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House Approves Budget Sunday Morning

by | Jun 2, 2013 5:29am
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Posted to: State Budget

Christine Stuart photo

House Minority Leader Lawrence Cafero

It preserves the safety net, education funding, and municipal funding, but the two-year $37.6 billion budget adopted Sunday morning by the House of Representatives also sweeps several funds and moves about $6.4 billion out from under the spending cap.

The House voted 95-48, along party lines, in favor of the budget around 5:12 a.m. just as the sun peaked through the stained-glass windows of the state Capitol.

The most controversial piece of the budget — moving $6.4 billion out from under the spending cap — received the most attention from lawmakers trying to make sense of a document they received moments before debate began at midnight.

It was explained to members of the Finance Committee late Saturday night that by “net appropriating” federal Medicaid reimbursements the state will receive under the Affordable Care Act and other federal programs, the budget effectively removes about $2.9 billion in 2014 and $3.5 billion in 2015 out from under the cap.

Democratic lawmakers argued that no other state in the nation includes federal revenue under their spending cap, and Republicans who largely opposed the budget said it’s an unprecedented temporary fix in favor political expediency.

In February, Gov. Dannel P. Malloy proposed a budget that redefined the spending cap, but he was unable to secure the three-fifths majority necessary in the General Assembly to make the changes. Support for changing the definition of the spending cap eroded last month when some of the 22 Democratic Senators refused to support it. Instead, a small group of senators sought to find ways to cut $500 million from each year of the budget in order to remain under the current spending cap.

But the handful of lawmakers and Malloy administration officials negotiating the budget decided that removing some federal funds out from under the cap was a better solution. Instead of removing $500 million from the cap in the budget’s first year, they decided to remove $2.9 billion in the first year and $3.5 billion in the second year.

“For the first time we’re going to treat some — not all — federal funds differently than we’ve ever treated them in the past,” House Minority Leader Lawrence Cafero, R-Norwalk, said. “What we’re doing tonight just with regard to revenue is different than we’ve ever done it before . . . that doesn’t make sense to me.”

He said it ignores the constitution and 20 years of budget writing history.

But Democratic lawmakers said Connecticut is the only state that counts federal funds as part of its budget, and it does so to its detriment.

Christine Stuart photo “We would be squeezing out other programs because of the federal dollars coming,” Rep. Patricia Widlitz, co-chairwoman of the Finance Committee, explained. “That really is not a benefit to the taxpayers of our state.”

Rep. Vincent Candelora, R-North Branford, said when the state stops receiving 100 percent reimbursement of these funds in 2017 it’s going to have trouble moving them back under the spending cap.

“We are prolonging the agony,” he said. “No one here should be fooled we solved the problem.”

The Medicaid maneuver was called “voodoo” by one Republican lawmaker during the floor debate and it wasn’t the only “gimmick” or “broken promise” included in the budget.

The budget also sweeps about $30.4 million from the Clean Energy Financing and Investment Authority and $5 million from the Regional Greenhouse Gas Initiative account. The move was the nail in the coffin for environmentalists frustrated with at least three pieces of legislation passed recently by either the House or the Senate.

“They’re going back to a trick that’s been tried before,” Chris Phelps, director of Environment Connecticut, said Sunday.

The funds, which help finance residential solar and other clean energy efficiency projects, have been raided during tough budget times under previous administrations.

“It takes a huge bite out of the clean energy programs and could be potentially devastating to those programs,” Phelps warned.

But taking money out of those programs wasn’t easy for lawmakers.

“We had to make some very difficult decisions in the budget and there were some items we were negotiating until just a few hours ago,” Widlitz said.

She said they decided to take the funds from the Clean Energy Finance and Investment Account because the other choices were worse. She said they hope to be able to restore those funds, which is why the bulk of the money was included in the second year of the budget.

The budget also sweeps more than $76 million from the Special Transportation Fund, a budget gimmick for which Malloy had criticized his Republican predecessors.

The budget also legalizes Keno for the first time in Connecticut outside of the tribes’ sovereign territories.

