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Lawmakers Approve Budget That Increases Spending, Gambles On Future Revenue

by Hugh McQuaid & Christine Stuart | May 3, 2014 10:16pm
(21) Comments | Commenting has expired
Posted to: State Budget, Taxes, State Capitol

Christine Stuart photo

House Minority Leader Lawrence Cafero

The legislature approved an $18.9 billion state budget plan this weekend that preserves municipal aid and preschool funding. The budget repeals keno but gambles on future revenue collection and unidentified savings.

Legislators in the House debated and passed the plan on a 91-55, mostly party line vote with Democratic Reps. Edward Moukawsher, Frank Nicastro, and Daniel Rovero joining Republicans in opposing it. A few hours later the Senate voted 21-15 to give the bill final passage early Sunday morning. Democratic Sen. Joan Hartley voted with Republicans against it.

Legislative Democrats and Gov. Dannel P. Malloy’s administration negotiated the budget this week after budget analysts concluded the $505 million surplus anticipated earlier had dropped to about $43.3 million based on disappointing income tax revenue.

“Let’s face it, we’re all humbled at the fact that budget projections really rely on the best guess of economists and fiscal analysts and those estimates can fluctuate so many states across the country have had to revise numbers,” Senate President Donald Williams said.

The new plan assumes that the Department of Revenue Services will, in 2015, collect an additional $75 million in unpaid taxes from tax delinquents identified last year during the tax amnesty process.

The budget increases spending 2.5 percent and it assumes the administration won’t spend $132 million that it had planned to spend when it approved the two-year budget last year. If spending patterns in the 2015 budget are maintained, the state will face a $1.3 billion deficit in 2016.

The budget assumes no revenue from keno and repeals the state’s authorization to implement the bingo-style game. Although keno was legalized last year, it was never rolled out and is generally unpopular among voters.

“This budget speaks to Connecticut’s priorities. Municipal aid, education, transportation, jobs, the environment, criminal justice, healthcare, and above all it provides the help to the people that need it in Connecticut,” Rep. Toni Walker, a New Haven Democrat who chairs the Appropriations Committee, said.

Christine Stuart photo

Reps. Patricia Widlitz and Toni Walker

The budget will again spare municipalities from most cuts. It increases the Education Cost Sharing formula’s payment to municipalities by about $47.5 million and boosts payment-in-lieu-of-taxes, or PILOT, for state property by $10 million and an additional $10 million for colleges and hospitals. It also seeks to distribute $12.7 million in the Municipal Revenue Sharing Account that was mistakenly caught in limbo after last year’s budget.

The budget further preserves spending for private, nonprofit providers who serve the developmentally disabled and the addicted. It transfers $11.5 million from the Tobacco Settlement Fund to substance abuse and mental health services.

“We were looking for a way that we could keep mental health providers, people who treat people with addiction in business because that system’s so fragile,” Sen. Beth Bye, co-chairwoman of the Appropriations Committee, said. “We believed it was a very appropriate use of the Tobacco Settlement Fund.”

The budget also includes an additional $4 million to open residential slots for 100 intellectually and developmentally disabled adults who have been on a waiting list because their parents are elderly. It was one of the additions the Appropriations Committee made to Malloy’s budget.

The budget scales back the tax relief Malloy planned to offer retired teachers by phasing it in over a period of three years. Under the budget adopted Saturday, 10 percent of the retirement income would be exempt. That exemption increases to 25 percent in 2016 and 50 percent in 2017.

“This budget is on time, balanced without any new taxes, and under the state spending cap. It invests in our children’s education, helps working families, encourages economic growth, and bolsters the Rainy Day Fund to protect taxpayers from future budget fluctuations,” House Speaker Brendan Sharkey said in a statement.
     

Christine Stuart photo

Sen. Beth Bye and Sen. John Fonfara

Republicans, however, claimed the budget is built on faulty premises. House Minority Leader Lawrence Cafero compared the budget to superficial repairs to a house in order to get its sellers through closing day. He said lawmakers were using “Band Aids and duct tape” and a fresh coat of paint to prop the budget up through the next Election Day rather than address its fundamental problems.

