Hartford — House Republicans mounted a full assault Tuesday on Gov. Dannel P. Malloy's $40.1 billion biennial budget, although like their Senate counterparts, they failed to break its momentum.
The budget passed the House on a 83-67 vote a minute before midnight. Fifteen Democrats -- including two from southeastern Connecticut -- broke ranks to join Republicans in their opposition to the plan and its $1.4 billion in new taxes for the fiscal year starting July 1 and $1.2 billion in year two.
The document now awaits the governor's signature.
"With the passage of this budget by the Democrats in the House of Representatives, coming on the heels of [Tuesday morning's] passage by the Senate, Connecticut has taken another important step toward much-needed fiscal stability," Malloy, a first-term Democrat, said in a statement. "This budget is balanced, honest and contains none of the gimmicks that helped get us into this mess."
But for the moment, the budget leans on a $2 billion placeholder. The Malloy administration has been in closed-door talks since March with state employee unions to obtain $1 billion in annual savings and labor givebacks.
Roy Occhiogrosso, the governor's senior adviser, told reporters that the first round of employee layoff notices will go out Friday if an agreement isn't reached. He declined to say the expected number of notices. The layoffs would not go into effect until July 1.
"I think at some point there's either a deal or there's no deal and no chance of getting one," Occhiogrosso said.
Those voting for the budget Tuesday included State Reps. Ernest Hewett, D-New London; Ted Moukawsher, D-Groton; Melissa Olson, D-Norwich; Betsy Ritter, D-Waterford; Diana Urban, D-North Stonington; Elissa Wright, D-Groton, and Kevin Ryan, D-Montville.
Those voting nay included Republican Reps. Christopher Coutu, R-Norwich and Marilyn Giuliano, R-Old Saybrook. They were joined by Democrats Steven Mikutel of Griswold and Ed Jutila of East Lyme.
"I wanted to see more spending cuts and a little less on the taxing side," Mikutel said after the voting, adding that the budget plan did get better last month when some new taxes were done away with. "There were some improvements on the taxing side but it didn't come with equivalent spending cuts."
Whether or not he obtains full concessions, Malloy said the legislature would later vote again on a budget to either ratify what was approved Tuesday or move forward with a plan B.
The budget now approved plugs a $3.3 billion hole in the next fiscal year through a mix of spending cuts and tax increases on income, property, retail sales, services and corporations.
The Malloy administration says the average taxpayer would pay $20 more a month under the new budget. But Republicans say it would be far higher.
House Republicans held forth for hours during Tuesday's deliberations, blasting the Malloy plan as spendthrift and labeling its tax increases as unfair to struggling middle-class residents. It would also drive businesses out of state, they said.
"I've visited hundreds of businesses across my district and the region, and there's been one constant message from these thousands of people: 'Please think of us and don't raise taxes,'" Coutu said.
The budget anticipates a $369 million surplus in its first year and $635 million in the second. Democrats say the surplus would go toward debt repayment and rebuilding the depleted rainy-day fund. Republicans criticized them for not using the surplus to obviate the tax hikes.
The budget also calls for $1 billion in spending cuts over two years, in addition to the requested labor concessions. And officials said the number of state agencies will be consolidated from 81 to 56.
Unveiled Feb. 16, the Malloy budget sprinted through the committees and chambers of the General Assembly. Budget votes usually don't come until near the end of regular legislative sessions, or beyond.
But the Connecticut's first Democrat governor in two decades had party allegiance on his side, with Democrats controlling both the House and Senate.
"We have a sound meaningful budget document that represents a consensus, at least among most of us here in state government, about how we should be moving forward," House Majority Leader Brendan Sharkey, D-Hamden, said moments before roll call. "We are reaching a vote and a decision tonight on a state budget that is earlier than we've ever had in recent memory."
The majority leader's consensus did not extend to any Republicans. Sean Williams, R-Watertown, noted during budget deliberations that Connecticut's 9.1 percent unemployment rate is above the 8.8 percent national average. The Malloy budget would make it worse, he said.
