The state House of Representatives voted early Tuesday morning in favor of a $20.5 billion budget compromise that eliminates proposed bus fare increases, increases overall state education spending for cities and towns by $100 million, raises Metro-North fares, creates a new housing department and sends $13.5 million to the University of Connecticut Health Center in Farmington.
By a party line vote of 95 to 49, the House approved the fiscal plan at about 2:30 a.m. Tuesday.
As part of the budget compromise, cities and towns will receive an additional $50 million for public education that Gov. Dannel P. Malloy wanted under his education plan. The compromise also provides $7.5 million for the “commissioner’s network” to help improve struggling schools – far below the $22.9 million that Malloy had wanted.
As lawmakers race toward the end of the legislative session at midnight Wednesday, the budget and the education plan were negotiated simultaneously in a horse-trading manuever. Since the education plans costs millions of dollars, the budget could not be completed without a deal on the education bill, lawmakers said.
Democrats hailed the bill as a major step forward to improve urban education and decrease the longstanding achievement gap between wealthy and poor districts.
Numerous state officials said the education bill was historic, but the overall financial impact of the bill represents 1 percent of the current overall spending on public education in Connecticut.
Currently, about $10 billion is spent statewide on education, including about $2 billion from the state with the lion’s share from local property taxes. The increase in spending of $100 million represents 1 percent of $10 billion.
But Malloy’s senior adviser, Roy Occhiogrosso, noted that much of the increased money will be going to the poorest-performing school districts, and the increased funding for those districts represents an increase of more than 1 percent.
Soon after a press conference on education was finished at the state Capitol, the House began debating the budget – shortly before 11 p.m. Monday.
The bill delays the implementation of generally accepted accounting principles, which had been one of Malloy’s goals.
“This bill represents gimmicks, broken promises, ” said Rep. Vincent J. Candelora, a deputy House Republican leader from North Branford.
Rep. Sean Williams, a Watertown Republican, agreed with Candelora.
“We should just admit that we are using gimmicks,” Williams said on the House floor. “We’re doing the same exact thing in this budget document that we did so many years that got us into this. … Things haven’t changed. … You can’t tax your way back into prosperity.”
Rep. Gail Lavielle, a Wilton Republican, said it was difficult to ask questions about the education budget when she had not yet seen the 97-section education reform bill.
“This bill has had a checkered history,” she said on the House floor at about 12:05 a.m. Tuesday. “I have not seen even the draft of that bill. … I think that’s backwards. I’m not suggesting I’m the only one in that situation, by the way. … It’s very disappointing, and I think, disrespectful to all of our constituents. … We are making laws here, quite literally, in the dark.”
But House Majority Leader Brendan Sharkey of Hamden said there was “a fairly liberal use of the pronoun ‘we’ in closing a $3.5 billion deficit.” He said that taxes were raised and tough choices were made by the Democrats in closing the projected deficit.
He said it is incorrect that the legislature has failed on its fiscal promises. “We are in a balanced situation,” he said, adding that this year’s deficit of $200 million is “relatively small” and far different than last year’s $3.5 billion deficit.
The budget, he said, maintains the safety net, does not raise any additional taxes, and funds education.
“We have not broken any promises. We are in sound financial shape. This deficit is relatively small. It’s a minor adjustment in the context of a $20 billion budget,” Sharkey said. “Let’s, please, keep that in perspective. … We have turned the corner. Let’s continue on that track.”
The legislature is also bailing out the UConn Health Center with $13.5 million for the current fiscal year that ends June 30 and another $13.5 million for the next fiscal year. Lawmakers have bailed out the health center at least four times since 2000, and the moves are normally made by the Democratic majority during the final days of the legislative session – as is being done this year. The money will be used to cover the “fringe benefit differential” because employees at the John Dempsey Hospital in Farmington receive far higher pensions and health care benefits as state employees than workers at competing hospitals.
The current year’s budget of $20.17 billion would increase to $20.54 billion for the year that starts July 1. The fiscal plan covers a gigantic list of items, including everything from dental care for prison inmates to salaries for more than 50,000 state employees, and is $86 million under the state-mandated spending cap. The plan is designed to close a $200 million gap for the current year and close the deficit for the next fiscal year.
While bus fares will not increase, there will still be a 4 percent increase for the Metro-North Commuter Railroad – which mainly affects Fairfield County.
The Republicans offered an alternative budget that included mandate relief, privatizing services, annual audits of municipalities that receive the highest amounts of state funds, withholding of longevity payments for non-union employees, salary cuts for state legislators and others, a 1 percent increase for nonprofit providers, $50 million for a GAAP reserve fund, increased detection of Medicaid fraud in an effort to net $102 million, consensus expenditure estimates, and an increase in dispensing fees for the smallest pharmacies that have been impacted by the SEBAC mail-order agreement.
