Senate OKs Budget Changes; House Approves Early Tuesday Morning

July 1, 2015

Article as it appeared in the Hartford Courant

HARTFORD — After a month of complaints from major corporations, the state Senate narrowly approved a budget implementation bill late Monday night that pulls back some proposed business tax increases and funnels an additional $30 million to cash-strapped hospitals over the next two years.

The bill, approved in a special session, moved over to the House of Representatives, which passed the measure by 78 to 65 with 8 members absent early Tuesday morning. Two House Democrats – David Alexander of Enfield and John Hampton of Simsbury – joined with Republicans in voting against the measure.

General Electric Co. and other corporations expressed outrage at increased business taxes in the budget narrowly approved by the legislature June 3. GE was especially incensed about a proposed unitary reporting system that would increase taxes on some major corporations, but that plan was postponed until the 2016 calendar year.

By a vote of 19-17, the Senate approved a bill of nearly 700 pages that sets out the nuts and bolts of fiscal policies needed to implement the two-year, $40 billion budget. Two conservative Democrats — Sens. Joan Hartley of Waterbury and Paul Doyle of Wethersfield — joined with 15 Republicans in voting against the bill.

Republican Sens. Art Linares of Westbrook and Sen. Toni Boucher of Wilton compared the Connecticut budget with fiscal crises in Greece and Puerto Rico.

“How could this have possibly happened?’’ Linares said on the Senate floor. “These countries spent money they didn’t have, borrowed money they couldn’t pay back and to solve the problem, they tried to raise taxes. … We’re spending money we don’t have, borrowing money we can’t pay back, and raising taxes. We’re doing the exact same thing that Greece and Puerto Rico did. … We’re pushing GE out. We’re pushing Aetna out. We’re pushing Travelers out.”

But Democrats defended the budget.

“We listened, and we made some changes,’’ said Sen. John Fonfara, a Hartford Democrat who co-chairs the tax-writing committee. “It’s still about fairness, and I hope that those who are listening and watching, through all the smoke and all the attention that has been paid to this, know the conversation will continue on how to make the tax policies of our state fair. … Our corporate tax is one of the most competitive in the country. Our sales tax — very competitive in the country. The underlying document is a good one and will withstand the test of time.”

Deputy Senate Republican leader Kevin Witkos of Canton said the state has had deficits in recent years, much the way that a tire has continuing problems with a nail stuck in it. The air, like revenues, keeps leaking out, he said.

“Why?’’ Witkos asked. “Because we have not taken the nail out of the tire. We have not fixed the problem. … This budget was praised as historic for providing property tax relief, but that’s not true.’’

But in an early morning visit to the Capitol press room, House Speaker Brendan Sharkey said that negative statements by Republican legislators have backfired and not helped the state’s economy.

“I am extremely frustrated with the Republicans for their behavior over the course of this last month,” Sharkey said. “In my opinion, they’ve been on a feeding frenzy for the last month – and a guy whose name is Sharkey knows feeding frenzies when he sees one.”

Senate Majority leader Bob Duff of Norwalk and Senate President Pro Tem Martin Looney of New Haven countered that Democrats passed a transformative budget by capping the personal property tax on vehicles and making large investments in the state’s transportation infrastructure.

Residents in high-tax communities would see their car taxes drop, and as many as 56 percent of residents will see a decrease by the second year, they said. Those living in affluent communities like Greenwich would see no change at all.

“I, for one, don’t want to be driving on crumbling roads and broken bridges,’’ Duff said. “While we cannot rely on Congress to help us, we’ve got to take this upon ourselves.’’

The bill also imposes the 6.35 percent sales tax on car washes for the first time and provides 6 percent raises over two years to judges, family support magistrates, judge trial referees and others whose salaries are tied to those of judges. It also boosts wages to $15 an hour for the cafeteria workers who make sandwiches for legislators at the Legislative Office Building.

The sales tax on data processing and computer services will remain at 1 percent rather than rising to 3 percent, as had been proposed. Major corporations that were paying $5 million a year on that tax would have seen a jump to $15 million a year.

On the spending side, legislators rejected Gov. Dannel P. Malloy’s request for increased authority to make unilateral budget cuts without legislative approval.

They also did not enact a constitutional amendment for a lockbox to ensure that money set aside for transportation is used for that purpose. Instead, they included a statutory lockbox that would not require approval from voters as a constitutional amendment.

Rep. Devin Carney, a freshman Republican, said early Tuesday morning that he had grown tired of driving through his hometown of Old Saybrook and “seeing house after house after house for sale, for sale, for sale.”

