Malloy, Legislative Leaders Reach Deal On Deep Cuts, No Tax Increases
May 04, 2016 | 12:14 AM
HARTFORD – Democratic legislative leaders announced a comprehensive budget deal late Tuesday night with Gov. Dannel P. Malloy that cuts spending deeply and does not raise taxes or fees to balance the nearly $20 billion package.
After holding closed-door caucuses, the leaders of the state House of Representatives and the Senate said they have enough votes to pass the budget on Wednesday — the final day of the legislative session.
The agreement does not use any money from the state's $406 million "rainy day fund'' for fiscal emergencies and does not borrow money for operating expenses, legislators said.
Although Democrats said they had cut $830 million in spending, Republicans responded that they would withhold judgment because they had not seen any details of the deal.
House Speaker Brendan Sharkey, a Hamden Democrat, said the budget is balanced with "real cuts'' and long-term structural changes that would carry over as ongoing cuts in future years.
"It is not something that has been done with smoke and mirrors,'' Sharkey told reporters in the Capitol press room after 11 p.m. Tuesday.
In an attempt to spread the budget cuts across the entire state government, Sharkey said that negotiators decided to "take a little bit out of just about every line in our budget.''
Lawmakers said they will reduce the six legislative commissions, including the Permanent Commission on the Status of Women, into two commissions that focus on equal opportunity, as well as women and children. The deal also calls for increased health care premiums for nonunion state employees.
Democrats battled during the talks to preserve enough funding to ensure that property taxes on cars are reduced in high-tax cities like Hartford, Waterbury and New Britain. Some municipalities would not be included in the tax relief in the first year, but the relief would be expanded in the second year as the cutoff for the property tax cut would drop again to the original local tax rate of 32 mills. This means that car owners in wealthy communities with tax rates under that level, including Greenwich, Westport and New Canaan, would receive no relief.
The agreement involves delaying some transportation spending, which is one of the governor's top priorities, and restoring money for Democratic priorities like hospitals and school funding.
The Democratic leaders said their goal is to pass the budget, the annual bond package, and a detailed, budget-implementation bill all in one day – a Herculean task when compared to past years at the Capitol. But the leaders said they are committed to the goal and will ask Republicans not to conduct any filibusters that would push the bills past the midnight deadline that ends the legislative session Wednesday night.
But Senate Republican leader Len Fasano of North Haven, who has been at the Capitol since 2003, says it is not realistic to believe that the legislature could pass so much major legislation pass in a single day.
"No, you can't do that,'' Fasano said at 11:30 p.m. Tuesday. "It's never been done, that I know of, in this building on a budget that's not consentable or agreeable by most folks. I don't think that is plausible in this building.''
He added, "What is the rush? … Let's come back in a week or three days and vote on the darn thing.''
Fasano said he would not prejudge the bills, which he had not seen, and he would not predict whether Republicans would hold filibusters to run the clock out at midnight.
Malloy's spokesman, Devon Puglia, said: "This is a budget that doesn't raise taxes and is built almost entirely on long-term spending reductions, which will help keep expenditures under control in the future. Our goal has been to do things differently this year, to ensure that — just like the households we represent — we do not spend money that we don't have. If and when the legislature passes this budget, we look forward to signing it."
After two hours of detailed talks Tuesday, Malloy said negotiators had made "substantial progress,'' but he declined to provide any details. Malloy emerged from the talks in the Capitol office of Senate President Pro Tem Martin Looney, but he did not break stride as he talked to reporters while walking most of the third floor and down the stairs to his second-floor office.
"We've made substantial progress,'' Malloy said on the stairwell. "I didn't think I'd be in a position to say that we have.''
When asked if there could be a budget vote by the legislature on the final day of the session Wednesday, Malloy responded: "I don't know how that all works. I think the sooner it gets done, the better for everybody. More certainty is better.''
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Behind the scenes, budget negotiators continued to work Tuesday night on the details and make calculations on spending cuts. "I think people have to run some numbers,'' Malloy said.
While being pursued by Capitol reporters with tape recorders, Malloy abruptly stopped in front of the Senate Republican caucus room, bent down, and picked up a shiny penny off the floor.
Asked whether he was trying to symbolically close the budget deficit, Malloy said: "When you guys are too important to pick up a penny, there's something wrong.''
With the two sides getting closer and closer, the talks were described by one insider as being "at the five-yard line'' – a football analogy that the legislature was close to scoring.
"The governor is playing goal-line defense,'' the insider said, adding later that the strategy had led to a touchdown.
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House Republican leader Themis Klarides criticized the budget talks, which blew up Friday night when Malloy went public to blast Democrats for not cutting spending enough and saying the negotiations were "hitting a wall.'' There were no substantial talks on Saturday or Sunday, and the process resumed Monday morning.
