Democratic lawmakers met with Gov. Dannel P. Malloy on Thursday after unveiling their $920 million deficit mitigation plan, a change in their stance of last week to cut the governor out of talks.
House Speaker J. Brendan Sharkey, D-Hamden, who last week said Malloy would see the Democrats’ proposal after legislators vote on it, told reporters Thursday that rank-and-file members preferred to get the governor’s take beforehand.
He said he and Senate President Pro Tem Martin M. Looney, D-New Haven, believe a majority of their members in each chamber support their plan.
Malloy met with Democrats on Thursday afternoon to discuss their plan, but said his staff would handle the preliminary talks with those from the House and Senate Democrats.
Although Sharkey and other Democrats had expressed hope that revised revenue forecasts, due by the end of the week, would outperform most people’s expectations, Thursday’s proposal was within $15 million of recent plans from Malloy and Republicans.
Malloy declined to say where revenue forecasts — a consensus from his budget office and the legislature’s nonpartisan Office of Fiscal Analysis — are headed, but said the deficit projection is actually likely to rise.
“It’s far more likely that it’ll be a bigger number than it’s going to be a small number,” he said, adding there’s “no hope” for those expecting revenue forecasts to improve.
Democrats based their deficit mitigation plan on items approved this month by the Appropriations Committee, which cut $570 million in spending, and the Finance, Revenue, and Bonding Committee, which cut $35 million.
The proposal includes a additional $315 million in changes, including $168 million in one-time revenue streams, drawing criticism from Malloy and Republicans.
“I don’t believe that’s a document that constitutes what we need a budget to do, but I needed to acknowledge that they put a document forward,” Malloy said after their meeting.
He said the one-time revenues fail to provide the structural changes that he has been seeking for months. The legislature’s nonpartisan Office of Fiscal Analysis has projected that budget deficits will exceed $2 billion in both fiscal year 2018 and 2019.
Republicans were more critical, saying the proposal is “business as usual.”
“This budget fails in every regard, in every way,” Senate Minority Leader Leonard Fasano, R-North Haven, said. “Once again they failed to do their job, they failed to provide a budget which is workable, they failed to do what they had to do as a majority.”
Republicans were particularly critical of Democrats’ proposal to generate $60 million in revenue through a tax credit deferral.
Under the plan, businesses would pay additional taxes next fiscal year for credits with additional financial benefit in fiscal year 2019.
“It’s another excuse because they can’t balance a budget — another gimmick, another revenue grab,” House Minority Leader Themis Klarides, R-Derby, said of the proposal. “I don’t even know where they get that number from, to be honest with you. They’re just pie in the sky guessing in regards to that.”
Looney said Democrats are confident in their projection because of support they claim they’ve received from businesses.
“We’ve heard a great deal of interest from the business community on it because it is attractive in that it allows them to choose when a credit will be taken,” Looney said. He acknowledged the increased cost in fiscal year 2019, but said, “everything is a trade off.”
Connecticut Business and Industry Association president Joseph Brennan said his association has concerns because of that very trade off.
He said CBIA expressed an interest in talking about a tax credit deferral that gives business owners more freedom to decide when to claim credits, but pushing out the costs into a year when the state already is looking at a deficit exceeding $2 billion is “somewhat problematic.”
Brennan also said business owners have a “lack of confidence” that the legislature will follow through on its promise to repay those credits, with interest, in two years.
Rep. David Alexander, D-Enfield, also expressed concern about the proposal, and frustration over the fact that Looney and Sharkey told reporters and lawmakers that CBIA endorsed the idea.
“It’s disturbing that our caucus leadership misled us,” he said, adding that lawmakers are worried that “no one can explain how it works or why it works.”
Democrats also built in the expectation that the state will see a windfall of $39 million compared in settlements that the attorney general is negotiating.
Sharkey said lawmakers believe the number could be even higher, but the $39 million figure is a conservative estimate.
Savings in the Democrats’ plan includes a $25 million reduction in debt service payments, $26 million by reassigning executive branch lawyers to the attorney general’s office, and a $10.4 million reduction in the Department of Developmental Services’ operating budget.
Democrats proposed restoring 85 percent of the funding Malloy’s plan would cut to hospitals, but Fasano said that still would result in a $37.4 million drop. He said that also would result in the loss of $112 million in federal reimbursements.
Democrats expressed an interest in talking with Republicans, but leaders from both parties accused the other side of failing to fully negotiate.
Sharkey said Republicans “refused to participate” in budget talks, prompting Fasano to note that Democrats declined to attend two budget meetings with Malloy last week.
“We are in the budget negotiation,” he said. “We’ve been in the room with the governor, they walked out of the room.”
Malloy said he thinks a bipartisan negotiation “would be best,” and that he doesn’t “support, in whole, either of those budgets.”
Read more
