Conn. House passes Democratic $43B state budget plan
HARTFORD (AP) — The House of Representatives gave its approval Monday to a two-year, $43 billion Democratic budget proposal that Democrats predict will put Connecticut on a path to fiscal stability, but one Republicans argue is a hodgepodge of ideas, increased spending and higher taxes that repeats the state's past financial mistakes.
After nearly nine hours of debate, the Democratic-controlled House voted 86-65 to advance the massive 550-plus-page bill to the Senate. Five Democrats joined the Republicans in opposition.
Democrats made note of how the bill preserves about $2 billion for the state's budget reserve account, money that can blunt the impact of any future recession. It also includes the groundwork for a tentative legal settlement Democratic Gov. Ned Lamont reached with the state's hospitals to ward off what could be an expensive court decision. And the plan reschedules teacher pension payments to address a major underfunding problem.
"Those three things I think are really a big, big linchpin," said Democratic House Majority Leader Matt Ritter of Hartford, when asked if this budget plan will finally end Connecticut's string of deficits and appease business interests, who've complained for years about the unpredictability of legislative decision-making and budget-making. This budget covers an estimated two-year, $3.7 billion budget gap.
But Republicans were skeptical of the Democrats' optimism, arguing the legislation does nothing to grow the economy or spur business creation and employment, especially with other legislation they see and anti-business, including the recently signed minimum wage increase.
"This budget increases spending. This budget increases taxes. And this budget allows for an increase in borrowing," said Rep. Christopher Davis, R-Ellington, who called the bill an "attack" on small businesses and middle class taxpayers. "These are the things that have gotten us into this problem that we're facing (over) so many years and so many decades."
The bill also includes numerous public policy initiatives, including compromise language on a paid family medical leave program sought by Lamont. The package of legislation was finalized last week by Democratic legislative leaders and Lamont following closed-door negotiations that didn't involve the General Assembly's minority Republicans. Lawmakers face a midnight deadline on Wednesday to act.
Here's a look at some of the highlights of the plan:
The budget plan includes a variety of tax increases, which add up to about $2 billion over the two-year budget.
About half of that $2 billion comes from a tax on hospitals, which is part of the tentative agreement Lamont negotiated with the Connecticut Hospital Association.
While much shorter than Lamont's budget, unveiled in February, this plan still extends the state's 6.35 percent sales tax to more goods and services, including dry cleaning and laundry services; interior design services; and some parking. It also imposes a 1 percent tax on prepared foods and beverages, including restaurant meals; increases the sales tax from 1 percent to 6.35 percent on digital downloads; requires the state's occupancy tax to be charged for short-term rentals, such as Airbnb; imposes a 10-cent surcharge on single-use checkout bags and a subsequent ban beginning July 1, 2021; and a 10 percent excise tax increase on alcohol at the wholesale level, excluding beer.
It also increases the fee for ride-hailing services per ride from 25 cents to 30 cents and a trade-in fee auto dealers pay from $35 to $100, and imposes a 40-cent-per-milliliter tax on e-cigarette liquid and a 10 percent tax on the wholesale price of other e-cigarette products.
The bill doesn't include a capital gains tax on higher income taxes on the wealthy that the legislature's Progressive Caucus supported, but it does make tax changes that target higher income residents. It includes a version of a so-called mansion tax, a 1 percent surcharge on the 1.25 percent real estate conveyance tax paid for properties that sell for more than $2.5 million. It would be refunded in the form of a tax credit for those homeowners who remain in Connecticut. There's also a proposal to tax earnings of people who form limited liability companies and don't pay the corporation tax. There's disagreement about whether this will target wealthier taxpayers who may have already benefited from President Donald Trump's federal tax cuts or hurt small business owners.
The bill also requires the secretary of the Office of Policy and Management to come up with $50 million in possible fee increases.
The budget proposal spends a total of about 2 percent more, or nearly $430 million, in fiscal year 2020 compared to the current fiscal year. In the second year, spending grows by 3.7 percent or nearly $781 million.
Republicans criticized the spending levels, claiming the plan funded lawmakers' pet projects at the expense of key programs, such as expanding slots for day care services for low-to-moderate income families and programs that serve people with disabilities.
"How, in a multibillion-dollar deficit year, do we spend more, borrow more and raise taxes," asked House Republican Leader Themis Klarides of Derby. But Ritter noted that the plan remains under the state's constitutional spending cap and criticized Republicans for not offering their own budget proposal.
The GOP raised questions about tens of thousands of dollars set aside for specific Boy Scout troops and high school booster clubs. But Democratic Rep. Toni Walker of New Haven said such funding ensures recreational opportunities are available for all children across the state.
The plan also increases state funding for programs like methadone maintenance clinics, health care for needy adults, funeral expenses for the indigent, magnet school funding, and nursing homes, which are facing a possible strike over wages and benefits. There's also roughly $100 million more for state employee salary increases and a proposal requiring the creation of a debt-free community college program by 2020, funded with revenues from yet-to-be-approved online gambling by the state lottery.
Additionally, the plan scraps Lamont's plan to eliminate a planned expanded income tax exemption for Social Security income and funds state aid to cities and towns are current levels.
"Look, we're really proud of the document that came out," said Democratic Speaker of the House Joe Aresimowicz of Berlin. "It's coming out on time, balanced, and makes investments in our municipalities through education and workforce development."
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