“We have water in our basement and our roof is leaking. If we’re honest people, and I believe we are, we have to tell that to the people of the state of Connecticut and we have to fix the roof,” he said. “The budget that’s before us now is a house built on a faulty foundation and unless and until we change that foundation, that house will crumble.”

Republicans questioned the reliance upon $75 million from previously uncollected taxes. Rep. Vincent Candelora, R-North Branford, called it a “wish fund,” for which the tax department has been given no new resources to collect.

Finance Committee Chairwoman Rep. Patricia Widlitz said the Commissioner of Revenue Services has the ability without legislation to reach out to taxpayers who have fallen behind on their taxes and negotiate a way to help them “meet their commitments.” She said that “most people want to pay their taxes.”

“Not these people,” Rep. Sean Williams, the Finance Committee’s ranking Republican, said.

The nonpartisan Office of Fiscal Analysis told Cafero in a letter Saturday that it has “not been able to obtain other information to support the $75 million in enhanced collection initiatives.”

“The very people who have not in the past paid their taxes and who did not pay their taxes vis-a-vis a tax amnesty program, a very aggressive tax amnesty program,” Williams said. “. . . All of a sudden we are expected to believe this revenue is going to come right in and our whole world’s problems are going to be solved right here in Connecticut.”

He said it’s decisions like this that cause the state to continue to run into deficits.

Already, the current fiscal year budget fell $462 million short of the $505 million surplus budget analysts predicted in January. That’s in addition to the loss of keno revenue.

In addition to the $75 million in miscellaneous tax revenue, the budget assumes that a number of Correction Officers eligible for retirement won’t be retiring, which means the state won’t have to find $51 million to fund their retiree health benefits.

State Comptroller Kevin Lembo told the governor’s office and nonpartisan budget analysts that he believed it was prudent to add that money to the budget. The Appropriations Committee did added it to their budget, but after revenue estimates came in lower than expected, Bye said “the committee has a level of comfort that the Office of Policy and Management will be able to meet their obligations to retiree health care.”

State budget director Ben Barnes said he doesn’t believe the Correction Officers will retire despite their eligibility because most are fairly young.

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(21) Comments

posted by: DrHunterSThompson | May 4, 2014  7:07am

DrHunterSThompson

Just a few thoughts from the Doctor ....... It’s fun when the republicans are right, isn’t it? The $75M is kinda fictitious and full of hooey, seems from the description of their “tool box” the DRS henchman are going to drive around in plain cars and trenchcoats and threaten the bad non-taxpayers amongst us with harm to their families. They’re the Taxmen, if it gets too cold they’ll tax the heat, if you take a walk they’ll tax your feet.

Prison guards can’t wait to retire.  Dem dems gots a big surprise on the short horizon if they are truly banking on that fiction.

HST

posted by: IOU | May 4, 2014  8:41am

IOU

No keno. Thank you Legislature.

posted by: Stan Muzyk | May 4, 2014  3:39pm

“Snake-eyes.” The Malloy Democratic leadership has already gambled away our future. We have no future in Connecticut due to our elected leadership squandering away our money,  and continuing to deficit- spend by adding to our massive debt. We keep doing it to ourselves by voting in an iron-clad control one-party regime into office—that shows no mercy on our dwindling taxpayers.

posted by: Lawrence | May 4, 2014  7:23pm

And yet, what I think would be most alarming to Republican commentors here and Republican voters across the state is that the poll-leading Republican alternative to all this, Tom Foley, has no budget answers for Republicans and unaffiliated voters in CT.

While the press focuses on the waning days of the legislature, Tom Foley avoids every public discussion of Republican alternatives for the future of CT.

When asked by CT news junkie about his position on potential tax hikes next year—honestly one of the most basic and important positions a gub. candidate can take—he is the ONLY Republican gubernatorial candidate to have a spokesman issue a statement for him; the other GOP candidates took the time to speak directly with the press.

Mr. Foley’s history of responsible, balanced approaches to solving CT’s budget deficits—both immediate and long-term—is disappointing bordering on frightening.

