'Odd couple' co-chairs played key roles in historic budget debate
It took a long time — nearly four months into the fiscal year — but when the General Assembly finally managed to approve a $41.3 billion budget plan for this year and next, it included genuine reforms that could significantly trim the growth in state spending for years to come. But it won’t be easy.
At the center of the struggle that dragged out over 10 months was a local odd couple who also happened to have some important things in commom. Seated from the start of the session as Senate co-chairs of the Appropriations Committee were Sen. Cathy Osten, a Democrat, and Sen. Paul Formica, a Republican.
Osten is in her third term representing the 19th District, which includes both the Democratic stronghold of Norwich and the conservative bastion of Ledyard, two among a politically varied 10-town district. A union activist when she worked in the Department of Correction, Osten shares the political bloodlines of the woman she succeeded, former Sen. Edith Prague. Both are unapologetic working-class oriented progressives.
Formica, owner of Flanders Fish Market in East Lyme, is in his second term, in 2014 having wrested away a 20th District seat long held by Democrats, most recently Sen. Andrea Stillman. Her retirement exposed the seat to a GOP challenge. Losing the seat was a bright red warning light of growing voter dissatisfaction with the dominant Democratic Party’s stewardship of the state.
If you look at the numbers, the eight-town 20th should be a Democratic district. It includes the Democratic bastion of New London and Democratic registered voters outnumber Republicans in most of the district’s towns, including Formica’s home turf of East Lyme.
Fittingly, the Osten and Formica districts share blue-collar Montville, Democratic in its registration numbers but often conservative in its inclination.
Odd as this couple might be — the former union activist and the businessman, the defender of progressive causes and the fiscal conservative — they share the pull of pragmatism necessary to survive in their politically pluralistic districts.
They also share the experience of serving as first selectmen. Osten still does double duty as first selectwoman of Sprague in addition to her Senate gig, winning re-election Tuesday. Formica used his successful tenure as first selectman in East Lyme to launch his Senate bid. Pragmatism is a survival instinct natural to most successful first selectmen. You can’t let progressive tendencies lead to tax increases so steep that they alienate taxpayers and you can never be so pure in your conservative leanings as to pass up state aid that helps pay the bills.
Osten and Formica found themselves sharing leadership of the Appropriations Committee because the Senate split 18-18 after the 2016 election. Rep. Toni E. Walker, D-New Haven, serves as the House chair.
“I think it contributed to the compromise,” said Osten of the circumstances that placed the two lawmakers from southeastern Connecticut at the head of a committee at the center of the budget debate.
The two sat down recently with members of the editorial board to discuss the historic and controversial session that dragged on several months past the normal adjournment date.
“If you improve the quality of the process, you will improve the quality of the product. And I think going back to January that process has undergone a transformational shift here in Connecticut. Adding the third (Senate co-) chair began the process of change in how things got done. Compromise was the result of the fact we had to deal with one another’s priorities and philosophies,” Formica said. “We weren’t going to get things passed without each other.”
“I think Paul and I learned a lot about each other over the last little bit of time,” said Osten, as the two traded thoughts on their forced political union. “We could argue our points and disagree vehemently on issues but at the end of the day we were ready to work together.”
In the final analysis, Republicans got the better of the negotiations that finally led to a bipartisan budget, signed by a weakened governor, the lame-duck Democrat Dannel P. Malloy, who recognized the legislature had enough votes to override had he vetoed it. Significantly, it avoids any increase in the sales or income taxes. It also imposes restrictions that Democrats know could endanger some of their favored government programs, and take a toll on state labor, in years to come.
Republicans found themselves negotiating from strength after a few House and Senate Democrats joined them in passing their initial spending proposal. Malloy vetoed that first plan, but it set the stage for the bipartisan deal. Formica and Osten played a significant role in pushing the necessary compromises through their respective caucuses.
The General Assembly finally approved by the required three-fifths margin the language that implements the constitutional spending cap Connecticut voters approved back in 1992. It will bar future legislatures from authorizing general budget increases that exceed the greater of the average increase in personal income or the increase in inflation.
In approving the budget, the legislature also imposed a $2 billion cap on bond authorizations.
A volatility cap will force the legislature to base income tax revenue projections on a baseline determined by averaging revenues over time. This will avoid the past practice of boosting spending to reflect projected spikes in income tax revenues, projections that in recent years have often fallen short, producing budget deficits.
If tax revenues exceed these more conservative projections, the new cap calls for the excess to be used to pay down long-term obligations — such as debt service or closing the gap on underfunded pensions — and not be used for ongoing expenses. A three-fifths super majority would be necessary to ignore the volatility cap requirements.
While these caps impose fiscal discipline on the legislature, they do not magically address the fundamental problem that the state’s expenses continue to exceed projected revenues. Projecting forward on current spending obligations and anticipated tax revenues, the Office of Fiscal Analysis estimates the legislature will face a $4.6 billion deficit when it starts work on the 2020 and 2021 fiscal-year budgets, following the 2018 election.
Formica was excited about the reforms his party achieved in pushing its agenda.
“We are on the road to being able to solve these problems,” he said. “This is the beginning of a future that moves in a different direction.”
Osten was more circumspect about the challenges ahead.
“I’m going to put a little dose of reality into that,” she said after listening to her co-chair. “I still think we have long-term problems that we have to deal with. We have not solved our deficits in the out years. And we need to do a lot more work revolving around that.”
This spirit of cooperation may well disappear during a bruising election-year fight in 2018 for control of the legislature and the governorship. If it only proves to be a shooting star, here and then gone, it will have at least pushed state spending policy in a new direction. Connecticut needed that.
Paul Choiniere is the editorial page editor.
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