House OKs budget by 103-45 vote

September 01, 2009 12:00 am • Last Updated: September 01, 2009 11:15 am

By By TED MANN Day Staff Writer

Hartford - The legislature was working toward passage late Monday of a $37.6 billion two-year budget plan, despite continuing doubts about whether it would really bring the state's two-month budget standoff to an end at last.

The House of Representatives voted to pass the bill just before midnight, 103-45, after roughly four hours of debate. Nine Democrats joined all the Republicans present in opposition.

The Senate was preparing to begin debate on the budget shortly after midnight.

Democratic leaders hailed their package as a "compromise" that included significant spending cuts as well as tax hikes and borrowing to close a projected $8.5 billion cumulative deficit.

But Republicans resisted en masse, along with some Democrats, saying the legislative leadership had failed to truly cut back on spending and instead had leaned heavily on one-time sources of revenue and accounting gimmicks that would only magnify fiscal problems down the road.

Senate Democrats struggled to marshal enough votes to pass the legislation, despite holding a two-thirds majority in the chamber. Among the complicating factors in the Senate was the resistance of a number of Democrats to vote for income tax increases without greater spending reductions.

The problem was exacerbated for leaders by the absence of one of those who provided a razor-thin margin in the last budget vote in the Senate, Sen. Andrew Maynard, D-Stonington, who was out of the country after the death of a relative.

And throughout the day, the action was met with virtual silence from Gov. M. Jodi Rell and her staff. Rell's press office refused to say publicly whether Rell would accept the Democratic budget in order to end the standoff - perhaps by letting it become law without her signature - or veto it, forcing a potentially grueling round of unilateral program cuts as the state runs short of operating revenues with escalating expenditures looming.

But Rell's staff was apparently negotiating with Democrats on the scope of the bill even as debate continued in the House. Shortly before passage, the House adopted an amendment, negotiated between the governor's office and legislators, that directed funds to a variety of community organizations in selected towns around the state, including YMCA facilities and neighborhood nonprofits. It did so in part by reducing funds from mass transportation accounts that support bus and rail programs, some of the very spending that many legislators had urged for months could not be cut without unfairly burdening the state's neediest residents.

"It's not everything you'd hoped for, it's not everything we've hoped for, but it's a good and fair budget," said Rep. Cameron Staples, D-New Haven, the co-chairman of the Finance Committee.

But there were Democratic dissenters too, including Rep. Linda Schofield, D-Simsbury, who said she was "embarrassed and appalled" that Connecticut is one of just two states that has yet to enact a budget for the new fiscal year, which began July 1. But Schofield said she was unwilling to support the leadership just to get a budget passed.

"There's a constitutional requirement for us to have a balanced budget and I dont see that here," said Schofield. "This budget has us spending far more in annually recurring expenditures than we collect in annually recurring revenue."

Schofield specifically objected to the $1.3 billion in "securitization" of future state revenues, a strategy that both Rell and Democratic leaders have relied upon to make their budgets balance. But the budget bill does not identify where the funds to support that borrowing would come from, Schofield noted. And the scheme would only add to the projected $1.7 billion cost of debt service on Connecticut's already issued bonded debt.

"It's a budget that says we can put a chicken in every pot and it doesn't have to be paid for," Schofield said.

The Democratic proposal adopts Rell's previously offered increase on the income tax for those making $500,000 or more, raising roughly $1 billion over two years.

But it does not include the amount of additional spending cuts - $520 million - that the governor demanded in exchange.

Republicans charged that the $385 million in spending reductions offered by Democrats in response to Rell's most recent proposal included just $185 million in real cuts, with the remainder only loosely defined, including scheduled "lapses" of unspent funds in various state agencies and accounts.

Democrats also tinkered with Rell's own tax changes, including delaying Rell's proposed cut in the sales tax rate from October 1 to January 2010, and building in triggers that would cancel that cut altogether if revenues from the sales tax fell by more than 1 percent.

The majority bill also rejects Rell's effort to totally eliminate the inheritance tax on those with estates worth more than $2 million. In a compromise on a longtime Republican policy goal, Democrats proposed raising the threshold at which the tax takes effect to $3.5 million while lowering the rates.

Rell and Democrats agreed on a three-year, 10 percent surcharge in the corporate tax, but limited that to businesses with gross receipts of $100 million or more to shield small businesses.

Hanging behind it all, the same old question: Was this really the end?

"There hasn't been handshakes, but we've been talking to each other and some things they've wanted we've incorporated," said House Speaker Christopher Donovan, D-Meriden, on Monday morning, referring to Rell and her advisers.

Donovan conceded that, after months of jockeying and negotiating for leverage among the Democratic majorities in the General Assembly and the governor's office, there was still no assurance that the latest budget bill will become law.

"I would be thrilled if she said it's a deal," he said. "But she's considering it, and we're looking to pass it."

Republicans were disdainful, however, even as the party's legislative leaders conceded that they are not sure if Rell would be willing to let the bill become law without her signature.

"I don't quite understand with whom this is a compromise," said House Minority Lawrence F. Cafero Jr., R-Norwalk. "And if it's not a compromise, what is it?"

And the bill, even as it tries to wrestle the state's projected $8.5 billion two-year deficit under control, continues to spend.

For instance, an existing state statute called for the state to stop paying meal allowances to non-union employees of the Department of Public Safety on April 1. Buried deep in an early version of the Democrats' budget bill is a provision that strikes that existing language from the law, and replaces it with the following sentence: "A meal allowance shall be maintained for state police personnel at the expense of the state."

Still, some Democratic lawmakers say the criticism that they have been unwilling to make meaningful cuts overlooks the effect of further reductions to social programs, universities and caregivers.

"We are cut out," said Rep. Ernest Hewett, D-New London. "People are suffering already. We make any more cuts in these programs in the state of Connecticut, of course they're not going to feel it - the millionaires are not going to feel it. We feel it in New London."

t.mann@theday.com