In 2010 he told the CT Mirror that he didn’t have to raise taxes or cut spending—that a $3 billon budget deficit would disappear when he was elected and CT gained back the 100,000 jobs it had lost in the recession (several years after the recession officially ended we are about 70 percent of the way there.)

Here’s a link to a different CT Mirror story, titled “Tom Foley tests the limits of Fiscal Credibility.” No, it is not an editorial:

http://ctmirror.org/foley-tests-limits-fiscal-credibility/

If Republicans in 2014 can be alarmed and disappointed in the Malloy administration’s reliance on $75 million in expected back-tax collections (I still want to see the background research and the plan from DRS), then what do they make of their front-running gubernatorial candidate who counted on not just 7.5 percent income growth to raise $620 million in new revenue, but who expected 12.1 % revenue growth and $1 billion in new revenue? And unprecedented union labor contract savings from a bargaining group that had already just re-negotiated its contract? And who counted on half a billion dollars more in federal aid (courtesy of the U.S. House Republicans??)

A questionable (for now) $75 million in a $19 billion annual budget is a problem, if a miniscule one (as far as percentages go).

But if Republicans can be angry about $75 million, what do they have to say about their own Republican frontrunner’s expectation in 2010 for over $1 BILLION in ‘fiscal gimmicks.’?

There must be some parity here.

And, again, despite Republican outrage over tax increases, spending levels, out-year budget deficits and ‘tax hikes,’ the CT Republican alternative budget had all of that in spades.

So, again—what is the GOP alternative?  Don’t use new tax revenue? (they do) Don’t have multi-billion dollar out-year budget deficits? (they do) Don’t raise taxes? (they do) Don’t rely on revenue gimmicks to balance budgets? (they do).

posted by: dano860 | May 4, 2014  9:25pm

OK, so they get the $75M. What’s that really get us? That may cover the money we give the none tax payers, the unearned tax credit and maybe one of the two annual longevity payments they give the State check collectors. They deserve it, yup more of ‘we deserve it’ crowd.

posted by: Noteworthy | May 5, 2014  6:53am

This budget is embarrassing. What is so damn hard about producing a budget, fully vetted, reasonable and balanced, free of gimmicks and gotchas and that makes sense to anybody who reads a summary of it? Why does it not fund the promises made to employees? This is just another WTF moment brought to you by the CT Legislature and the Malloy administration - a one sided manufactured budget of mystical proportions that defies gravity and counts on hope as a spending strategy. It doesn’t have to be this way but year after year, this is the path always traveled as those who rule put common sense on shelf and hold press conferences telling us just how smart they are.

posted by: Noteworthy | May 5, 2014  8:11am

Lawrence: The great disappearing act on the surplus, coupled with a big spending increase and massive out year deficits and a hookah inspired balancing act this year - and you point to Foley and the lack of GOP spending cuts? They’ve been barred from the table, not one idea was given a snowball’s chance in hell of being discussed let alone adopted. Your distraction tactics don’t put a dent in this continuing budget silliness.

posted by: DCSCT1 | May 5, 2014  9:54am

Lawrence…

I don’t alway agree with what you say, but you are spot on.  The republicans especially Foley have no real alternative ideas.  Both sides are using shaky assumptions when it comes to both revenue, and how the Connecticut economy will look 2 to 3 years from now.

posted by: Stan Muzyk | May 5, 2014  9:55am

@Lawrence: You provide a very Democratic diversion ploy of attacking a non-incumbent Tom Foley when you cannot defend the failed fiscal policies of Gov. Malloy and his controlled Democratic General Assembly. You appear to write a lot—even though you are aware that you are not right….only to defend your failed anti-taxpayer political preference.

posted by: Matt W. | May 5, 2014  10:37am

Matt W.

