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Tentative Budget Deal Reached

by Christine Stuart | May 24, 2013 8:41pm
(16) Comments | Commenting has expired
Posted to: State Budget, Taxes

CTNJ file photo

Ceiling outside the Senate chamber

Democratic leadership in the General Assembly and Gov. Dannel P. Malloy have reached a compromise “in principle” on a new, two-year state budget Friday, according to sources.

Complete details of the compromise are not available yet, but according to sources it will rely on an alternative accounting method for federal reimbursed Medicaid dollars. The budget Malloy proposed is about $1 billion over the next two years over the spending cap under current budgeting rules. Malloy was unable to garner the three-fifths majority in the Senate he would have needed to make the changes he proposed in February when he released his budget.

Sources say a last-minute pitch by the American Heart Association to raise cigarette taxes by 95 cents per pack didn’t make it in, but the deal does eliminate a digital download tax that would have brought in tens of millions of dollars from iTunes fanatics.

The negotiated budget also continues the tax on electric generators, but to a lesser degree, according to sources.

The electric generation tax was first implemented in 2011 with the promise that it would sunset July 1, 2013. Malloy’s original budget proposal continued the tax and estimated it would levy about $76 million a year. The Democrat-controlled Finance Committee sought to rearrange some of its borrowing priorities in order to help sunset the tax.

Sources say it continues in the budget deal reached late Friday night, but raises less money.

Dominion, which runs the Millstone Nuclear Power Plant in Waterford, pays about half of the tax at the moment. But company officials couldn’t promise they would not move to pass the tax on to their customers if the legislature failed to sunset it this year. On Friday afternoon, Attorneys General Martha Coakley and Peter Kilmartin, of Massachusetts and Rhode Island, wrote lawmakers thanking them for sunsetting the tax at the same time that they warned them they would be keeping a close eye on the issue.

Coakley and Kilmartin argue it will raise electricity rates not only in Connecticut, “but it unfairly raises the rates of all ratepayers throughout New England and New York, and puts the region at a competitive disadvantage to attract jobs and invest.”

The negotiated budget also restores the $25 exemption for clothing and shoes by mid-2015. The exemption, which was eliminated in 2011, was a Malloy proposal aimed at middle-class tax relief.

Sources say there also will be a few more spending cuts and it’s unclear at the moment exactly how the negotiated budget handles the cuts to the 32 acute care hospitals in the state. Republican lawmakers were not included in budget negotiations.

The legislative session ends June 5. Sources said a deal on the budget will be finalized over the weekend and a vote could come as early as Wednesday next week.

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(16) Comments

posted by: PaulCarr | May 24, 2013  9:21pm

Gov. Malloy ran hard on bringing GAAP to State government. How does this budget agreement reconcile with that? Why are the dually elected Republican Representative not included? Some sectors of our citizens are paying taxes & not being represented!

posted by: Noteworthy | May 24, 2013  11:24pm

So it seems the Weasels win - “alternative accounting” is nothing but a weasel move and all the people who voted for it get the weasel award. Malloy said no new taxes, he wanted and got new taxes. He wanted to redefine spending as not spending - he got that and so did the two Toni(s). Violations of the public trust made 21 years ago; violate campaign promises now. Amazing.

posted by: Lawrence | May 25, 2013  9:01am

Still waiting for the alternative GOP alternative budget proposal to be put forth by Republican leaders/gubernatorial candidates.

Why are they no-shows to the budget debate for the first time in over half a decade??

If I was a registered Republican, I’d want to know too.

Paul Carr—citizens will be ‘represented’ when the Republicans vote against the budget, and their constituents get all the benefits of state spending and bonding anyway.

