Legislature weighs tough budget choices
HARTFORD — There are so many budgets floating around the Capitol that it seems like there’s something for everyone.
But with sharply declining tax revenues — adding up to $450 million to the projected $1.7 billion deficit for the first year of the upcoming biennium — there will be little money for anybody.
Stick these bleak fiscal prospects into the caldron of partisan politics in the divided state Capitol, and there’s a recipe for legislative failure while lawmakers and Gov. Dannel P. Malloy scramble to agree on a two-year, $40 billion spending plan before July 1.
Malloy has asked Republican and Democratic leaders to meet with him early next week. That request follows the collapse of a $41.03 billion spending package in the Appropriations Committee, a bare-bones revenue bill raising no taxes from the Finance Committee, and detailed GOP proposals totaling $40.3 billion.
The Republican plan would increase education funding, but end the state’s nationally recognized public election-funding program for statewide and General Assembly races.
The governor’s own $40.6 billion plan, which called for cities and towns to pick up $400 million in teacher-retirement costs, and includes $700 million in union concessions, will be outdated when April taxes are added up. He plans to present a revised budget proposal.
“I think there is a recognition that this is not about raising taxes,” Malloy told reporters on Friday afternoon. “It’s about finding a way to live within the means that we have. Clearly the Appropriations Committee is not in agreement with the Finance Committee and we have a long ways to go.”
Malloy expects it to be a tough slog.
“I certainly want to say that I appreciate that they are finding it very difficult,” he said of state lawmakers.
Over the last two years, income taxes fell $850 million below budgeted projections.
“We are one of the most-dependent states on the highest income-earners,” Malloy said. “I understand it’s difficult for people to broaden the tax base. They find it politically difficult, but we have a very narrow, self-made tax base. In the financial services, in particular — in the hedge fund industry even more particularly — there’s been a lot of change.”
The Connecticut Conference of Muncipalities, which is trying to retain aid to cities and towns while reducing costly mandates, called for both sides to join together and take the best proposals, along with the CCM’s own plans.
The CCM praised Democrats and Republicans for allowing towns and cities to diversify their revenue, preserving local aid and rejecting Malloy’s plan to force local teacher-pension payments. The municipal organization approves Malloy’s plan to focus on helping cities such as Bridgeport. The group also believes more towns and cities have to consider collaborating on some services.
“A three-way collaborative for a state budget agreement is the best avenue for bringing about a balanced state budget and a budget that also reduces over-reliance on the state’s largest, most regressive tax - the property tax,” the CCM said in a news release Thursday.
Brian Flaherty, senior vice president for public policy at the Connecticut Business & Industry Council, said Friday that to create more revenue, the state needs more job opportunities.
“We need to grow and we need a budget for (business) to grow on,” said Flaherty, a former Republican member of the House.
Flaherty said that even though there are various plans now out for public consumption, drastically falling tax revenue is making them all irrelevant. The CBIA, he said, wants to hold the line on taxes, and not raise the costs of creating jobs.
He said big savings can result as the state closes more prisons and transfers some state services to community non-profit providers.
“With the budget failing at this point, now is the time to find innovative ideas that were overlooked in the past,” Flaherty said.
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