Interesting choice of photos for the headline.  I would say that SpongeBob Squarepants had as much to do with this budget as Cafero. No stock photos of spongebob?

posted by: GBear423 | May 5, 2014  12:33pm

GBear423

Why is Cafero in the headline Picture?? He and the gop voted against the budget. No pictures of University President Williams available?
...and its so typical to see a Dannel Fanboy carrying on about Foley, and the story is about a Democrat Budget banking on the proven faulty budget anlaysts projections that brought us the revoked $55 check news last week!

posted by: Stan Muzyk | May 6, 2014  1:13pm

WE are stuck with the bad leadership of Gov. (No Joy) Malloy as he has politically inherited the failed policies of his tutor—Pres. Barack (Way off track) Obama—a leader in deficit spending.

posted by: ASTANVET | May 6, 2014  3:05pm

What the Liberals in the comment section (and in the state) don’t want to recognize is that we have a huge spending problem.  You either want one of two things… A very expensive government (another 1.5 billion in taxes), or a reduction in services and programs.  You can’t have both.  We can debate what is essential in the State, but we should not go further in deficit spending, debt building, or unfunded requirements.  For the record, i don’t think any candidate on either side of our political sports teams have the candor to discuss what needs to happen, or even bring up a rational debate!

posted by: Joebigjoe | May 6, 2014  3:34pm

As for Lawrence’s comment, I dont think Foley is answering the question in detail because no body is going to be happy with what he or someone else does.

The producers are not going to be happy, and the non-producers aren’t going to be happy. The State employees aren’t going to be happy, and employers aren’t going to be happy.

If I have to pay a little more but in the end the Democrats have to hang their heads in shame because the average person in this state realizes what they have done and don’t trust them again for many years until they purge themselves of the Lunatic Left, then I’m happy.

posted by: gutbomb86 | May 6, 2014  4:30pm

gutbomb86

Yet another example of faulty analysis and black/white thinking from a conservative. The solution can ONLY be cutting spending, because there are no consequences to cutting state jobs at all, right? No consequences to putting people out of work?

Typical conservative nonsense. You don’t have any answers or ideas. It’s the broken-record in an echo chamber.

Wait five minutes and StanMuzyk will go ahead and copy-paste another one of his identical comments from every thread. Yawn.

posted by: DCSCT1 | May 6, 2014  4:52pm

Why is it whenever there is a shortfall(75 million this time) no one from either side seriously talks about looking for spending cut?  Why is that? Because both sides (D’s and R’s) have the special interests to keep happy.  It easier to say they will somehow find this additional revenue(in a time of declining revenues), sweep funds from dedicated account, and use gimmicks then make hard decisions to get the states fiscal house in order.

posted by: Stan Muzyk | May 6, 2014  5:30pm

@gutbamb86: You can’t defend Gov. Malloy—so instead you attack the conservatives.  Nice try, but no cigar.

posted by: ASTANVET | May 6, 2014  5:50pm

Gutbomb, you have two columns expenditures and revenue (i.e. taxes/fines/regulatory income).  What I object to are the priorities to set a public institution up in lavish green glass buildings while we cut funding for people with developmental disabilities.  While we cut services to people who genuinely need the social services.  It’s disgusting.  You know it!  All i’m saying, and i can’t believe you don’t agree - is that we have to manage our finances better.  If the answer is raising taxes to meet what the people of CT want to pay for, so be it.  There are sure to be second and third order effects from that too, but we shouldn’t hide that fact.  You want a program or an employee, let me know what they cost and what service they provide.  Embrace it, broadcast it… and then tax people to pay for it.  You want to pay a zillion in taxes, i’d bet not, but you probably just want me to pay a zillion… hahahahaha

posted by: gutbomb86 | May 6, 2014  5:50pm

gutbomb86

@stanmuzk - you say that, and yet I have defended his recorded repeatedly here. But you never actually respond to specifics.

Instead you leave the same cranky comment, copy-pasted from one thread to another. Yawn. Still waiting for a viable candidate from your party. Still waiting for a viable idea. Instead your party has offered a budget that is essentially the same as Malloy’s. Even your own party’s leadership is unable to differentiate themselves from what is pretty obviously the best way forward under the circumstances.

Maybe it’s time you realize that your ideas don’t get traction because they’re not good ideas.

