One day after budget deliberations collapsed in the legislature, Gov. Dannel P. Malloy called for talks to get negotiations back on track as Senate Democrats signaled they were dropping major tax hikes.
Malloy called for a meeting with legislative leaders next week to break the stalemate on the $41 billion, two-year budget. That request came as legislative leaders tried to determine their next steps on resolving a standoff that led to an adjournment by the appropriations committee with no vote on the budget— stunning lawmakers and lobbyists.
In addition, top Senate Democrats now say that they will not support raising the state sales tax and income tax — despite holding a public hearing Tuesday on those controversial issues. That change highlighted a fast-moving environment as a key committee held an important hearing on major taxes and then suddenly dropped the idea.
“There are no new across-the-board taxes in the tax package,” said Senate President Pro Tem Martin Looney, a New Haven Democrat. “It is a very modest package because of the fact that the appropriations committee managed to make substantial cuts and also save municipalities from the $407 million cost that would have been added onto them with the governor’s proposal regarding assumption of the 33 percent of teachers’ retirement.”
The one-third share of teachers’ pension costs was rejected by leaders of the appropriations committee, but there was no vote by the full committee.
Senate Majority Leader Bob Duff of Norwalk agreed with Looney, adding, “There’s no income tax increase. There’s no sales tax increase, and there’s no increase in business taxes.”
The tax-writing finance committee is expected to vote as early as Thursday. The committee might also vote on tolls, but it would be a separate bill from the principal one already approved by the transportation committee.
In another development, top Republicans said they will unveil their budget Thursday and try to force a vote in the appropriations committee before the 5 p.m. deadline. Lawmakers need approval from the Democratic-dominated committee to debate the bill, and that had not been granted as of early Wednesday night, House Republican Leader Themis Klarides of Derby said.
On taxes, Democrats are split over how to close the budget deficit.
“Some people are saying there should be no revenue [increases], and it should be all cuts,” said Rep. Josh Elliott, a Hamden Democrat who serves as vice chairman of the finance committee. “Some people are saying there should be more revenue, and I’m one of them.”
Elliott supports raising the income tax on people who earn $1 million or more, an approach not all Democrats back.
“In my mind right now, there’s a wider division between the progressives and the moderates within the Democratic Party than there is between the moderate [Democrats] and the Republicans,” he said.
Given the Democrats’ slim hold on the majority, the defection of just one member of the party could scuttle the whole proposal. “The caucus is scattered,” he said. “If one person says no to new revenue, we don’t come out with a bill.”
Malloy’s letter Wednesday came 24 hours after a major meltdown at the legislative budget committee that threw the Capitol into chaos. After spending last weekend in Puerto Rico at meetings with the Democratic Governors Association, Malloy is spending vacation time with his family before an expected return to the Capitol on Thursday.
Citing weak tax collections, Malloy said in a letter to top lawmakers that his budget office “now projects that we could lose hundreds of millions of dollars toward next year’s budget once the consensus revenue process is complete next week.”
Although the final numbers are still being tallied, the potential shortfall in state income tax receipts is more than $267 million. That shortfall not only causes financial problems in the current fiscal year, but it also prompts analysts to lower their forecasts for next year.
Malloy also addressed the need for a budget in the coming biennium in the letter, saying that “without a formal proposal from your appropriations and finance committees, we must chart a course together for reaching a responsible, balanced budget for the coming biennium.”
House Speaker Joe Aresimowicz, a Berlin Democrat, said he believes that Republicans actually agree with 85 percent of the appropriations budget, adding that he is getting back to work with a focus on reaching a compromise.
“Let’s stop with the partisan politics,” Aresimowicz said. “Let’s take this compromise, bipartisan agreement with about 85 percent agreement, and let’s work on the next 15 percent to move Connecticut forward.”
But Klarides said the remaining points of disagreement are large.
“That last 15 percent is the big stuff,” Klarides said. “It’s the spending. It’s the borrowing. It’s the taxing. It’s the earmarks. … Those are big things. It’s that 15 percent that is the deal-breaker.”
Rep. Melissa Ziobron of East Haddam, the ranking House Republican on the appropriations committee, rejected the notion that the committee worked on a bipartisan basis. She did not see the Democratic-written, 262-page budget binder until 10 a.m. Tuesday — the same time that reporters first saw the budget book that had been compiled in secret.
“There is no bipartisan document,” Ziobron said. “I had no idea the things they were putting in. We floated some ideas, talking to them, but I didn’t see their budget until [Tuesday] morning. So I’m offended when they say it’s bipartisan because I represent 72 House Republican members who had no input and had no sneak peek — even a 24-hour look at this budget document.”
But House Majority Leader Matt Ritter of Hartford said there is no reason to give up on the budget process, adding that he is looking forward to the release of the Republican budget in the coming days.
“They may have good ideas,” Ritter said. “We can’t wait to see them. That’s what I don’t understand. There’s no end date [this week]. We’re just having ongoing discussions. We can’t wait to see their ideas.”
Rep. Christopher Rosario, the chairman of the legislature’s Black and Puerto Rican Caucus, said the budget proposal jettisoned by the appropriations committee contained provisions many lawmakers found unpalatable.
“It wasn’t a perfect document,” said Rosario, a Democrat from Bridgeport who serves on the committee. “What came to us was a compromise bill.”
Rosario and members of the Black and Puerto Rican Caucus were troubled by deep cuts to social programs.
“It was a difficult pill to swallow,” he said. “I understand that times are hard, but we have to protect people. We can’t be penny-wise and pound-foolish.”
Instead of deep cuts, Rosario and some other Democrats continue to press for additional revenue. That doesn’t necessarily mean tax increases, he said, although he voiced support for a proposal to raise the income tax rate on high earners. Instituting tolls, building a new casino, permitting mixed martial arts matches and legalizing and taxing marijuana for recreational use are some of the ways the state could enhance its bottom line without directly resorting to tax hikes, he said.
Rep. Daniel Rovero, one of the most conservative members of the House Democratic caucus, said there is “no way” he could support a budget proposal that includes a major tax increase.
“I don’t think this is the right time to raise taxes,” said Rovero, who represents Killingly and two other northeastern Connecticut communities. “In my area, supporting a tax increase would blow me out of the water.”
Rovero, who has only supported one budget proposal in his seven years in the House, said he has heard from constituents who want the state to live within its means. “The people in my area continue to say, ‘We think we have enough taxes as it is,'” he said.”Whether this can be done or not is yet to be seen.”
Rovero applauded Malloy for summoning legislative leaders to try to end the budget stalemate.
“I give him credit for trying to put it together … for the good of the state,” Rovero said. “At this point, everything is worth a try.”