According to the bill, which was posted online shortly before midnight, it allows the Connecticut Lottery Corporation to offer Keno games. In Connecticut, the two Indian tribes, have exclusive rights to casino games under a compact negotiated with the state more than 20 years ago.

The state will negotiate an agreement with the Mashantucket Pequot and Mohegan tribes to share Keno revenue, but as of Sunday morning there was no formal agreement. The budget authorizes the state to give each tribe up to 12.5 percent of the gross Keno revenues. Keno is expected to raise $3.8 million in 2014 and $27 million in 2015.

Sen. Andrea Stillman, D-Waterford, said in a Finance Committee meeting late Saturday that she’s disappointed Keno is in the budget. She said she understands the problem the state is facing but remains concerned about gambling addiction and the lack of funding for addiction treatment.

“I don’t know that Keno will ever happen,” Sen. Minority Leader John McKinney said Saturday. “They’ll put the numbers in the budget,” but they need to work out an agreement with the two tribes.

Christine Stuart photo That agreement has yet to be reached, even though at least one of the two tribes has expressed a willingness to negotiate. Widlitz was unable to comment on those negotiations Sunday morning during the House debate.

Cities and Towns

Municipalities who were unhappy with the budget Malloy unveiled in February were largely content with the budget approved Sunday morning.

“The new state budget is a clear win for towns and cities and their local property taxpayers,” Jim Finley, CEO of Connecticut Conference of Municipalities, said.

Cities and towns will receive about $3 billion a year under the budget adopted Sunday.

Municipalities were upset with Malloy’s proposal to phase out the PILOT program as it currently exists and to also eliminate the municipal motor vehicle tax. Earlier this month a group of lawmakers led by House Speaker Brendan Sharkey proposed setting a statewide mill rate for property taxes on vehicles and phasing it out over time.

Sharkey said Saturday that many of the proposals from his municipal commission will be adopted as part of the language implementing the budget.

Taxes

Malloy proposed extending a tax on electric generators earlier this year to raise about $76 million, but Democratic lawmakers removed it from the budget by re-prioritizing some of its borrowing. The final version of the budget adopted Sunday included $17.5 million in revenue from electric generators.

However, the proposal sunsets the tax in October before lawmakers return to adjust the budget in 2014.

Dan Weekly, vice president for government affairs for Dominion, said they were pleased the legislature understood the importance of sunsetting this tax. He said it was greatly reduced from where it was when negotiations began.  Dominion pays the largest portion of the tax.

The budget does not sunset a 20 percent surcharge on the corporation tax, which is expected to raise $44 million in 2014 and $74 million in 2015. It also extends a cap on the use of tax credits for insurance premiums to raise about $27 million over the biennium.

Also, the provider tax hospitals have been paying will be extended. Unable to reach a deal with the administration, the state’s 32 acute care hospitals will continue paying the tax without reimbursement. The administration argues that it will see more money starting in 2014 because more individuals will be covered under the Affordable Care Act.

Rep. Penny Bacchiochi, R-Somers, offered an amendment that would have restored the funding to hospitals. She warned that the hospitals will have to layoff employees in order to make up for the loss in revenue.

The budget also restores a sales tax exemption for clothing and footwear priced under $25. The measure was touted by Malloy as “middle class tax relief.”

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Comments

(16) Archived Comments

posted by: Lawrence | June 2, 2013  7:23am

Brilliant series of amendments there, Republicans. Now we know why you didn’t even bother to propose an alternative budget.

$90 million in budget savings from a state employee suggestion box??

$200 million + in layoffs?

Creating a new pension alternative when the existing labor contract for pensions and benefits is in effect for another nine years (Rowland locked the state in from 1997-2017, Gov. Malloy extended it another five years)?

Smashing the working poor by taking away Ronald Reagan’s lauded Earned Income Tax Credit, which EVERY STATE IN THE NATION OFFERS.

Yet another war on CT’s poor and the unemployed (more and more they used to be middle class suburbanites; caution, GOP!!) with a phony hunt for EITC and unemployment fraud?