Also, calling the governor names and whining away about the president aren’t really ideas - those are just expressions of your own personal biases.

I’ve mentioned these before, but will do so yet again, Stan, for your benefit:

Here’s why I’m still fine with the job Malloy has done:

-I’ve got excellent insurance for the first time through the ACA, which was rolled out without significant problems here and was on its way in CT even before the ACA.

-Repealed the Death Penalty, which is immoral and wasteful.

-Paid sick days - this was the moral thing to do and it needs to go further since I’ve suffered from a stomach flu that I picked up at a restaurant, likely from someone who was still afraid to take a sick day.

-The minimum wage increase - it was time. And it’s rolling out gradually as a compromise, which is appropriate. There has NEVER been a time when a minimum wage hike didn’t help the economy overall.

-Tighter control of firearms - long overdue and much needed, and particularly appropriate after the murders in Newtown. It took LEADERS to make it happen. This is something that needs to be mandated at the federal level but once again, smarter gov’t here leads the way. This alone would get my vote for Malloy if I were a one issue voter, but I’m not.

-Balanced budget. It’s not perfect and there are still some revenue streams where they appear to be hopeful, but nevertheless they’ve kept the lights on and the doors open without putting thousands of state workers out of work - something that ALSO has consequences and which Republicans often like to ignore in their rhetoric.

-Invested in data management at one of the state’s biggest cost centers - DSS. Should have been modernized a long time ago. They’re getting it done.

-Earned Income Tax Credit - helps people who need it. Again - morally and fiscally appropriate since the money goes right back into the economy.

-Paying for contractually agreed pensions. Something that Republicans opted NOT to do, putting us in financially dire straits.

-Scrutiny of GMOs, necessary because Republicans nearly destroyed the federal gov’t's ability to protect us from chemicals and other things to which we’re exposed as consumers.

posted by: gutbomb86 | May 6, 2014  5:58pm

gutbomb86

@astanvet - that’s a much more reasonable comment than your original, and you managed to post it without trying to plaster a negative label on everyone who disagrees with you.

In my estimation, we are managing our finances better in many ways but we’re still in a crunch for four major reasons:

1) the economy hasn’t rebounded yet, and there’s not a whole lot the state can do to help that without making matters worse through mass layoffs. If you don’t like private sector layoffs, you can’t also like public sector layoffs. The impact is the same.

2) We are playing catchup on investments we failed to make in the past: better data management, infrastructure, etc.

3) We failed in the past to pay our contractually obligated pensions. This is criminal. Part - only part - of the blame for this lies with the Dems in the legislature. It’s a lot harder to move a group forward than it is a governor’s office. Govs. Rowland and Rell needed to make this happen and opted instead to use the anti-labor playbook and decided not to fund the pensions, creating an artificial crisis today that puts the rest of us at odds with each other. Fund the pensions. We agreed to them. We’ve already drastically scaled back what we offer for pensions, and Gov. Malloy brought the unions to the table and won HUGE concessions. We should be THANKING our unionized state employees rather than vilifying them. (They certainly don’t help themselves, however, in the comment threads here).

4) Healthcare & healthcare insurance reform. Republicans fought this tooth and nail. Aside from the price of real estate, the cost of healthcare and health insurance are the two largest cost drivers against job creation. We are finally addressing that, regardless of partisan yammering.

Simply cutting doesn’t solve the problem - it takes a careful approach. We could probably be doing better but please don’t try to tell me that polarizing the discussion by attacking “liberals” is the way forward. We need a careful approach. Humility would be helpful from both sides. Instead, Republicans spend $100M in each election cycle to destroy the state’s reputation.

Don’t complain about the business climate when your party spends $100M to make us look bad.

posted by: Stan Muzyk | May 7, 2014  5:10pm

@gutbomb86:  Calling my comments cranky—and defending yours as viable—“depends on the nature of the the purpose of your madness.”  You write a lot, but no one cares that you dialike Tom Foley—“as no one knows Lawrence.”  Don’t give yourself creditability
as an unknown critic of Republicans—who are not calling the shots in our current state fiscal demise.