"We're losing jobs left and right," he said, "And the common denominator is (businesses) can't afford to be here anymore."
House Minority Leader Lawrence F. Cafero Jr., R-Norwalk, criticized how the budget would cut $200 from residents' $500 property tax credit
"We're going to take the one tool you have to fight property taxes and we're going to reduce it by 40 percent," Cafero said, his voice heavy with indignation. "Where's the pro-quo? What do they get for it? Nothing. And we're telling them you gotta like it — you've gotta sacrifice."
The Republicans tried without success to replace the budget with the GOP alternative — a "no tax increase" budget. That amendment, which failed in the Senate Monday, was voted down in the House Tuesday night by a 97-52 vote along party lines. A flurry of other Republican amendments to blunt the new budget's taxes also languished.
The Malloy budget would expand from three to six the number of income tax brackets, raising the top rate to 6.7 percent from 6.5 percent and lowering the threshold for higher rates.
Single filers with incomes over $50,000 a year and couples earning more than $100,000 would pay more than they do now. The brackets will be retroactive to Jan. 1.
The sales tax rate would rise from 6 percent to 6.35 percent, and clothing and shoes under $50 would no longer be exempt.
The budget calls for new or higher taxes on a variety of items and services including cigarettes, alcohol, cosmetic procedures including Botox, pet grooming, yoga studios, energy generators, and "luxury" vehicles, boats, jewelry and clothing. It also would double the 10 percent corporation tax surcharge.
The adopted budget is different in several aspects to the plan Malloy presented in February. It removed proposed new taxes on services including hair cuts, car washes and boating, and restored $300 of the $500 property tax credit that the governor first sought to eliminate completely. It also maintained a greater level of assistance to manufacturing-heavy cities and towns.
A final round of budget tweaks did away with a 3-cent-per-gallon increase to the state's tax on gasoline. However, lawmakers kept a 3-cent-per-gallon tax hike on diesel fuel.
Occhiogrosso, the governor's senior advisor, strongly disagreed Tuesday with statements by Republicans that the new taxes go after susceptible working people and small businesses still suffering from economic downturn.
"He's aware of what he is asking people to do, but thinks that it is not unfair given what people will get in return, which is stabilizing the state's finances, allowing the state to create jobs," Occhiogrosso said.
Much earlier on Tuesday, the state Senate adopted the budget bill by a 19-17 vote in a marathon session that started Monday afternoon and ran until 3:15 a.m.
Three Senate Democrats broke ranks to join Republicans in opposing the budget. Democrats who voted for the budget included state Sen. Andrew Maynard of Stonington, Andrea Stillman of Waterford, Edith Prague of Columbia and Eileen Daily of Westbrook.
With a few hours sleep, Maynard was soon back at the Capitol for a late morning committee meeting. But the Senate vote weighed heavy on him.
"I'm not feeling very buoyant today," Maynard said. "That was a very challenging vote. I have to say, I'm not entirely satisfied that we reduced spending as much as we could."
He said that although he did not regret his vote, his support for the spending plan was less than a full embrace. Maynard pushed hard in budget discussions for several changes, including the successful elimination of proposed boating and aviation taxes, a reduction of the "luxury" tax and preservation of municipal aid and tourism funds.
"A 'no' vote after all of the changes we made in getting some improvements in the budget would have really been a slap in the face, and would have undercut my ability in being an effective team player in whatever comes next," Maynard said.
He said he conferred with two other Democratic swing votes — Sens. Paul Doyle of Wethersfield and Bob Duff of Norwalk — and they shared a belief that legislative approval would "give the governor some support in a very difficult set of negotiations" with labor unions. If the governor lost such leverage, Maynard feared an eventual result would be cuts to municipal aid.
After the House vote, state Rep. Urban noted that few speakers voiced concerns about how the budget's cuts would affect state programs, such as those assisting children and families.
"There's been so much emphasis on the tax side of the equation and not the cut side," Urban said. "But I get it, we need to have a sustainable government, and I feel that this budget is getting us there."