Laughable.
Hateful.
Ridiculous.

posted by: JAM | June 2, 2013  7:33am

And what happens if the Tribes want a larger cut? They’re not exactly flush these days. How can you budget money without a firm agreement?

posted by: dano860 | June 2, 2013  9:18am

Smoke and mirrors, that’s what comes to mind after reading this report.
“middle class tax relief”, he has to be joking! A whole $1.60, WOW! That won’t even get you a DD ice coffee. It doesn’t even cover the tax on a gallon of gas, what a sham.
So now, once again, we are accounting for money that is “estimated” to be received in ‘14 & ‘15 but after ‘15 the whole thing disappears and the Feds throw us nothing. What happens if the seniors leave the State or they get healthy? The reimbursement is based on spending, right? If there are no people then there is no spending. Then the magical mystery numbers, pulled out of a hat, of $2.9B in ‘14 & $3.5B in ‘15 will not be the expected amount.
At a fund raiser on Friday I heard Senator Blumenthal say that he didn’t think KENO would happen in CT. I have to believe he has a pretty good handle on this since it was all done under his watch. If it does go through it is just another form of a regressive tax on the lower middle class. Add it to the sin tax and lottery, smoke and mirrors.
Get rid of the clean energy subsidy funding, yup! Why? Because it is a big number and that would support removing people from the grid. The grid that provides tax on services and power. We can’t allow that to happen.
A good friend, who happens to be a former State Representative, predicted this budget would come out just as it has.
The party line vote substantiates the Republicans move of not needing to present a “throw away” budget proposal.
Donny Williams and his band of merry wanderer’s pull off another fast one. This says to me that the majority of CT voters like being stiffed and paying more and more. With this budget there is no way Dannel can claim to be GAAP compliant…that would be a huge deceitful lie!

posted by: Simon Peter Gruber | June 2, 2013  10:58am

How does this budget “preserve the safety net” exactly?

posted by: maryd | June 2, 2013  1:49pm

It is astounding that given the data the legislature has available to it that legalizing keno will create as many problems as it will solve, the legislature is in the process of voting to legalize keno without a hearing, without a cost-benefit analysis and without including in the bill provision for increased funding for problem gambling prevention and treatment!

When is the amount of legalized gambling in the state too much?  It is clear that the answer is the same for the state as for problem gamblers – NEVER ENOUGH. How does the state know that keno will reduce a budget deficit if it doesn’t know what the financial and social costs will be?  It doesn’t.  The answer from the proponents of keno is embarrassing in the absence of solid data support.  However, we do know that significantly increasing gambling will definitely increase problem gambling with its serious individual, family and societal problems. It is irresponsible to propose Keno and not pair it with new funds for treatment, prevention and research related to problem and underage gambling.

It is very clear that keno embedded in communities across CT will dramatically increase exposure of our youth to gambling. For example, minors will gamble on keno along with their parents while dining in restaurants. Other minors observing this at other tables will also want to gamble – and will.  It is a well- researched fact that the earlier gambling begins, the greater the likelihood of a gambling problem as an adult.

Three CT studies have documented the serious problem of youth gambling in CT. The last of these studies was conducted by the Yale Department of Psychiatry with partial funding by the state!  Despite this, the legislature has demonstrated little concern about addressing the serious problem of youth gambling in CT.  A primary example is the resistance of the legislature to removal of the law which specifically permits adults to give lottery tickets to minors.  Even the CT Lottery Corporation strongly opposes this practice.

The projection of the amount of new dollars to be derived from keno is unrealistic, especially if measured against the new social costs.  Why hasn’t a cost-benefit analysis been conducted instead of presenting an inflated expectation of benefits without any estimation of social and public health costs and without including new funds for problem gambling prevention, research and treatment?  Balancing the economic benefits of gambling and the long term wellbeing of our communities and our citizens should be a key priority.

The CT Council on Problem Gambling is neutral about whether gambling should be legalized but is strongly opposed to legislation which will increase problem and underage gambling and does not allocate an appropriate proportion of the expected revenue to addressing the inevitable problems that will result from the proposed gambling.

