Published April 17. 2014 4:03PM Updated April 18. 2014 12:03AM
Hartford — Republican legislators proposed their own budget revisions Thursday for the fiscal year that begins July 1.
They are proposing several spending cuts and revenue adjustments that would ultimately reduce spending levels below those proposed by the Democrats and the governor this year.
They would eliminate $827 million worth of what they called gimmicks and one-time revenues that they said set the state up for budget deficits in future years.
"The budget adjustments that Governor Malloy and the Democrats have offered give us more spending, more gimmicks and bigger deficits," said state Senate Minority Leader John McKinney, R-Fairfield, who is an announced candidate for his party's gubernatorial nomination. "In short, they are fiscally irresponsible and unsustainable."
Senate President Pro Tempore Donald Williams, D-Brooklyn, said the Republicans didn't reduce spending much and that the proposal lacked "bold ideas."
"We are always open to ideas, but again, their bottom line was almost identical to the governor's bottom line," Williams said.
The Republicans proposed spending $17.48 billion, while Malloy proposed spending $17.496 billion.
Malloy's budget chief, Benjamin Barnes, said in a written statement Thursday that the minority party has failed to produce an actual budget proposal. The Republican proposal included a press release, a PowerPoint presentation and a 14-page budget with more than 400 line items. The Appropriations Committee passed a 200-page budget document last month.
"Perhaps most troubling, it includes a $120 million tax increase on Connecticut's working poor by eliminating the (Earned Income Tax Credit)," Barnes said.
The intent of the EITC is to make the $120 million available to the working poor so they can spend it and it goes directly into the economy. But House Republican Leader Larry Cafero, R-Norwalk, said that when the governor enacted the EITC, he also got rid of programs such as the nonprescription drug tax exemption and the clothing tax exemption, which hurts the poor.
Malloy and the Democrats have proposed reinstating the sales-tax exemption for nonprescription drugs, the sales-tax exemption on clothing costing less than $50 and restoring the EITC to 30 percent of the federal EITC.
"It is a program unfortunately, the Earned Income Tax (Credit) program, that we cannot afford," Cafero said.
Williams said the elimination of the EITC was a "tax increase on the poor. I think that is the most cynical part of the Republican package, and it's really the only cut they are proposing."
The Republicans also eliminated Malloy's proposal to give individual tax filers a $55 tax rebate and joint filers a $110 tax rebate.
Malloy has said the $155 million in tax rebates would create 1,200 jobs.
"You have got to be kidding me," McKinney said.
Constituents say $55 won't even fill up their gas tanks, he said.
The Republicans' budget also includes a pension income tax cut for everyone, unlike the Democrats' proposal, which would provide an income tax break to retired teachers collecting state pensions.
Teachers would pay taxes on 75 percent of their pensions this tax year. In fiscal year 2015, that amount would be reduced to 50 percent.
Under the Republicans' plan, there would be a pension tax exemption of 5 percent in the first year, a 7.5 percent exemption for the second year and a 10 percent exemption for the third year.
Connecticut is one of four states that tax their retirees' pensions, Cafero said.
"That has got to stop, otherwise we are going to remain as the worst place in the United States to retire in," he said.
The Republicans' budget also removes the controversial revenue source from keno, a game of chance that currently remains in Democrats' budget proposals.
With regard to spending, the Republicans proposed reinstating the Municipal Revenue Sharing Account that was eliminated this year and adding $26 million to municipalities' budgets.
"Every municipality in Connecticut, under our budget, will receive more state aid than they would under the governor's and the Democrats' budgets," Cafero said.
Republicans said their budget was more transparent and didn't rely on surplus funds to pay for ongoing expenses such as health care expenses for retired state employees or "revenue intercepts" for Connecticut state colleges and university. A revenue intercept relies on funds that were never built into the appropriations budget.
"One of the things we found over and over again in the Appropriations Committee was the amount of gimmicks that take place each and every time we have a meeting, and we wanted to put an end to that," said state Sen. Rob Kane, R-Watertown. "We want to make sure people know that these gimmicks are out there."
The Republicans said it would be appropriate to spend surplus money toward paying down the state's long-term debt. They proposed paying $196 million toward the Economic Recovery Notes, which were notes that were bonded to close the budget deficit during former Republican Gov. M. Jodi Rell's administration. The budget that was enacted last year for fiscal year 2015 and the Democrats' and governor's budget-modification proposals currently delay this payment, which increases the state's debt payments in future years.
The Republicans' proposal retains Malloy's proposal to contribute an additional $100 million to state employees' pensions.
House of Representatives Speaker Brendan Sharkey, D-Hamden, called the Republican's proposed budget adjustments "typical."
"It is typical Republican fare — targets the poor and middle class, and claims illusory spending cuts," Sharkey said.
Budget discussions among the co-chairmen of the Appropriations Committee and Barnes are underway, Williams said.
At this point, the Republicans have not been included in these budget talks, Cafero said.
"I always remain, as I think Senator McKinney does, optimistic, and say what we say every year: We are ready, willing and able to share our ideas, to have discussions and to work towards bipartisan budget solutions," Cafero said.