The Republican alternative budget also would eliminate $18.5 million this year in public funding grants for political campaigns, block the 4 percent fare increase for Metro-North, eliminate funding for the proposed 11-stop, New Britain-to-Hartford busway, restore the sales tax exemption on non-prescription drugs, and repeal the earned income tax credit. The EITC was only recently enacted by Malloy and the Democratic-controlled legislature, and the proposal was immediately dismissed.
There was very little debate on the budget, and the amendment was defeated, 94 to 49, shortly after 2 a.m. Tuesday on a party line vote.
Another issue in dispute has been whether the state should maintain a minimum of 1,248 state troopers – a level that has been codified in state law for more than a decade. Legislators have debated that as a standalone issue, but Malloy’s administration is expected to strip the 1,248 minimum out of state law in the obscure, “back of the budget” language that is buried in the huge document and sometimes overlooked by legislators.
“We’re hoping to” vote on the budget Monday, Sharkey told Capitol Watch in an interview Monday. “Obviously, there is a lot of work that has to be done by staff to finish up the details of it and get it all lined up. It is our hope that we can try to do that today.”
The budget is tied directly to the education reform bill, which was negotiated over the weekend.
“The other aspects of the budget are pretty much done. We’re pretty much in agreement with the administration on the rest of the budget,” Sharkey said. “Now, it’s just a function of making sure we have the education piece. That’s kind of the last piece of the puzzle.”
“If education is taken care of, I think we’ll be able to get to the budget and resolve that and we should be out on time,” Sharkey said outside the Hall of the House. “We’re working with the administration on some of their proposals and some of ours to find the cuts necessary and find some additional transfers of revenue to help cover that deficit. It’s not a large deficit, really, in the bigger picture. Last year, we were looking at $3.5 billion. This is about $200 million, so, obviously that’s a much, much smaller scale and much more manageable. It’s not a huge hurdle to jump over at this point.”
The budget calls for borrowing $30 million to give to cities and towns for road repairs in a program known as Town Aid Road. The money is normally taken from the general fund, rather than from the state’s bond package. Originally, bus fares were expected to increase by 4 percent on January 1, 2013, but that will not happen under the final budget. Fares were also expected for those with disabilities who use publicly-funded transit, but that will not happen, either. The document states flatly that there will be no fare increases during the 2013 calendar year.
House Republican leader Larry Cafero told Capitol Watch early Monday afternoon that he had not been officially told that he should prepare his caucus to vote on the budget Monday. He added that the education bill is not completely nailed down yet, saying he would not breach any confidentiality of the issues being discussed on the ”tenuous” education bill.
“I just want to warn everyone: framework is one thing, legislative language is a whole different ballgame,” Cafero said of the education bill. “Until and unless the framework matches the language, we’re still nowhere.”
When asked if he expected a vote Monday on education reform, Cafero said, “I have no idea.”
Cafero said the Republicans could offer their own budget as an amendment – in the same way that they offered a 55-page bill in the appropriations committee.
“That is very possible, depending on what the budget that we see before us says,” Cafero said.
In his wrap-up speech early Tuesday morning, Cafero said the state had a bit of a spring in its step last year as a new day dawned with a brand new governor.
“We told the world that we were on a new path,” Cafero said on the House floor. “That we were taking a road less traveled, as our governor said. That we had to suck it up with shared sacrifice. … They said that the enacted budget, and I quote, returns the state to structural balance into the foreseeable future. … We were going to generally accepted accounting principles. That’s what we said in this chamber, not too long ago. … The budget we are about to vote on – the story we are about to tell – is not a pretty one.”
He added, “We spent more than we said we would spend – and taking in less than we said we would take in. … The proclamation that we made less than a year ago that the budget we put in puts the state in structural balance. … It wasn’t true, ladies and gentlemen, because we find ourselves today trying to fill the holes. … We got it wrong. We didn’t do what we said we would do. Instead of owning up to it, what are we doing? … In some cases, we are cutting direct services to the public. We were told that if we swallowed the tough medicine that things would be good. … And yet, it’s just the opposite of that. … We ignored GAAP.”
Cafero, one of the most outspoken Republicans, said, “At some point, we have to stop – because the people we’re representing are not buying this. … They’d had it. Enough, they’re saying to us. How could we go home after the vote today and say, ‘Be proud of us’ ? … Stop it. Please, stop it. And we don’t. … We have an opportunity to truly turn a corner – to take a path less taken. This is not the way.”
Under a deal between Republicans and Democrats, the budget debate ended Tuesday and campaign finance reform bill will be completed later Tuesday in 2 1/2 hours.
The key budget issues being debated on the House floor will be based on the budget framework that was outlined by the appropriations committee. The apropriations version which restored funding for the arts and scholarships for students in private colleges - items that had been initially cut by Malloy. The committee also blocked bus fare increases, added 1,000 slots for pre-school students, allocated an additional $2.8 million for vocational agricultural schools, and kept the $20.7 billion annual budget about $700,000 below the state-mandated spending cap.
The committee originally cut $23 million from Malloy’s overall education budget of nearly $3 billion, but both the budget and the education reform bill have been recrafted since the committee vote.
