Drafting a state budget that spends tens of billions of dollars annually, often increases taxes or fees at least modestly — and always leaves some groups dissatisfied — is never an easy process.
Add to the mix the potential loss of billions in federal aid later this year, and the politics goes beyond tricky as legislators begin the final push to craft a new spending plan before they adjourn five weeks from now.
Majority Democratic legislators recently reminded Republicans to be careful with their budget rhetoric — because they may have to put their votes where their mouths are.
Meanwhile, House Republicans will remind Democrats on Thursday to be careful what they wish for when the GOP caucus unveils its own plan to solve Connecticut’s latest budget dilemma. And if Democrats are serious about good government, GOP leaders say, they can’t ignore ideas from the other side of the aisle.
Republicans criticize the budget but don’t always draft one
“This is a game they have played for years,” Senate President Pro Tem Martin M. Looney, D-New Haven, said of Republicans’ off-again, on-again approach to state finances.
With a couple of exceptions, Republicans have been in the minority at the state Capitol since 1985. The GOP held a slim 19-17 edge in the Senate in 1995 and 1996, and that chamber was tied 18-18 in the 2017 and 2018 sessions.
That means Democrats hold majorities on all committees, including the two budget-writing panels. It also means Republicans can propose a minority budget if they want — or simply criticize select elements of the Democrats’ plan without offering a holistic alternative.
Neither House nor Senate Republicans offered budgets in 2019 or 2021. Neither party did so in 2020, when COVID’s arrival forced the Capitol’s closure in early March. The Senate GOP also didn’t show its cards last year, and Sen. Stephen Harding, R-Brookfield, the minority leader, said the caucus still hasn’t decided whether it will this year.
The GOP plans that are submitted often contain gimmicks and other questionable maneuvers, just as do the Democratic proposals they criticize. Democrats say Republican budgets routinely promise tax relief and easy fixes to deficits by exaggerating savings from hiring freezes, employing across-the-board cuts in miscellaneous accounts that don’t assess the actual impacts, and sometimes by thinking wishfully.
A 2010 GOP plan still recalled at the Capitol would have plugged a huge $800 million hole in the General Fund not by cutting programs or raising taxes — but by selling Bradley International Airport in Windsor Locks and Hartford-Brainard Airport. About 5% of ongoing programs in the General Fund would have been covered, for one year, by one-time sales proceeds. Republicans decided Connecticut could get $800 million for the two airports based on the proposed 2009 sale of Chicago Midway International Airport for $2.5 billion, which ultimately fell through.
Sen. Cathy Osten, a Democrat from Sprague who co-chairs the Appropriations Committee, was disappointed that her Senate GOP colleagues aren’t ready to write a budget detail, given their frequent calls for adherence to sound fiscal principles.
“I think the [Republican] rhetoric is pretty strong this year,” she added.
Republicans chastised Osten’s panel last week when Democrats unveiled a $55.7 billion, biennial plan that would exceed Connecticut’s spending cap by $215 million next fiscal year.
Legislatures legally can exceed the cap, which ties most budget growth to household income and inflation, with a 60% vote of approval and the governor’s endorsement but haven’t done so since 2007. Exceeding the cap became politically taboo shortly after that as big spending growth, massive pension debt and a severe recession triggered major state tax hikes in 2009, 2011 and 2015.
Pressures on the spending cap
Democrats and Republicans voted overwhelmingly in late February to send an extra $40 million to local schools to mitigate a special education funding crisis. That happened despite warnings from Gov. Ned Lamont that the current state budget already was on pace to exceed the cap by $61 million.
And while the Appropriations Committee’s plan originally continued those extra $40 million special education payments for each of the next two fiscal years, members from both parties insisted they wanted more.
Republicans would support $124 million per year in extra payments, but only if funding for public colleges and universities were reduced by $84 million annually to offset the special ed increase. Higher education institutions entered this fiscal year with close to $1.1 billion in reserves and could absorb the cut, the GOP argued.
Democrats rejected that, noting that college students have faced significant tuition hikes in recent years. And hundreds of millions of dollars in temporary federal pandemic grants, which have propped up college and university programs, will vanish after this year.
Rep. Anthony Nolan, D-New London, then proposed adding another $84 million for special education in each of the next two years without offsetting cuts to higher education, which pushed the committee budget from $131 million over the spending cap in 2025-26 to $215 million.
Despite their statements in support of the cap, about half of the committee’s 13 Republicans voted for Nolan’s amendment.
“If we agreed our children deserve that quality education,” Nolan said, “it shouldn’t be up for a debate.”
It’s easy to pledge allegiance to the spending cap, but harder to remain loyal when a priority like local school aid is on the chopping block, said House Speaker Matt Ritter, D-Hartford, who added there are consequences to heated political attacks.
“If your rhetoric gets too strong, you may lose things you had in the budget,” he said.
GOP: Democrats don’t listen, don’t save
But Republican leaders counter that Democrats have short memories.
The GOP always has been willing to come to the table, provided they are partners and their ideas are given due consideration. Too often, they added, Democrats simply want Republicans to vote for bloated spending and unnecessary tax hikes so both parties share the blame.
When Democrats couldn’t pass a budget in 2017 despite a House majority and control of the governor’s office, Republicans joined a bipartisan effort. That yielded new budget caps that built a paltry $212 million rainy day fund, equal to about 1% of the General Fund, into a record-setting $4.1 billion bulwark against the next recession.
Those same caps, or “fiscal guardrails,” also produced more than $8.5 billion in supplemental payments against Connecticut’s massive pension debt (the state entered this fiscal year with more than $35 billion in unfunded liabilities in this area).
Republicans note that the last time Connecticut enjoyed big surpluses, before the “guardrails” era, Democratic-controlled legislatures spent far more than they socked away, even though those legislatures were working with Republican governors.
Between the 2003-04 and 2007-08 fiscal years, Connecticut ran up $3.6 billion in potential surpluses, according to records from the comptroller’s office and the legislature’s nonpartisan Office of Fiscal Analysis.
But state officials would deposit just 38% of that windfall, about $1.38 billion, in the rainy day fund during this five-year period. The remaining $2.25 billion, or nearly two-thirds of the rest, would be spent.
While acknowledging that Republicans voted this year for special education funding that threatens to break the spending cap, Harding says his caucus still believes legislators must adhere to the “fiscal guardrails” while not boosting taxes.
“And it seems there’s an unwillingness to do that on their [Democrats’] end,” Harding said.
The Democratic-controlled Finance, Revenue and Bonding Committee proposed an income tax surcharge on the capital gains earnings of wealthy households and an array of business tax increases that collectively would generate more than $460 million per year.
But while Democrats say some of that revenue would be needed to maintain state programs in the face of likely cuts in federal funding, about $175 million of that new revenue would be returned to poor and middle-class families in the form of a new $150-per-child income tax credit.
House Republicans also are expected to offer tax relief Thursday when they provide their own budget proposal for the next two fiscal years.
Rep. Tammy Nuccio of Tolland, ranking House GOP member on the Appropriations Committee, said her caucus always intended to offer its own solutions to the fiscal challenges facing Connecticut, adding it will be cost-efficient and respectful of the heavy burdens state taxpayers already face.
The real question, Nuccio added, is whether majority Democrats will include House Republicans in budget negotiations with the Lamont administration and incorporate GOP proposals into the final plan.
“We are not the party of ‘No,’” Nuccio said. “We’re the party of options. We’re just being ignored.”
