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More than one way to pass a reasonable state budget

If Gov. Ned Lamont and Democratic leaders in the House and Senate cannot reach agreement on a budget plan for the next two years, a House leader is suggesting his chamber may move the process along the old-fashioned way — pass its own budget plan.

Preferably, the budget talks produce a compromise well in advance of the scheduled June 9 adjournment. But if the talks stall, the approach suggested by Rep. Sean Scanlon, D-Guilford — pass a budget in the House of Representative — makes lot of sense.

“The House is ready to get this budget done,” Scanlon was quoted as saying in the Connecticut Mirror. Scanlon co-chairs the Finance, Revenue and Bonding Committee.

A House budget would not have everything Lamont wants, but it would probably have enough to get him behind it. The pressure would move to the Senate.

Lamont is not on board with a proposal to increase income taxes on the wealthy, meaning households earning $500,000 annually and up. Sen. Cathy Osten, D-Sprague, co-chair of the Appropriations Committee, told the editorial board last week that past experience has taught her that such tax increases will backfire. The very wealthy will avoid them, some moving their permanent residences elsewhere if necessary, and there will be no resulting tax revenue increase, and maybe a drop, she said.

The editorial board agrees. Now is not the time for a tax hike, not with a record surplus and billions in federal aid coming into the state.

Also questionable is a proposed tax on digital media advertising, targeting online titans such as Google, Amazon and Facebook, but offering no assurances the cost wouldn’t be passed along to small and mid-sized businesses here in Connecticut.

It appears the House is ready to run a budget without these tax increases, which are looked on more favorably in the Senate.

But there is support in the House for expanding the Earned Income Tax Credit to more families — which provides tax breaks for workers on the lower wage scale — by increasing the income eligibility level.

We would also expect a House budget to increase PILOT funding — payments in lieu of taxes — for struggling cities such as Norwich and New London. The state sends the PILOT funds to communities to partially make up for the revenues lost due to high concentrations of tax-exempt nonprofit and government properties. The General Assembly in March passed legislation promising to boost PILOT aid.

But to get what he wants, Lamont would have to support something he doesn’t want — moving revenue for the PILOT program through a special fund that would not be subject to the state constitutional spending cap, which the legislature has tied to growth in personal income.

Granted, such “revenue intercepts” are gimmicky, moving spending outside of normal budgetary appropriations. But if a case could be made for utilizing it, this would be it. Elected leaders in towns and cities count on the PILOT program, and the increases in promised aid, in preparing their own budgets. Intercepting the funds to pay for it, before they arrive in the general fund, can prevent them from being reallocated. Plus, their intent is to provide some property tax relief for this communities, and the property tax is the most regressive form of taxation.

If the House forces the Senate hand by passing a budget, the bipartisan southeastern Connecticut delegation — Osten, fellow Democratic Sen. Norm Needleman of Essex, and Republican Sens. Heather Somers of Groton and Paul Formica of East Lyme — could play a key role in getting the votes necessary to get a spending and tax plan through the Senate. On fiscal policy, while they can certainly disagree, the southeastern Connecticut senators are most fundamentally pragmatic centrists.

Maybe none of this sausage making will be necessary. Maybe the governor will soon announce he is on the same page with the leaders of both the House and Senate, which are both in solid Democratic control. But if sausage making it is, our region could have some key cooks in the kitchen.

 

The Day editorial board meets regularly with political, business and community leaders and convenes weekly to formulate editorial viewpoints. It is composed of President and Publisher Tim Dwyer, Editorial Page Editor Paul Choiniere, Managing Editor Izaskun E. Larrañeta, staff writer Erica Moser and retired deputy managing editor Lisa McGinley. However, only the publisher and editorial page editor are responsible for developing the editorial opinions. The board operates independently from the Day newsroom.

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