Take a look at most any Republican senators’ web site. They criticize the budget and state spending, then tout state money for ice skating rinks and other such projects in their own districts.

posted by: JAM | May 25, 2013  9:44am

I’m not clear on what Federal reimbursents they’re trying to exclude from the cap. To be consistent the money reimbursed in last year’s budget should remain under the Cap. Only any new Obamacare funds should be excluded.
Including all Medicare reimbursements opens up a gap that will have to be filled by the taxpayers.

posted by: Lawrence | May 25, 2013  12:02pm

Noteworthy—Connecticut is THE ONLY STATE IN THE COUNTRY that includes Medicaid spending as a general budget line item. Even the precious GOP states of Texas an South Carolina do this. So, still think it’s a ‘weasel move’? Or is CT so incredibly far behind the standard budgeting practices of every other American state that we are finally, finally catching up?

posted by: lkulmann | May 26, 2013  9:29am

Now I get it. FINALLY! My son is ENTITLED to Medicaid, Social Security and other Federal monies that CT receives. In the application my disabled son gets counted in the numbers. So, the State gets reimbursed for all of the money he is entitled to for basic human needs such as food, shelter, clothing, education and etc… Connecticut GETS the money and puts it in one pot called The General Fund Pot. No wonder the poor and the needy and the disabled get whats left over at the bottom of the Pot. If you’re not entitled to it get your hands out of the Pot! Go get your own POT:/
The Department of Developmental Services has been picked over so bad that we don’t even get postage paid envelopes like the other State Agencies…. animals!

posted by: Noteworthy | May 26, 2013  12:13pm

Lawrence:

I’ll set aside the fact you’re a GOP hater and assume you are actually interested in the subject instead of the CYA weasel moves of Democrat leadership and Malloy. That being said, I’ll make two points:

1. It is pointless to produce an alternative budget, even alternative amendments. The Democrats will do nothing but criticize them, dismiss and denigrate them. The Democrats who run this state are not interested in ideas or even in doing the right, nobel and practical applications of a budget. They are simply set on spending more money and doing it anyway possible including redefining what spending is spending.

2. I don’t give a tinker’s damn what other states are doing. You and party leaders always roll out what other states are doing provided it supports what you want this state to do. When other states’ actions conflict with what leadership here wants to do, funny how they never mention it.

Further, the rules and definitions that were in place when the income tax was passed; and the Constitution was amended for the spending cap which simply keeps the spending increases in line with real income growth was done to protect taxpayers from huge spending increases and massive debts that drive tax rates. Those same rules should apply now. To change those rules on what’s included in budget because the only safeguard afforded taxpayers would be violated otherwise, is a weasel move by those who claim to be gimmick free, transparent and above board.

posted by: Lawrence | May 26, 2013  8:47pm

Noteworthy, not a GOP hater. Far from it. But the bottom line is this: In this economy, with this budget situation, with these players, criticism means nothing. If you can’t walk your talk by producing a line-item alternative that adds up, then shut up. It’s that simple. I’m reminded of kids hanging around a basketball court dogging a pickup game. When they’re invited the court to actually play, they suddenly hear their mother calling them for dinner. It’s embarrassing for the Republicans, and undercuts their claims that they have a workable, better solution THAT THEY’RE NOT SHARING WITH ANYBODY.

posted by: Santa | May 27, 2013  11:18pm

Of all things not to make it in the cigarette tax!!!  Danny and crew should hang their smoke filled heads in shame!!!  Smoking kills more people than guns…

posted by: Noteworthy | May 28, 2013  8:50am

Lawrence:

This economy has nothing to do with the state budget. When you increase the proposed state spending by a billion dollars, when the increase was another billion last year; the problem is not the economy or the Republicans.

Since 1992, the popolation of this state has grown 9%; overall state spending has grown from $7.9 billion to a proposed $22 billion; retiree health benefits have risen 1,000%; pensions +580%; debt service +204%; and on and on. 

Malloy, the G.A. Democrat leadership has a problem only because the Constitution kicks in. Instead of limiting the spending increase, the move is how to slip the noose from their necks to ours and do it by claiming to do “what other states do.”  Good luck with that. It’s still a weasel move.

posted by: Greg | May 28, 2013  10:14am

Lawrence: Why are you so preoccupied with what the GA GOP does or doesn’t do with their lack of budget? They control nothing, their votes don’t mean much given the Dem supermajority,and any alternative is nothing but hot air and talking points…but yet you’re railing against them like this sham of a budget deal is their fault. What gives? 

