “We are going to be staring at tax increases if we continue down this same road,” Sen. Kane warns Democrat lawmakers.

April 22, 2013

Dem Committee Budget Would Hike Spending by 10 Percent

Fri Apr 19 2013 6:43 PM

The General Assembly’s appropriations committee voted Friday to increase state spending by nearly 10 percent over the next two years in a state budget that cuts millions from hospitals, increases salaries for judges by 5 percent, and extends a tax surcharge on corporate profits for two more years.

Meanwhile, legislators on another key legislative panel, the finance committee, voted to reject Gov. Dannel P. Malloy’s highly controversial plan to eliminate the property tax on most cars for the next two years. Democratic leaders left the door open Friday for a possible compromise that could eliminate the tax in 2018.

The budget vote was largely approved along party lines, with Republicans opposing it and Democrats suppporting the spending increase.

Gasoline prices would grow by 2 to 4 cents per gallon on July 1 under a previously approved tax increase that is now scheduled to take effect for the main summer driving season. The increase would occur under the state’s highly complicated, two-pronged gasoline tax, and the exact amount of the tax would vary because the percentage is pegged to the fluctuating wholesale price of gasoline.

The appropriations committee also restored some funding for cities and towns, but the chief lobbyist for municipalities described the decisions as “a mixed bag” that will be subject to further negotiations. Lawmakers also rejected Malloy’s plan to consolidate the legal staffs of the Freedom of Information Commission and other watchdog agencies, which had caused concern by good-government groups.

Friday’s proposals re-set the table and set the stage for the final budget negotiations that will involve Malloy and the top legislative leaders. The final decisions will likely not be made until late May or early June as the legislative session is scheduled to end on June 5.

Appropriations — the legislature’s budget writing committee — called for spending $21.5 billion in the fiscal year that starts on July 1 and $22.36 billion in the following year. The combined total is $49 million higher than Malloy proposed over the biennium – essentially the same level as the governor on a two-year base of more than $43 billion.

Democrats who control the House and Senate said the budget and tax decisions were reasonable in a time of economic sluggishness. Sen. Toni Harp, the influential co-chairwoman of the budget committee, said the proposal was “a little better” than the plan offered in February by Malloy.

But Republicans blasted both the taxing and spending decisions at the committee level.

“This budget does not curtail government. It grows government,” said House Republican leader Larry Cafero of Norwalk. “We are growing government by leaps and bounds.”

The appropriations and finance committees were meeting simultaneously on Friday afternoon as they crafted the state’s budget. The tax package was approved 31 to 17, with six finance committee members absent. The spending increase was approved by 32 to 17 with four legislators on the budget committee absent.

The overall spending increases over Malloy’s budget would be $10.7 million in the first year and $38.3 million in the second year.

Ben Barnes, Gov. Malloy’s budget director, thanked the two committees for their work that he said is close to Malloy’s budgetary framework.

“There is a lot in this budget we agree on,” he said in a statement. “There are also problems that will need to be addressed, including the need to continue key bipartisan education reforms, to support economic development initiatives that will grow jobs, and to provide real tax relief for middle class families. As it stands, this proposal doesn’t get there.”

The gross receipts tax on gasoline is scheduled to increase July 1 under a previously approved schedule, which could generate an estimated $60 million per year for state coffers. Republicans offered an amendment to block the tax increase, which is a percentage of the wholesale price of gasoline, but the effort failed. If no changes are made in the coming months, the gross receipts tax – which currently has an effective rate of 7.53 percent of the wholesale price – will increase to 8.81 percent on July 1.

Rep. Melissa Ziobron, R-East Haddam, questioned a proposed pay increase for judges in light of the state’s still-struggling economy.

“In light of the economy, I’d like somebody to explain to me how we can approve [an]…increase at this time,” Ziobron said.

Sen. Rob Kane of Watertown, the ranking Republican on the appropriations committee, said lawmakers did not look to state employees for additional concessions, nor did the so-called “suggestion box” established by Malloy to uncover efficiencies yield significant savings.

“We are going to be staring at future deficits and future tax increases if we continue down this same road,” Kane predicted.