Regarding the future, the legislature’s non-partisan fiscal office is projecting that the budget would increase by 6 percent in the 2014 fiscal year and then by 4.8 percent and 4.0 percent in the next two years. By the 2016 fiscal year, the overall state budget would be $23.73 billion, the fiscal office said.
In a separate bill debated for about 40 minutes Monday night, the House voted 147 to 0 in favor of consolidating or eliminating 31 boards and commissions that had been proposed by Malloy. The measure, a substitute for House Bill 5027, covered a series to changes to carry out the internal changes within state government. Those included the elimination of somewhat obscure groups, such as the defunct Lower Fairfield County Convention Center Authority, which was established in 1990 and has not been in active operation in recent years. Another is the defunct Innovations Review Panel, which was created in 1992 under then-Gov. Lowell P. Weicker to evaluate state employee recommendations under Public Act 92-7. The William Benton Museum of Art Advisory Committee, established in 1987, is also being eliminated.
“There are legitimate reasons to consolidate them,” said Rep. Tony Hwang, a Fairfield Republican.
Separately, the final budget compromise included numerous other changes in a fiscal plan with thousands of line items that cover about 100 major departments and agencies.
One of the issues that raised the budget committee’s objections was Malloy’s initial plan to eliminate scholarships for Connecticut students who attend certain private colleges in the state. The elimination was targeted for universities with endowments of more than $200 million. As such, the cut would have been $1.85 million for Quinnipiac University students in Hamden; $1.23 million for Fairfield University; $468,000 for Trinity College in Hartford, and $266,000 for Wesleyan University in Middletown. That funding was restored by the committee, along with an additional $1.2 million for a total of $5 million above Malloy’s proposal for scholarships.
Overall, more than 6,400 students received scholarships — averaging more than $3,600 — last year at more than a dozen private schools that included Goodwin College in East Hartford, Albertus Magnus in New Haven, and the University of Hartford.
For administrative purposes, Malloy had also called for combining the University of Connecticut, the UConn Health Center and the office of the chief medical examiner, which is on the UConn campus in Farmington. But the committee rejected that consolidation and called for allowing the medical examiner to remain as an independent agency with 58 employees. The chief medical examiner, Dr. Wayne Carver, has complained publicly about bureaucratic tangles in his agency and said that he was going to retire because of them. He has since changed his mind.
Budget negotiations with the Malloy administration have been held behind closed doors recently as both Malloy and legislators want to finish the budget before their regular session adjourns at midnight Wednesday.
The appropriations committee paid for the budget restorations by making cuts or generating savings in a variety of areas across the state budget:
* Saving $36 million in debt service due partly to lower projected interest rates in the bond market.
* Cutting nearly $5 million in salaries, expenses and workers’ compensation costs at the Department of Correction, which runs the state’s prisons.
* Cutting more than $2 million in expenses for the Department of Social Services.
* Reductions in the environmental, consumer protection, insurance, veterans affairs, and labor departments, among others.
* Cutting eight funded positions, currently vacant, in the state tax department to save $520,000.
* Cutting $250,000 for a business tax credit study in the governor’s budget office.
* Cutting $750,000 for an elderly renters program because the growth in caseloads has been slower than expected.
The committee also called for adding six positions in the “cold case” unit in the division of criminal justice, including three in a new shooting task force that would be added to southwestern Connecticut.
Those issues are among the items up for discussion when the full House and Senate debate the budget.
In another move, the committee restored all funding for the arts that had been cut by Malloy and maintained specific line items for various cultural organizations. Malloy had originally proposed cutting those funds to zero and allowing the arts groups to compete for $14 million in funding, but the arts leaders who testified to the appropriations committee said they were unclear on how and when they would compete. Malloy later restored 80 percent of the funding after an outcry from arts leaders who came to the state Capitol complex for a public hearing.
The restorations of full funding included nearly $800,000 for the New Haven Festival of Arts and Ideas, $650,000 for the Mystic Aquarium, $575,000 for the Maritime Center Authority in Norwalk, nearly $400,000 for the Stamford Center for the Arts, more than $372,000 for the Beardsley Zoo in Bridgeport, and more than $100,000 for the Mark Twain and Harriet Beecher Stowe homes in Hartford. The committee’s recommendation included a new line item for the first time for The Bushnell Center for the Arts in Hartford, which will receive $250,000.
At the committee level, the Republicans offered a 55-page amendment as an alternative budget. That plan called for three tax cuts that would have included restoring the popular $500 property tax credit on the state income tax. The property tax credit is currently $300 — as set by the budget last year.
The Republicans also called for eliminating the state’s sales tax on clothing and footwear that cost less than $50, which would save an overall total of nearly $142 million for taxpayers per year. They also wanted to restore the sales tax exemptions for non-prescription drugs that would save taxpayers $17.5 million per year. After a brief debate, the Republican plan was rejected, 30-15, by the Democratic-dominated committee.
Republicans would have paid for their committee plan by eliminating two major programs: the earned income tax credit that had been installed last year by Malloy and the Democrats, and millions in public funding for political campaigns.