Mary Drexler
Executive Director
CT Council on Problem Gambling

posted by: Chien DeBerger | June 2, 2013  3:45pm

This state is screwed…

posted by: Joebigjoe | June 2, 2013  4:17pm

Dano I’m just shocked that you were at the same fundraiser as Blummie yet I see nothing in the media about how a private citizen put him in his place. Were you beng held back?

posted by: dano860 | June 2, 2013  5:25pm

Maryd, you are correct, it remains a mystery as to why they do the things they do. You mention, “given the data the legislature has available to it,” Where do they get that data from? It certainly isn’t anything that the State has compiled. I wouldn’t think that it comes from any data base the IT people have compiled.
How can anyone prepare a budget on gambling? I would love to go to the bank with a pile of lottery tickets to apply for a loan. This is a fools road to ruin.
They are driving up the cost of social repair. I consider this is an attack on the lower end of society. I live 3 miles from Mass & 3 miles from R.I., they each have KENO and both States are still in the hole. Especially R.I. which has all forms of gambling and they are still broke!
The places that I see KENO in are primarily bars or places that serve alcohol and food. This will be an attraction to those folks that have dual addictions.
I see this as a step towards on-line gambling too. It is quite obvious that they have no prospects or ideas about how to increase jobs or business opportunities in the State.

posted by: JamesBronsdon | June 2, 2013  7:06pm

Lawrence, when you bash Republicans, perhaps you can share with us who is writing your pay check. I’m private sector, insurance, non-government relations.

posted by: Noteworthy | June 2, 2013  9:37pm

This budget is a disgrace and those that voted for it are even worse. The Dome Dwellers are held in low regard by the public for a reason and one of them is a budget like this - higher taxes; raiding designated funds; more taxes; more spending. It is incredible the lack of stated priorites and broken promises These people can’t even stick to the Constitution without doing teh Taxes Two Step.

Lawrence: There you go with the everybody else is doing it again Who gives a damn what other states are doing? Other states don’t have the debt we have or the taxes. The EITC welfare program in Connecticut is a $120 million giveaway. Nobody was clamoring for it except Malloy and Looney. When the state is broke, how do agree to a new annual program of that magnitude. It’s beyond stupid. And when the smoke clears on this mess, more last minute gambling and half baked spending ideas, they’ll find out just how unbalanced it is and will be back again. This is tired and old.

posted by: dano860 | June 2, 2013  10:50pm

JBJ, I was invited on a dare,sort of. I can keep my mouth and feelings in check at times. Especially when so out numbered, Joe Courtney was there too.
I will guarantee you there was no cash or any checks written that came out of my pockets.
As they have said about Dicky for years, he will appear at a garage door opening when invited or the age old question, “Where is the most dangerous place to be in Hartford?” Answer, between Dicky B and a camera.
Rest assured, I went home and took a shower.

posted by: OutOfOutrage | June 3, 2013  11:55am

OutOfOutrage

You’re all just screaming at the wall.  Get out now before this nonsense begins to affect the property values.  It’s simply a matter of time.

posted by: Christine Stuart | June 3, 2013  12:45pm

Christine Stuart

To Simon Gruber:
It protects the safety net because it does not kick 40,000 parents off their HUSKY health insurance and into the exchange in 2014 for starters. There are cuts, but for the most part social services was spared too much pain.

posted by: justsayin | June 3, 2013  1:46pm

Christine, I thought preserve the safety net was democrat speak, meaning vote for me. Also the exchange was going to be the panacea for low cost, quality health care? What are you saying Husky is better, why change?
This is all foolishness, they fixed nothing accomplished nothing the state is not better off.

posted by: Simon Peter Gruber | June 3, 2013  6:48pm

To Christine Stuart:

Okay, I understand your point. But I think the “safety net” encompasses a lot more than just that. I’m not sure it’s accurate to say that social services were spared too much pain. Developmental Services, for example, was hit hard when you consider the rescissions and cuts from November and December.

posted by: Simon Peter Gruber | June 3, 2013  6:50pm

Social services might not have had massive cuts across the board, but the state hasn’t nearly kept up with funding them over the last decade or so.  Cuts on top of flat funding.