Sen. Rob Kane, R-Watertown, said: “I think this is a bad day for the state of Connecticut. We’re really going down a dangerous path with this budget. … The people of the state of Connecticut don’t know what we’re doing today.’’

Kane noted that Malloy had called for reducing the sales tax in his budget in February, “but that has gone out the window.”

For example, Kane pointed to extra money set aside for nursing homes — up to $9 million will be used to cover union contracts and about $4 million will go to nonunionized homes for both direct-care workers and others, such as janitors.

Kane said it made no sense that about 30 percent of all nursing homes are unionized but the vast majority of the additional money will be going to the unionized homes. He also questioned whether the allocation of the money was a violation of the National Labor Relations Act under federal law.

But Sen. Beth Bye, a West Hartford Democrat who co-chairs the budget-writing committee, said the bill’s language was crafted by lawyers to avoid violating federal law. Currently, the state government spends about $1.5 billion a year on nursing homes through Medicaid. A Republican amendment to spread the money evenly between unionized and nonunionized workers was defeated on a party line vote.

“What we’re trying to do with this budget is assure that there are not strikes,” Bye said. “I am comfortable standing before you, defending this today.”

The implementer bill includes provisions, including keno gambling. The bill also extends Malloy’s First Five business tax incentive program by another year in an effort to help corporations. So far, the First Five program has helped 12 corporations, including CIGNA, ESPN, NBC Sports, Pitney Bowes and others.

House Republican leader Themis Klarides of Derby said she was dismayed by the process of the implementer, which she described as including “stuff that never got through committees, stuff that never had a public hearing.”

She said she is still wondering when the legislature will learn that “what we’re doing does not work.”

Rather than forming a tax study committee that was included in the Democratic-written bill, Klarides said one of her ideas was : “Let’s not give this state the two highest tax increases in its history in four years.”

But House Majority leader Joseph Aresimowicz of Berlin said that lawmakers had responded to the concerns of citizens who want property tax relief and transportation improvements.

He said, “I think today is an excellent day” in explaining democracy.

“All we hear is doom and gloom,” Aresimowicz said in the final speech before the vote early Tuesday morning. “That has a chilling effect. … I love my state. I love my town. We’re doing what we can do to make it better.”

After the budget was passed, Brunilda Ferraj of the Connecticut Community Providers Association said the budget was not pretty.

“The budget agreement crafted by legislators and approved tonight reflects an understanding that programs for the most vulnerable individuals in Connecticut cannot sustain further cuts,” Ferraj said in a statement. “For months, individuals, their families and providers have walked the halls of the Capitol carrying the message that after more than a decade of underfunding, programs such as outpatient services for people with mental illness and support services for individuals with developmental disabilities could close their doors if funding was further reduced, leaving people with nowhere to turn for the services the rely on.

“This budget, overall, is not pretty, and the funding will just meet basic needs for community providers and many others who receive state funding. But this budget also sends a strong message that human service programs are a vital and important part of our communities and we thank the General Assembly for its support.”

Among other things, the budget bill would:

Allow doctors to prescribe medical marijuana to minors with terminal cancer and other conditions. The measure would also have expanded the list of diseases for which adults could be prescribed medical marijuana. Children would not have been allowed to smoke the marijuana under the bill. But the marijuana provisions were later removed from the bill on a voice vote.

Increase judges’ salaries. The judges’ salaries are set to rise 3 percent on Wednesday, and again on July 1, 2016. The annual percentage is lower than the 5.3 percent by which their annual paychecks rose in the previous two years, after a special state commission recommended increased pay after comparing the compensation of judges in Connecticut to others around the country.

Superior Court judges’ current pay of $162,751 will rise to $167,634 on Wednesday and to $172,663 on July 1, 2016. The current $194,757 salary of the Supreme Court chief justice will go to $200,599 on Wednesday and $206,617 on July 1, 2016. Associate justices of the Supreme Court would see their current $180,204 pay rise to $185,610 Wednesday and $191,178 on July 1, 2016.

Appellate Court judges’ current $169,245 salaries would jump to $174,323 on Wednesday and to $179,552 on July 1, 2016. The pay rate for retired judges who hear Superior Court cases as judge trial referees will go from the current $244 a day to $251 on Wednesday, and to $259 on July 1, 2016.

Youth athletic leagues would be required to provide concussion information to parents and participants of all youth athletic activities, including symptoms, treatment and risks.

Gas companies will have to develop an incentive program to reduce natural gas demand. It also allows municipalities to exempt gas companies from property taxes to fund natural gas expansion projects.

The transportation commissioner will indemnify Metro-North Railroad for claims related to operation of train cars on Amtrak property.