A key Democratic committee voted Friday to increase state spending by nearly 10 percent over the next two years in a state budget that cuts millions from hospitals, increases salaries for judges by 5 percent, cuts college scholarships, and extends a tax surcharge on corporate profits for two more years.
Legislators on a separate committee voted to reject Gov. Dannel P. Malloy’s highly controversial plan to eliminate the property tax on most cars for the next two years, but Democratic leaders left the door open Friday for a possible compromise in the future.
Gasoline prices would increase by 2 to 4 cents per gallon on July 1 under a previously approved tax increase that is now scheduled to take effect for the main summer driving season. The increase would occur under the state’s highly complicated, two-pronged gasoline tax, and the exact amount of the tax would vary because the percentage is pegged to the fluctuating wholesale price of gasoline.
The budget committee restored some funding for cities and towns, but the chief lobbyist for municipalities described the decisions as “a mixed bag” that will be subject to further negotiations. Lawmakers also rejected Malloy’s plan to consolidate the legal staffs of the Freedom of Information Commission and other watchdog agencies, rather than keeping them autonomous.
The budget-writing appropriations committee called for spending $21.5 billion in the fiscal year that starts on July 1 and $22.36 billion in the following year. The combined total is $49 million higher than Gov. Dannel P. Malloy proposed over the biennium - essentially the same level as the governor on a two-year base of more than $43 billion.
Democrats who control the House and Senate said the budget and tax decisions were reasonable in a time of economic sluggishness. Sen. Toni Harp, the influential co-chairwoman of the budget committee, said the proposal was “a little better” than the plan offered in February by Malloy.
Friday’s proposals re-set the table and set the stage for the final budget negotiations that will involve Malloy and the top legislative leaders. The final decisions will likely not be made until late May or early June as the legislative session is scheduled to end on June 5.
But Republicans blasted both the taxing and spending decisions at the committee level.
“This budget does not curtail government. It grows government,” said House Republican leader Larry Cafero of Norwalk. “We are growing government by leaps and bounds.”
Like Malloy’s proposal, the committee plan includes deep cuts to the state’s hospitals that total about $550 million statewide over the biennium. Malloy’s budget director, Ben Barnes, questions whether it is fair to describe the changes as cuts, but the hospitals say they are definitely cuts – coming on top of reductions that were made by the legislature in a deficit mitigation plan that was passed in December.
Bristol Hospital says the cuts would amount to $3.2 million over two years, while Griffin Hospital says it would be cut by $6 million over two years. Malloy, however, says the hospitals statewide have seen huge increases from the state over the past 10 years.
Harp mentioned during a news conference that hospital chief executive officers are currently earning huge salaries that sometimes exceed $1 million per year.
“Executives in the for-profit businesses don’t make that kind of money,” Harp told reporters at the state Capitol complex.
The two committees were meeting simultaneously on Friday afternoon as they crafted the state’s budget. The tax package was approved by 31 to 17 with six members absent. The spending increase was approved by 32 to 17 with four legislators absent.
The overall spending increases over Malloy’s budget would be $10.7 million in the first year and $38.3 million in the second year.
Barnes, in a statement, thanked the two committees for their work that he said is close to Malloy’s budgetary framework.
“There is a lot in this budget we agree on,” he said. “There are also problems that will need to be addressed, including the need to continue key bipartisan education reforms, to support economic development initiatives that will grow jobs, and to provide real tax relief for middle class families. As it stands, this proposal doesn’t get there.”
He added, “Despite those and other concerns, we believe the announcement today is a good step toward putting together a responsible budget for the coming biennium. We’re confident that working together in the weeks ahead Connecticut can achieve an honest budget that does not raise taxes.”
Senate Republican leader John McKinney of Fairfield said he was outraged that about $8 million in college scholarships would be cut for students at schools like Fairfield University and Sacred Heart at the same time that jobs in the state bureaucracy were being saved.
“It is absolutely abominable,” McKinney told reporters at the Capitol complex. ”This is a disappointing day.”
The gross receipts tax on gasoline is scheduled to increase July 1 under a previously approved schedule, which could generate an estimated $60 million per year for state coffers. Republicans offered an amendment to block the tax increase, which is a percentage of the wholesale price of gasoline, but the effort failed. If no changes are made in the coming months, the gross receipts tax – which currently has an effective rate of 7.53 percent of the wholesale price – will increase to 8.81 percent on July 1.
“We all feel the pain when we’re at the pump,” said Sen. John Fonfara, a Hartford Democrat who co-chairs the finance committee and opposed the tax cut. “But we also have a debate every year on how we’re going to maintain our infrastructure and pay for our roadways.”