"It just seems like it's very erratic behavior,'' Klarides said. "One day, they hate each other. One day, they're talking to each other. It's like a kindergarten class.''
As legislators continued their fiscal negotiations, 89 state employees received layoff notices Tuesday at the Department of Developmental Services.
In addition, more than 600 workers could be laid off in the judicial branch if Malloy's latest budget proposal is approved, officials said. Of those, 110 workers will receive layoff notices Thursday as the courts prepare for a worst-case scenario of "widespread courthouse closings and consolidations,'' officials said.
Chief court administrator Patrick L. Carroll III, who is a longtime judge, raised the specter of a legal challenge to the deep budget cuts in a potential battle among the three branches of government by writing to Malloy that "a constitutional challenge may be raised.''
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The union representing the developmental services workers – SEIU 1199 – is calling for alternatives to avoid the loss of jobs, which is part of Malloy's overall fiscal plan to reduce 2,500 positions in state government. The job reductions, including layoffs and retirements, would generate an estimated savings of about $280 million, which represents a large part of the attempts to balance next year's projected deficit of $960 million.
"Today's layoffs to workers who have dedicated their lives to caring for the intellectually disabled are very harmful for our state," union spokeswoman Jennifer Schneider said. "Eliminating workers who care for the disabled should be Connecticut's last resort, not the first step in solving budget deficits. We encourage the governor and lawmakers to use a portion of the $406 million in the state's rainy day fund before making the drastic step to remove caregivers from the disabled who depend on them for their most basic every day needs."
Those who were laid off work as occupational therapists, physical therapists and speech pathologists who help people with disabilities. The governor's budget office said the layoffs are related to conversions of state-operated group homes and closing regional centers.
Besides 89 layoffs at DDS, one employee was laid off Tuesday in the military department related to the Governor's Horse Guard.
Overall, the state has had 776 layoffs, including 126 in the courts.
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The chief court administrator said in a letter that Malloy's latest fiscal proposal would cut nearly $57 million that has been set aside for personnel costs.
"This reduction is both unprecedented and catastrophic in its consequences,'' Carroll wrote. "In addition to the 126 layoffs we announced on Friday, April 15, no fewer than an additional 600 layoffs will be required if this budget proposal is adopted. The final number could be even higher.''
Carroll, who oversees nearly 4,000 employees at 43 courthouses, said the layoffs would impact other programs being pushed by Malloy.
"In fact, it is impossible to imagine how we could consider undertaking additional responsibilities as part of the Second Chance Society and Raise the Age Initiatives because the very staff responsible for their implementation would be dramatically reduced, and the proposal requires that the Bridgeport Detention Center be closed,'' Carroll wrote.
Throughout the budget crisis, Carroll has written multiple letters with state Supreme Court Chief Justice Chase Rogers to discuss the fiscal problems. But Rogers did not write the most recent letter because "we are concerned that the reduction in funding is so extreme that a constitutional challenge may be raised,'' Carroll wrote.
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In another development Tuesday, the state's probate court administrator's office says it needs an additional $1.1 million next year "to provide bare minimum funding to operate the probate courts.'' Malloy is now proposing a uniform tax rate of 0.425 percent on all estates, which would raise an estimated $5 million. He is also proposing a maximum cap of $40,000 in probate fees, regardless of the size of the estate. Democratic lawmakers are looking for a cap of $30,000, and the final number will be settled in the budget process.
Although some legislators are still publicly optimistic they can get things done by the end of the legislative session at midnight Wednesday, they are privately preparing to spill into overtime.
A draft of a Senate joint resolution says the special session would begin at some point after 12:01 a.m. on May 5. The resolution says the session would be called "solely for the purposes of considering and enacting'' bills on certain narrow topics.
Although Malloy has offered some spending solutions, Democrats responded that he ignored their plans on the taxing side of the budget on issues that would affect consumers – including a compromise on taxing sports games and concerts. In addition, Democrats want to save consumers $500,000 by ending the sales tax on parking fees at all state parks, including Hammonasset Beach State Park in Madison as the busy Memorial Day weekend approaches.
Malloy and Republicans are also rejecting a Democratic revenue-raising plan that calls for generating an estimated $60 million in voluntary tax payments from businesses as part of a deferred tax credit plan. Democrats say it would be a good idea because the state would receive millions in the next fiscal year at a time when the state needs the money. But Malloy says the plan essentially amounts to expensive borrowing because it would cost about 30 percent over two years to pay back the businesses with future tax credits.
Malloy has also been seeking to eliminate $50 million in a new sales-tax, revenue-sharing plan with cities and towns in order to help balance the budget.
Three months ago, during his State of the State Address on the opening day of the legislative session, Malloy said: "So this is my challenge to you and to me: Let's not pass a budget on the final day of this session this year. Let's get it done early. Let's do it so that we can spend those final days working on other proposals — both yours and mine."
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