STATE SENATE PASSES BUDGET (BARELY) AFTER 3 AM; IMPOSES SPENDING CUTS, HISTORIC TAX INCREASES, GOVERNMENT CONSOLIDATIONS

Working with a Democratic governor for the first time in 20 years, the Democratic-controlled state senate early this morning passed a new two-year state budget that is remarkable in its scale of tax increases and reorganization of state government. The vote was 19 to 17 with Democrats Joan Hartley (Waterbury), Ed Meyer (Guilford) and Gayle Slossberg (Milford) joining Republicans in opposing the plan. The debate last some 11 hours.

The scope of the changes in state government accomplished through the spending plan certainly is wide-ranging. It raises more than $1.5 billion in taxes on income, corporations, sales, electric power plants (sun-setted after two years), hospitals and the so-called “sin taxes”—alcohol, cigars, and cigarettes. It also consolidates state agencies.

The most impassioned voice in support of the spending plan on the senate floor was Senate President Don Williams who has been a bit quiet lately. The senate president traditionally speaks last before the vote. He and Majority Leader Marty Looney issued a statement after the tally. “This is a tough, fair, and responsible budget that moves Connecticut forward and helps to solve the budget crisis that has gripped the state for nearly three years. There are no gimmicks, borrowing, or reliance on one-time revenues. Democrats worked together to identify billions of dollars in spending reductions and consolidate 30-percent of state agencies…No wonder the budget framework has been endorsed by business leaders from across the state, including the Fairfield County Business Council, Bridgeport Business Council, and the CEO’s of some of Greater Hartford largest companies, such as Aetna, UTC, and CIGNA,” the statement said.

Even with passage, many questions remain. There is still the $2 billion hole in the spending plan. The governor hopes to wring that out of state employee labor unions. However, there is no indication that can be accomplished. The Malloy administration and labor continue to talk. The budget contains language that would permit but not require the legislature to reconvene to vote on new spending cuts if the union concessions don’t come through. Otherwise, the cutting authority would fall to Malloy budget director Ben Barnes.

Republicans also strenuously objected to a new tax on Internet sales—the so-called “Amazon tax.” They cited Malloy’s Commissioner of Revenue Services Kevin Sullivan who issued a memo saying the tax was likely uncollectable. Similar legislation in other states is tied up in the courts.


Republicans whined that Malloy didn’t follow through on promised bipartisan cooperation, negotiating the budget with the Democrats. House Minority Leader Larry Cafero whose chamber is expected to take up the budget today said the governor is “unwilling to compromise, unwilling to listen, headstrong, and not willing to be flexible…It’s his way or the highway.”

The Hartford Courant reported Senate Minority Leader John McKinney as saying, “He’s a tax-and-spend liberal. His rhetoric may be different, but the rhetoric is over because this budget is real. How can you be open for business when you have a 100 percent increase on the corporate surcharge?” McKinney asked on the Senate floor. “You cannot preach and talk and scream and say we’re open for business and increase the corporate surcharge. At some point, the talk is hollow and meaningless.”

Expect another marathon debate today, this time in the house. The lower chamber is also more of a question mark. More progressive Democrats want to tax the wealthy more than the current plan does while other lawmakers think the taxes are too high in general. Through into the mix the fact that labor has big-time influence with many house Democrats and Speaker Chris Donovan and you have a recipe that has an unknown outcome.