State Sen. Cathy Osten, D-Sprague, gave insight into ongoing budget negotiations during a Thursday morning meeting with The Day's editorial board.

Osten is the co-chair of the Appropriations Committee and deeply involved with the process of determining how the state should spend its money. The committee's budget proposal is currently in the House, as legislative leaders meet with Gov. Ned Lamont to compromise and ultimately mold a spending plan that can pass before the last day of this legislative session: June 9.

Democrats have hailed the Appropriations Committee budget as one investing in racial equity as well as Connecticut municipalities, nonprofits and schools without accessing the rainy day fund.

Osten highlighted three major disagreements with the governor on spending: the state’s Education Cost Sharing fund, pension obligations and funding for municipalities.

She shared what has become a bipartisan critique of the governor’s proposed budget, which calls for freezing state funding at current levels for Education Cost Sharing grants and instead using federal COVID-19 recovery funds. The Education Cost Sharing funding formula is meant to increase equity and transparency in funding the state’s public schools.

Osten argued against pausing the state’s 10-year Education Cost Sharing plan, which culminates in 2028, because of the effect on small towns.

“We recommend continuing with the 10-year rollout of the ECS formula; that brings into alignment underfunded towns like Norwich and New London,” she said. “Since it’s a population-driven formula, the small towns generally get less money. It took 10 years because some towns would be devastated if we didn’t roll it out over 10 years.”

Lamont’s administration has said that it’s difficult to calculate the number of students in school districts at the moment, Osten said. While she thinks that's a fair enough excuse, “With the amount of federal dollars that are here, we can accurately count students.”

The Municipal Revenue Sharing Account, known as MRSA, is how the state is paying for its payment in lieu of taxes, or PILOT, program for municipalities. The state already raised the sales tax by 1% in 2015 with the intention of half of the revenue generated from that increase going to the Special Transportation Fund and the other half going to municipalities.

“It’s not a gimmick, in my opinion it’s the right way to do it, and if we are serious about giving towns additional PILOT dollars, then we need to make sure that we’re funding those dollars,” Osten said.

The senator opposes Lamont’s proposal to seek bonding to fund the PILOT plan.

"I’m not interested in putting grants to municipalities on bonding,” she said. “Bonding should be used for other things like building affordable housing, or fixing the Gold Star Bridge, which is not done yet, or cleaning up brownfield sites.”

Osten says the governor wants to push off payments to the state pension system for a few more years, but she believes the state should make a large payment right now.

“Lamont’s plan would cost us an additional $320 million between now and fiscal year 2047,” Osten said. “We’ve had conversations, I’m not sure why he feels this way. I’m not criticizing, but that’s the biggest policy difference.”

Revenue from income tax on investments goes into the state’s rainy day fund, which stands at $3.5 billion. The fund is capped at 15% of the state’s budget and excess money is legally bound to go toward paying down pensions.

Progressive lawmakers have lobbied for the state to access at least a small amount of its rainy day fund to assist with the negative educational, societal and financial effects of the COVID-19 pandemic rather than focusing only on paying down pensions. Analysis from the Connecticut Center of Economic Research released this month advised the state to spend federal money and reach into its rainy day fund to stimulate the economy.

However, Osten wants the state to be more frugal with that money.

“I don’t think we should spend that this year. We don’t have any reason to spend from that fund at all,” she said. “I would agree that it is raining, but I would not agree that we are having a torrential downpour. There are a lot of federal dollars, and it looks like we’ll use about $800 million less of our funds to balance the budget. The rainy day fund I think would be used in the next biennium if we’re still experiencing that gap in what we have for funding.”

Though Osten does have several sticking points with the governor’s proposal, she agrees with his perhaps most controversial and consistent promise not to raise taxes, even if they would be specifically at the wealthiest people and corporations in the state.

Lamont's office has repeated the line, “We don’t need more taxes, we need more taxpayers,” and has sought to avoid alarming would-be wealthy newcomers to the state. The moderate wing of Lamont’s party, as well as many Republicans, support his goal of avoiding tax increases. But progressives and Democratic leaders such as state Senate President Martin Looney, D-New Haven, have said they’re seeking a more progressive income tax structure.

Osten is in favor of a progressive income tax in general but said she didn’t see a need for tax increases in the budget.

“The last time we raised taxes on the wealthy, we didn’t get any money in,” she said. “The entire budget reserve fund is from the top taxpayers in the state of Connecticut. The entire volatility cap is coming directly from those top taxpayers. We have a $3 billion rainy day fund, and we are going to put another $1 billion on our pensions that all comes from rich people.”

She acknowledged that Connecticut’s income tax structure is regressive but said that instead of looking at income taxes, the state should consider revising its property taxes, which isn’t currently part of budget negotiations.

In general, Osten said, she believes legislators can finalize a budget before the legislative session ends on June 9. When asked about former Gov. Dannel Malloy’s direct negotiating style and whether Lamont was different, Osten said, “He is. I prefer direct.”

She declined to offer details beyond confirming that she and other lawmakers met with Lamont Wednesday for discussions on the budget, and she believes those discussions will continue.

s.spinella@theday.com