Senate passes $37.6 billion state budget

Hartford — After more than six hours of debate, the state Senate passed the state budget for fiscal year 2014 and 2015 by a vote of 19-17 Monday night.

State Sens. Cathy Osten, D-Sprague, Andrea Stillman, D-Waterford, and Andrew Maynard, D-Stonington, voted in favor of the bill. State Sen. Art Linares, R-Westbrook, voted against it. All Republicans and three Democrats voted against the budget.

The House had already passed the budget bill 95-48 on Sunday morning. It now heads to Gov. Dannel P. Malloy for his signature.

“The budget is balanced, the budget doesn’t raise income or sales taxes, the budget protects key investments and the budget is below the spending cap,” said Appropriations Committee co-chair, state Sen. Toni Harp, New Haven.

The two-year budget uses a different budget format to stay under the spending cap, extends temporary taxes and relies on one-shot revenue streams while at the same time focusing funding on municipalities, higher education, education and developmental services.

The state budget is $18.6 billion in fiscal year 2014 and $19 billion for fiscal year 2015, which comes to $37.6 billion over two years. However, the legislators involved in the final budget negotiations decided to move $2.9 billion in fiscal year 2014 and $3.5 billion in fiscal year 2015, which come to $6.4 billion, “off budget.” These funds include Medicaid reimbursements from the federal government and other federal reimbursements. If the federal reimbursements remained in the budget the two-year budget would be $21.5 billion in fiscal year 2014 and $22.4 billion is fiscal year 2015 or $44 billion over two years.

Based on the budget that includes federal reimbursements and follows the old procedures, the state budget would increase by 9.8 percent in fiscal year 2015 compared to fiscal year 2013.

“This is certainly the wrong direction for our state,” said the ranking member of the Appropriations Committee, state Sen. Bob Kane, D-Watertown. “We have not reduced spending, we have actually blown through the spending cap. We have altered it for our own benefit, if you will, certainly not for the people of the state of Connecticut, but for the legislature and the administration to continue its spending spree.”

The governor had proposed changing the definition of the state’s spending cap, which would have required a three-fifths majority vote in each chamber. But there weren’t enough votes.

Many Republicans said there should have been a vote on the spending cap as opposed to just changing the way the budget is crafted.

Senate President Pro Tempore Donald Williams, D-Brooklyn, said that moving federal reimbursements “off budget” would finally allow Connecticut taxpayers to get their fair share of federal funds.

“Taxpayers in Connecticut send a lot of dollars to Washington through our income taxes, every other state gets those dollars back unrestricted in terms of how they account for those,” Williams said. “Connecticut stands alone in punishing our taxpayers from getting their fair share.”

When federal spending is included in the state’s budget, state spending would have to decrease in order to stay under the cap.

Republicans in the Senate as in the House also said the two-year budget was full of one-time revenues such as relying on the fiscal year 2013 surplus of about $220.8 million from residents making taxable gifts in 2012 before the gift and estate tax rates were raised. The budget also relies on $35 million from the Connecticut Resources Recovery Authority, which is paying the state $35 million in order to give over liability for the quasi-public agency. The budget also includes $50 million from a multi-million-dollar tobacco settlement and $35 million from a tax amnesty program.

The budget includes a revenue transfer from the transportation fund to the General Fund of $109.7 million, which takes away funding for new roads and bridges.

Republicans also said the budget includes $316 million in tax increases over the next two years, whereas Malloy has repeatedly said the budget wouldn’t increase taxes.

The scheduled gross tax receipt at the gas pump will increase to 8.1 percent from 7 percent and is expected to bring in $120 million over two years. During the Senate session the Republicans put forth an amendment to stop the hike, but it failed.

“I think our residents will be furious if we don’t pass it,” said state Sen. Joe Markley, R-Plantsville, who proposed the amendment.

The temporary energy-generation tax would continue for the first quarter of fiscal year 2014 and bring in about $17.5 million. Other temporary taxes such as the corporate income tax and the cap on tax credits for insurance premiums were continued, which would bring in $118.4 million over two years and $54 million over two years, respectively.

There was one tax break for residents.

The bill exempts certain items from the 6.35 percent sales and use tax on clothing and footwear that cost less than $50 as of June 1, 2013. It excludes items such as special athletic and protective clothing and footwear, jewelry, handbags and luggage. The Republicans proposed an amendment to reduce the sales tax in general to 6 percent from 6.35, but the amendment failed along party lines.

Some of the sectors of Connecticut that received more spending or similar spending this year compared to last year were municipal aid, higher education, education and developmental services.

State Sen. Beth Bye, D-West Hartford, announced during the Senate session that the budget restored 47 positions, which cost $5.6 million, to state colleges, universities and community colleges.

“We heard of students saying classes were not offered because of faculty cuts,” she said.

The budget also provides $2 million for community and technical colleges to help students who need remedial help and can’t be integrated into credit based courses immediately, Bye said.

However, the budget reduces scholarships to college students after consolidating the scholarship program to student-based scholarships instead of institution-based ones, Harp said.

Other education spending that was restored includes school transportation funds, which were restored to $25 million in each year. The state will also increase the Education Cost Sharing fund by $50 million in fiscal year 2014 and $100 million in fiscal year 2015, as proposed by the governor.

The budget also restored funding to municipalities.

“The new state budget is a clear win for towns and cities and their local property taxpayers,” said Jim Finley, executive director and CEO of the Connecticut Conferences of Municipalities, in a press release.

Payment in lieu of taxes on state-owned property were restored to $73 million in each year. PILOT funds for colleges and hospitals were restored to $115 million and the Pequot-Mohegan fund from slot machine revenue was restored to $62 million.

State Sen. Terry Gerratana, D-New Britain, said the budget focused on the most vulnerable population, people with disabilities. The budget provides funding for those who are aging out of state services, especially high school graduates, she said.

The state’s Department of Public Health maintains funding for School Based Health Centers, but doesn’t provide funding for additional centers, she said.

j.somers@theday.com

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