Budget passes Senate [Journal Inquirer]

By Mike Savino Journal Inquirer | Posted: Thursday, June 4, 2015 11:57 am
HARTFORD — The Democrats’ two-year $40.3 billion budget is headed to Gov. Dannel P. Malloy for his signature after the Senate narrowly approved the spending plan Wednesday with roughly 30 minutes remaining in the legislative session.

The General Assembly will need to come back for a special session to approve an “implementer” bill that allows the budget to take effect July 1.

The budget was the subject of nearly five hours of debate that ended with Senate Republican Minority Leader Leonard Fasano expressing frustration about how his party was treated throughout the budget process.

“This is why we are where we are. This is why this debate took so long,” Fasano said, agreeing to call off the filibuster. “It’s a culmination of frustration, the inability of our ideas to reach the public.”

In a joint statement with Sen. Kevin Witkos, R-Canton, Fasano condemned the way the budget was passed.

“This disastrous budget is overshadowed only by an even worse process,” they said. “The budget began with special-interest deals behind closed doors. It is now ending with a vote negotiated behind closed doors, in the hallway, and on the floor — shaped by deals made in exchange for votes. The bud_get, the implementer, and future bonding agendas will disclose the truth.”

While Fasano said the length of the filibuster — which he agreed to end when Senate President Pro Tem Martin M. Looney, D-New Haven, was about to move to end debate — was to show his party’s frustration, Republicans also voiced their concerns about a budget that would raise $2 billion in new revenue during the next two years.

A major point of contention for Republicans was the Democrats’ maneuver around the spending cap by removing debt for retirement benefits from the calculation.

Democrats have argued that the items were never meant to be under the spending cap, and that their removal keeps the budget $9 million under the cap next year and $93.7 million under in fiscal year in 2017.

The budget also calls for General Fund spending increases of 3.98 percent and 3.1 percent respectively over the next two years.
But Republicans also raised concerns about various tax increases, which have drawn warnings and threats in recent days from four major corporations that they could leave the state.

“You need somebody to stop this avalanche, and that’s what I’ve been hoping for,” Sen. Tony Guglielmo, R-Stafford, said. “And instead we’re adding to it, and we’re congratulating one another. I mean, it’s a disaster.”

Republicans have said they are particularly concerned about various taxes on businesses, including the continuation of the 20 percent corporate surcharge and raising the data processing tax by 1 percent each year to 3 percent.

They also warned that the implementation of a unitary tax system, which allows the state to levy taxes based on a company’s worldwide income and not just what is claimed in Connecticut, would drive away businesses.

The budget also will increase the cigarette tax by 50 cents each year, reaching $3.90 per pack in fiscal year 2017, and reduce the property tax credit from $300 to $200 in the second year.

Additionally, it will raise the luxury tax from 7 percent to 7.75 percent, the income tax for couples earning $500,000 to 6.9 percent, and create a new bracket for couples earning $1 million or more with a rate of 6.99 percent.

Policy changes also would limit the amount of losses and tax credits that businesses can claim, repeal the re-implementation of the sales tax exemption for clothing up to $50, and reduce the sales tax holiday on clothing to apply only to the first $100, down from $300.

All area legislators voted

The bill also drew criticism from Democrats, resulting in a 19-17 vote in the Senate after a 73-70 vote in the House earlier in the day.

“It shows the angst that people in Connecticut feel about raising taxes yet a second time in such a huge manner,” Sen. John A. Kissel, R-Enfield, said of the margins.

Locally, Rep. David Alexander, D-Enfield, was the only Democrat to vote against the budget, while all Republicans in the General Assembly opposed it. All area lawmakers representing the 17 towns in north central Connecticut cast a vote on the budget.

Alexander said his biggest concern was that many of the revenue sources hit middle-class residents — the Office of Fiscal Analysis said the reduction of the property tax credit would generate $100 million for the state.

“This budget is paying for an experiment on the backs of taxpayers, which is problematic for the state of Connecticut in my opinion,” he said.

Yankee Institute President Carol Platt Liebau also criticized the budget, saying, “Some politicians don’t seem to understand that tax policies have consequences. The more you tax something, the less you get — and that goes not just for businesses and jobs, but also for the affluent who happen to be the most mobile segment of society.”

Sen. Timothy D. Larson, D-East Hartford, said he shared concerns about the revenue plan, particularly the data processing tax increase, but he felt the budget as a whole provided a number of benefits for Connecticut.

In particular, Larson said municipal relief, funded by a designation of a half percent of the sales tax, will help reduce municipalities’ reliance on property taxes, which OFA projects will bring in $435.5 million for towns and cities.

“We need to be mindful that the people in the towns that I represent are middle-class people, and they’re looking for some relief,” Larson said.

The municipal sales tax would fund both an expanded grant program for towns with larger portions of tax-exempt property and a new program intended to reduce the property tax.

In order to receive the full grant under the program, towns must remain within a 2.5 percent spending cap. Also local taxes on motor vehicles is capped at 32 mills in fiscal year 2017 and 29.36 mills in fiscal year 2018.

The budget also designates a half a percent of the sales tax to the state’s Special Transportation Fund for transportation projects.
Sen. Eric D. Coleman, D-Bloomfield, meanwhile, said he supported the budget because his priority was “to preserve whatever safety net remains.”

While the budget passed Wednesday doesn’t fully restore many of the program cuts proposed by Malloy in February, much of the funding is returned.

That includes $25 million to the Department of Development Services to address its caseload, $18 million in grants for mental health and substance abuse service providers, and $33 million in provider rate increases for the Medicaid provider network.

Still, SEIU 1199 New England spokeswoman Jennifer Schneider said that while the union appreciates the work “to restore funding to vital social services” it is “disappointed the necessary increase in funding to help caregivers of the intellectually disabled earn a living wage was not included in this year’s budget.”

She added, “We remain committed to this long fight for a fair, living wage for caregivers.”

The budget includes $12 million for nursing home workers.

Democrats defended the taxes as being necessary to fund the budget, and some said the unitary tax system is in response to large corporations that shift their income to avoid taxes.

The Senate vote ended a prolonged day of budget debate that began when the House opened debate on the budget at 5:20 a.m. — after pulling an all-nighter at the Capitol — voting on the bill roughly five hours later.

Some Republicans accused House Speaker J. Brendan Sharkey, D-Hamden, of waiting until enough lawmakers opposing the budget left the building to get some rest, then calling supporters to chambers to secure passage.

Sharkey said the delay was to allow legislative staff time to make changes to the budget, and denied that the timing was a tactical decision.

“Part of the problem, in terms of when we could roll it out, was the fact that our nonpartisan staff was incorporating changes that we were trying to make in to the package … in terms of adjustments we could make to accommodate some of the concerns that were raised,” he said.