Malloy budget gets green light

In a victory for Gov. Dannel Malloy, state lawmakers moved the governor’s budget proposals closer to law Thursday.

The state legislature’s Finance and Appropriations Committees approved Malloy’s tax and spending plans, which now head to the floor of the General Assembly to be voted on as early as next week. But while record tax increases and wide-ranging spending cuts will close much of the state’s projected $3.2 billion deficit, $1 billion of it is still in doubt: concessions from state employees

In addition to their opposition to the record $1.4 billion tax increase in Malloy’s budget, Republicans in Hartford were quick to denounce its reliance on the outcome of closed-door concession talks with state union leaders, underway since early March.

“Passing this tax and spending plan without those concessions would be inconsistent with the Governor’s promise and the legislature’s responsibility to pass a balanced budget,” State Senate Minority Leader John McKinney (R-Fairfield) said.

But legislators did not stop the fact that the concessions have not been finalized stop them from putting their stamp of approval on the governor’s budget. While Malloy downplayed any impact the approval might have on the ongoing labor talks at a Wednesday press conference, the committees’ approval may create additional pressure on union leaders to produce the concessions Malloy is requesting.

The governor’s request of $2 billion over two years in reduced wages and benefits from the state’s roughly 45,000 employees is more than any Connecticut governor has demanded, said Senate President Pro Tempore Donald Williams (D-Brooklyn).

Larry Dorman, spokesman for the State Employee Bargaining Agent Coalition—representing all state employee unions—said the concession talks are ongoing, but provided no update on when they might conclude.

“We will continue our discussions with the governor to see if common ground can be found between him and those struggling middle class families who happen to work for the state,” Dorman said.

Malloy has already drafted a “Plan B” budget with what he called “nasty and ugly” cuts and layoffs in case the talks fail to produce his target of $1 billion this year.

After hearing reactions to his budget from the public at 17 town-hall meetings throughout the state, Malloy made modest revisions to the proposals he unveiled Feb. 16. The revised budget approved by the committees restores popular tax exemptions and shifts some of the burden of tax increases onto the wealthy.

For example, only the first $2 million is exempt from the state inheritance tax, rather than the original $3.5 million, a change expected to raise $45 million. Malloy will restore $300 of a $500 property tax credit slated for elimination, and in compensation will accelerate the phasing out of low income tax rates for the state’s top earners.

“I was listening,” Malloy said. “I’m proud to say that the end result is a better product, as I had anticipated it would be, than the Feb. 16 document. That’s because more people had more time to have a substantial input.”

But the budget still does not ask enough of the state’s large corporations and very wealthy residents, who are not “paying their fair share,” Dorman said. Instead, it asks state employees and other middle class workers to pay for an economic crisis they did not cause, he said.

But in an effort to keep the state’s top tax rate competitive with New York, New Jersey, and Massachusetts, Malloy has repeatedly refused to raise income taxes on top earners any higher than the proposed 6.7 percent.

A “no-tax alternative” budget proposed by Senate Republicans on Tuesday was ignored in the Finance and Appropriations Committees’ approval, which fell mostly along party lines.

Republicans in both the House and Senate excoriated the governor and Hartford Democrats for the record $1.4 billion tax increase.

“Governor Malloy and the Democratic majority have let down the people of Connecticut,” McKinney said. “This massive and unnecessary tax hike flies in the face of the unanimous public outcry against unsustainable government spending and higher taxes.”

Still, Republicans were not excluded in the budget process, Malloy insisted.

“But there is a simple reality,” he said at a press conference. “Time was passing and we needed to get the work done.”

The Senate may vote on a budget as early as this week.

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