Read the opener: “Democratic leadership in the General Assembly and Gov. Dannel P. Malloy have reached a compromise “in principle” on a new, two-year state budget Friday, according to sources.” 

This is a Dem-Malloy budget.  Debate it on its (de)merits, don’t obsess over what would be the very minority party’s non-factor of a budget proposal that doesn’t exist.  Trying to blame the GOP for not putting something forward doesn’t even make logical sense.  Dem budget deal with Malloy. Period.

posted by: GuilfordResident | May 28, 2013  11:54am

The CGA thinks residents are revenue sources. They think we are sheep to be fleeced. Apparently there are too many residents in CT that enable this.

My town property taxes, state income, and various other state taxes (sin. gas, sales, utility) paid throughout 2012 add up nearly what I could send one kid to UCONN for a year including dorm.

posted by: timelord | May 28, 2013  2:08pm

@GuilfordResident - hear, hear!

Regarding the cigarette tax, raising it *decreases* revenues after a certain point.  We’re already past that point.

Don’t forget that the gasoline tax will go up on July 1 by 1.28%.  With gasoline selling at $3.75 that raises the tax/gallon from approx. $0.26 to $0.31 and will raise the price of that gallon to $3.79.  (Numbers are approximate because of how gasoline is taxed.)

Meanwhile, just over the border in Sturbridge, MA, I can buy gasoline for $3.43.

posted by: ASTANVET | May 28, 2013  3:40pm

You know, if the CGA could just keep the money going to where it is suppose to go, we’d be a lot better off.  Transportation and infrastructure paid for by gas tax (except it went to the general fund), pension and benefit payments would be all set (except it went into the general fund) - the CGA does think we are fools - they may be right because we keep a supermajority in power in this state year after year… when you recognize that the problem is SPENDING you can figure out some solutions.  But they CGA and the GOV are still insisting on finding new taxes to levy.

posted by: GuilfordResident | May 29, 2013  7:25am

Once and a while, I bring the state fleecing us up to a colleague who lives not far from me. He says, “they’re going to find a way to get you.” The apathy is appalling. If you’re ok w/ being taxed into the poor house, send me some money to pay my taxes so I can save something for my kids education.

posted by: Lawrence | May 29, 2013  8:07am

Greg,

I think the GOP should have submitted a budget alternative for several reasons, each of which I think is pretty solid.

1) They are elected to legislate, each and every one of them. GOP House and Senate members have no problems introducing legislation, offering amendments, voting in committee and on the floor, and publicly speaking about the pros and cons of all legislation. Their greatest legislative responsibility, however, may not be in a particular banking bill or planning bill, but on how much public and federal tax dollars to spend our money on, and where to cut—and why—in a difficult economy.

2) At least for the past six years that I have read about, the Republicans have not only offered alternative biennial budgets (and given them catchy titles), but they have offered mid-year deficit mitigation plans, too. And the Senate Minority Leader has been on a “budget tour” around the state for several months, making presentations and gathering input. So, CT Republicans have historically—and presently—shown a deep and lasting interest in CT’s fiscal matters. Until this year. 

3) The top two Republicans in the CT legislature have spoken about running for governor next year. Obviously a governor’s job is multi-faceted, as Newtown and hurricanes and widespread power outages have proven. But perhaps the most significant responsibility of a governor, or someone aspiring to that position, is to embrace the fiscal and economic health of a state, especially emerging from a global recession. I haven’t seen any concrete proposals from the GOP hopefuls, just criticism.

4. I believe this is the most important reason: our Republican legislators are thoughtful, hardworking, experienced, caring people. They would not be in office if they were not. They have good ideas and are a part of our democracy. Good ideas are not limited to the majority party, especially on budgetary matters. I would hope that of the GOP put forth a budget alternative, parts of that could be or would be included in a final budget plan. I know there are philosophical differences sometimes on taxing and spending between the two parties. But no one is ever always wrong, or always right. There is an opportunity to help and make a difference, and I believe it should be undertaken.