Even before the votes, Republicans harshly criticized the proposals. Cafero told Capitol Watch earlier this week that the budget was being balanced by “smoke and mirrors,” adding that the various financial moves are “ironically, a dramatic turnabout from what this governor said he would never do – borrowing to pay operating expenses.”
The massive state budget covers everything from dental care for prison inmates to salaries for state commissioners. The committee budget would keep in place a series of commissions that various governors have tried to consolidate, including the Permanent Commission on the Status of Women, the Commission on Children, and African-American Affairs Commission. Rather than being consolidated and seeing their budgets cut, the Commission on Children would see an increase of $50,000 in each of the next two years, and the women’s commission would see an increase of $20,000.
In addition, pay for judges – who have not had a pay raise since 2007 – would increase by 5.3 percent.
State Rep. Christopher Davis, an Ellington Republican, said he could not support the tax package because he says it does little for the business climate. “We’re not saying we’re open for business,” Davis told colleagues on the finance committee, choosing a phrase often used by Malloy.
Rae Ann Knopf, the Connecticut Council for Education Reform’s executive director, was disappointed in the budget committee’s work.
“From the perspective of education reform, this budget is very disappointing,” Knopf said. “It takes many steps backwards on too many of the reforms that were signed into law last year. For example, it decreases the number of commissioner’s network schools from 21 to 12; allocates no funding for implementing Common Core; and allocates half as much funding as needed for districts to phase in the new teacher and principal evaluation and support system. Making these changes in Connecticut schools is critical to closing gaps in learning for Connecticut’s low-income and minority students.”
She added, “We understand lawmakers are facing very difficult decisions, and we get that they’re trying to do everything they can without the necessary funding. We’re sympathetic to their plight. But this is about priorities.”
Like two Republican governors before him, Malloy proposed consolidating state commissions in an attempt to save money. He was trying to eliminate six commissions in order to create a new agency that would be called the Commission on Citizen Advocacy. The six commissions currently have a combined 26 employees, while Malloy’s new entity would have 18 and save more than $1.6 million.
Malloy’s plan was similar to those offered several times in the past by Republican governors John G. Rowland and M. Jodi Rell, along with Republican legislators. Each time, the Democratic-controlled legislature rejected the ideas, saying that the nonpartisan commissions regarding women, children, aging, Asian Americans, African Americans, and Latinos and Puerto Ricans should remain as independent, standalone agencies.
The leaders of those agencies – one by one – testified in February in front of the powerful budget-writing appropriations committee.
“The Permanent Commission on the Status of Women rejects the governor’s recommendation,’’ Teresa C. Younger, the group’s executive director, said at the time. “It is important to have diversity at the table. The merger of these organizations would be detrimental.’’
Created in 1973, the 40-year-old agency focuses on gender discrimination, pay equity, gender inequities and other issues of concern to women.
The Connecticut Community Providers Association, which represents non-profit agencies that receive money from the state, said in a statement Friday: ”We appreciate that the appropriations committee has attempted to mitigate the impact of the Governor’s proposed budget cuts to mental health and addiction treatment services in the state. The committee has restored approximately 75 percent of the governor’s proposed cuts to these critical services. While this is a beginning to restoration of funding, the fact remains: a cut is a cut. Services to individuals with serious mental illness and substance use disorders will be compromised.”
The CCPA added, “Additionally, services to individuals with developmental and physical disabilities remain seriously at risk, as virtually no changes have been made to the Governor’s proposal which amounts to roughly $21 million in embedded cuts which are passed along to providers. These providers are financially fragile and cannot withstand yet another budget cut while maintaining access to high quality services for extremely vulnerable individuals.”
The Courant’s Daniela Altimari reports the following on the committee debate Friday:
Rep. Melissa Ziobron, R-East Haddam, questioned a proposed pay increase for judges in light of the state’s still-struggling economy.
“In light of the economy, I’d like somebody to explain to me how we can approve [an]…increase at this time,” Ziobron said.
Rep. Craig Miner, R-Litchfield, said he found some things to like in the budget, including an addition $3 million for the state’s vocational-agricultural schools over what Malloy had proposed, and more money for charter schools.
“There are a number of things in here I am grateful for,” Miner said. “But it is build on that same flawed foundation, that $585 million hospital catastrophe that is the underpinning of this budget.”
Sen. Rob Kane of Watertown, the ranking Republican on the appropriations committee, said lawmakers did not look to state employees for additional concessions, nor did the so-called “suggestion box” established by Malloy to uncover efficiencies yield significant savings.
“We are going to be staring at future deficits and future tax increases if we continue down this same road,” Kane predicted.