HARTFORD — Democratic legislative leaders said late Monday that disagreements with Gov. Dannel P. Malloy on how to close a budget deficit next year still total more than $100 million, despite a third budget proposal he presented to them earlier in the day.
House Speaker J. Brendan Sharkey, D-Hamden, and Senate President Pro Tem Martin M. Looney, D-New Haven, said they appreciated Malloy’s compromise on policy issues, but added that the governor’s latest proposal made little to no progress on actually making the numbers work.
“Reaching the rest of it — dollars-wise, we’re still where we were Friday night,” Sharkey said after meeting with Malloy early Monday evening.
Still, he remained hopeful that lawmakers could reach a budget agreement with the governor before the end of the legislative session Wednesday.
The meeting came after Malloy unveiled a new $19.76 billion budget that he said in a letter to lawmakers relies on pieces of his past proposals, as well as suggestions from Democrats and Republicans.
“This proposal makes great strides to find compromise with both Democrat and Republican plans while still maintaining the key priorities I’ve stressed through the session and especially recent days,” Malloy wrote.
Those priorities include not raising taxes, avoiding efforts to borrow money, and closing the entire deficit, which now is projected to be $960 million after the release Friday of revised revenue forecasts.
The changes in his latest proposal include reducing diversion of sales tax revenues to the Special Transportation Fund by $50 million and relying on some one-time revenue sources.
Malloy has previously touted the diversion of one-half percent of the sales tax as being needed to keep the special fund solvent while the state figures out how to pay for his 30-year, $100 billion transportation overhaul.
He also reduced his cut to municipal revenue sharing, asking lawmakers to cut $60 million of the $245.9 million in sales tax revenues that the current budget diverts to the account.
In total, Malloy’s proposal would cut $844 million, or 4.5 percent, off the General Fund budget and rely on $117.5 million in revenue changes to plug the $960 million deficit, as forecasted Friday after the release of revised income projections.
Democratic leaders said the proposal moves closer to their position on Education Cost Sharing grants — which Malloy previously proposed eliminating altogether for some of the state’s wealthiest towns — and funding to hospitals.
Spokesmen for Senate Minority Leader Leonard Fasano, R-North Haven, and House Minority Leader Themis Klarides, R-Derby, could not be reached for comment late Monday.
The latest budget proposal’s $40 million reduction in funding to hospitals is less than Malloy proposed April 12, but still cuts deeper than the legislative Democrats’ alternative budget.
Sharkey and Looney said they still had serious objections to parts of Malloy’s proposal, including its reliance on funds for the Municipal Revenue Sharing Account, or MRSA.
“We’re OK with making some adjustments to MRSA, but how it gets distributed and how it gets apportioned among the three parts of MRSA remains to be determined,” Looney said.
The Connecticut Conference of Municipalities also raised concerns about cuts to municipal aid, saying Malloy’s third budget would still mean a loss of $120 million for cities and towns.
“This proposal does not provide for significant and structural mandates relief to mitigate the impact of the cuts,” said Joseph DeLong, CCM’s executive director. “They are simply deep cuts in current state aid programs that only serve to shift the tax burden from the state onto residential and business property taxpayers across Connecticut.”
When asked if the gap between the leaders’ plan and Malloy’s latest was at least $100 million, Sharkey said it was over that figure but didn’t elaborate.
Social service providers had a mixed reaction to Malloy’s revised plan, which would cut $8.2 million for behavioral health services but add $5 million for day services and employment programs.
Jeffrey Walter, interim CEO of the Connecticut Community Nonprofit Alliance, said nonprofits are supportive of Malloy’s call to use community programs more for services provided by the state, but warned that funding cuts to those providers could eliminate those services.
“If we can get through this budget process and keep services from being totally dismantled, we have an opportunity to build on a system that’s pretty good now and make it even better,” he said. “But if we dismantle that system this year, there won’t be a system to build on for next year.”
