Legislature approves revised $19 billion budget, Sen. Frantz Shares Concerns [Republican-American]

May 5, 2014

BY PAUL HUGHES | REPUBLICAN-AMERICAN

HARTFORD — Democrats in the legislature pushed through a revised $19 billion budget that Republicans charged was chock full of gimmicks.

The House voted 91-55 just before 10 p.m. Saturday night to approve the budget deal, and a little more than two hours later the Senate voted 21-15 to send the tax and spending package to Gov. Dannel P. Malloy to sign.

“It makes many tough, but smart choices and decisions. As Connecticut has come through some very tough times along with the nation in the Great Recession of the last six years, we are slowly, but surely gaining traction,” said Senate President Donald E. Williams, D-Brooklyn.

Sen. L. Scott Frantz, R-Greenwich, did not see it that way.

“If we were a public company, and the 36 of us were the board of directors, and the shareholders were the taxpayers and the citizens of the state of Connecticut, I think by now they would have fired each one of us individually, and along the way they probably would have sold their stock,” said Frantz, the ranking Senate Republican on the Finance Revenue and Bonding Committee.

Three Democrats in the House voted against the revised 2015 budget. Sen. Joan V. Hartley, D-15th District, was the only Senate Democrat to oppose it. No Republicans supported the legislation.

The budget plan closed a revenue gap of $300 million that opened up suddenly as budget negotiations were nearing a conclusion.

It did so partly by sweeping $27 million from special state funds, assuming collections of an additional $75 million in back taxes, and delaying planned tax breaks to save tens of millions more.

The budget plan also anticipates an extra $36.1 million in real estate taxes and $26.4 million in assumed savings in agency budgets. It additionally moves $65 million from the general fund to other budget funds.

Lawmakers on Saturday got the details of the budget deal more than 24 hours after Malloy and Democratic leaders announced the agreement on Friday morning.

The reworked 2015 budget spends nearly $2.2 million less than originally budgeted in the two-year, $37.6 billion budget that Malloy and Democrats enacted last year.

It represents a 2.5 percent increase over current spending, according to the legislature’s budget office. That translates to $467.3 million.

This was too much for Republicans, who proposed an alternative budget that cut $81.9 million in spending from the original 2015 budget.

“Something is not working. Something is not adding up. And, why is that? Because we continue to spend and spend and spend,” said Sen. Robert J. Kane, R-Watertown.

The general fund grows by 2 percent. It is the largest of the nine appropriated funds that make up the budget. The Malloy administration reported Friday that the general fund increase was 1.6 percent.

The adopted 2015 budget was originally $166 million under the state spending cap. The revision is approximately $23.9 million below the cap.

There are no tax increases, but Republicans and some Democrats expressed surprised to see Saturday that the budget plan anticipates an additional $75 million in miscellaneous taxes.

These additional receipts were not included in updated revenue estimates that were issued on Wednesday.

Also, Malloy and Democratic leaders made no mention of this $75 million addition when they outlined the budget agreement for reporters Friday. It was one of many details that were left unsaid, including the revised budget’s bottom line.

Rep. Craig A. Miner, R-Litchfield, the ranking House Republican on the Appropriations Committee, observed that the legislature’s nonpartisan budget office was unable to verify the $75 million estimate or develop its own estimate Saturday.

Earlier in the week, it was learned taxes on capital gains raised $400 million less than anticipated, wiping out most of a projected $504.9 million surplus and sending budget negotiators scrambling to close a $281.8 million gap for 2015.

On Saturday afternoon, members of the Finance, Revenue and Bonding Committee questioned the sudden appearance of the additional $75 million in anticipated tax receipts while reviewing the revenue estimates for the revised 2015 budget.

“I have to tell you it really bothers me,” said Rep. Sean J. Williams, R-Watertown, the ranking House Republican on the finance committee.

Departing from his usual practice, Williams voted against the revenue estimates because of this last-minute addition. The committee approved the estimates 34-17.

Before the committee vote, Williams questioned Benjamin Barnes, the governor’s budget chief, about the $75 million addition.

Barnes explained that the Department of Revenue Services reported that a tax amnesty program last year identified significant tax debts owed by taxpayers who were unable to participate.

Tax officials are confident they can collect substantial amounts of those unpaid taxes with stepped up efforts, he said. The $75 million estimate was on the low end of the range that the DRS provided, he added.

“We are going to find people who owe us money. We think we have a much better idea of who those people are, and how much they owe us, and how to work with them to get those delinquencies resolved,” Barnes said.

Sen. John W. Fonfara, D-Hartford, co-chairman of the finance committee, was optimistic that the tax department could deliver.

“Given our experience this past year of what we projected versus what was realized, I don’t think it is a stretch to say there is still additional unpaid taxes and revenue that is out there,” Fonfara said.

The tax amnesty was budgeted to raise $35 million, but brought in $192.6 million.

“Certainly, we would be thrilled if this $75 million turned into a larger number,” said Rep. Patricia M. Widlitz, D-Guilford, the finance committee’s House chairwoman.

In the House debate, Republicans focused on the additional $75 million.

House Minority Leader Lawrence F. Cafero Jr., R-Norwalk, questioned the prudence of counting on tax delinquents to make good.

“We’re going to rely to the tune of 75 million bucks to balance a budget based on the fact we’re going to get people who by definition don’t pay their taxes to pay their taxes. If you tell that story at home, people scratch their heads. They don’t get it,” he said