Gov. Dannel P. Malloy’s biennial budget proposal for fiscal years 2014 and 2015 is now on the table, and the town’s local legislators are not happy with it.
The governor, a Democrat, is proposing a $43.8 billion two-year budget proposal that he says does not include any new taxes and does not exceed the state’s spending cap. Mr. Malloy said his budget is balanced and includes $1.8 billion in spending reductions from the state’s services budget over the next two years.
In his budget presentation, the governor said he would hold municipalities harmless, so that cuts made in Hartford “don’t come at the cost of higher property taxes around the state.”
He proposes increases in Education Cost Sharing funding, but Redding would see no increase in this area. The state’s lowest-performing schools are slated to receive about 95% of this increase.
Also in the capital budget, the governor said, is nearly $1.5 billion to invest in cities and towns over the next two years and $173 million for new projects through the town road aid program and the Local Capital Improvement programs, as well as $15 million in new grants to help towns update their infrastructure though the Local Bridge Program.
The governor also said he wants to pursue jobs for the state, starting with his proposed Bioscience Innovation Act that would establish a $200-million fund to strengthen the state’s bioscience sector over the next 10 years.
He talked about the state’s new “comprehensive energy strategy,” which he said will help enhance energy efficiencies to drive down energy costs for families and for businesses.
In his “Next Generation Connecticut” proposal, the governor would set aside more than $1.5 billion over the next 10 years to drive innovation, enhance job creation and spur economic growth. “It will allow us to make strategic investments in new facilities to offer more scholarships and add researchers,” Mr. Malloy said.
The governor also proposed exempting the first $20,000 of motor vehicle assessments from municipal property taxes (see other story), a move that could cost the town more than $1 million in lost revenue starting with the 2014-15 fiscal year.
The governor also proposes to reinstate the tax exemption for items of clothing up to $25 starting next fiscal year and back to the original $50 exemption in July 2015.
His budget calls for money to invest in affordable housing, maintains support for a program to allow the elderly to stay in their homes if they want and provides for transitioning people out of nursing homes back to the community. It contains other health care initiatives.
“It is clear state government has a spending problem,” said state Sen. Toni Boucher (R-26th District) in a release. “New bonding proposals totaling nearly $2 billion have been floated by the administration to spur job growth. Connecticut should not buy jobs with bonding money. It should create a positive tax and regulatory environment for the private sector to grow jobs.”
She said “the proven way” to improve revenues is to grow private sector employment. “Job growth equals a healthy economy. Unfortunately, Connecticut is going in the opposite direction. Its labor force shrunk by 51,000, or 2.68%, last year, the largest loss in the nation,” she said.
It is crucial both sides of the aisle work together to pass a fiscally responsible budget, said Ms. Boucher. “And just how would a state government addicted to spending do this? The budget proposed should not substitute one tax for another.
“We all agree with removing the car tax, but not by substituting the 10% corporation surtax, electricity tax and insurance premium tax instead,” said Ms. Boucher.
The budget “should not increase town property taxes by taking away ‘payments in lieu of taxes’ as it shifts the tax burden to local property owners and business, even if funds are reallocated to education.
“Instead, the administration should work harder to reduce labor costs,” said Ms. Boucher. She pointed to suggestions to renegotiate with the state’s unions and pension reform.
Ms. Boucher is looking for bipartisanship in addressing the state’s finances.
State Rep. John Shaban (R-135th District) expressed concern over “the proposed increases in spending, borrowing, taxation and burdens on municipalities and taxpayers.”
“At a time when Connecticut is facing yet another multi-billion dollar deficit, Gov. Malloy is proposing to increase spending by 9%, and to pay for it with more taxes and nearly $3.1 billion in additional borrowing,” Mr. Shaban said. This is “stifling” businesses and employers, “and has kept our state in perpetual deficits and economic stagnation.”
The current state budget, said Mr. Shaban, also increased spending and included “the highest tax increases on record.” Mr. Shaban said this was coupled with a state worker union contract that many considered too costly.
“The governor’s proposed budget (a) continues the electric generation tax that will result in more than $80 million being passed on to families and businesses; (b) continues the corporate profits surcharge tax that was supposed to sunset in 2012 and again in 2014; (c) pushes the payment of $300 million in ‘Economic Recovery Notes’ from the next two years into the out years; (c) borrows to pay for day-to-day spending and certain ‘pay-as-you-go’ transportation projects; and (d) avoids the constitutional spending cap by redefining about $900 million in spending to put it outside the cap,” said Mr. Shaban.
He also said the budget could have a negative impact on municipalities and local taxes by eliminating property taxes on most vehicles and reworking PILOT (payment in lieu of taxes for state-owned poperty in a municipality) and revenue sharing payments. “Balancing the state’s books on the backs of our towns is simply wrong,” said Mr. Shaban.
“Our families, businesses and employers need stability,” Mr. Shaban said, “not another ballooning state budget that supports a prospering public sector at the expense of our weakening private sector. I think all of us in Hartford have some serious work to do.”
“I am disappointed the governor didn’t learn any lessons from his last budget, also fraught with schemes to hide poor choices and overspending,” said state Rep. Dan Carter (R-2nd District).
Like Mr. Shaban, he pointed to the spending cap issue and not sunsetting taxes, including the energy generation tax, which he said will result in higher energy rates.
The governor “even proposed a significant increase in his own authority over the budget and placing watchdog agencies under his control. The list goes on,” said Mr. Carter.
The power in creating a budget actually rests in the legislature, said Mr. Carter.
“Two months ago I witnessed bipartisanship in the legislature when we came together and made tough choices to fix the governor’s last budget. Both parties in the legislature should continue to take charge of the fiscal situation in the state and create a bipartisan budget that does not contain billions in increased spending.
“We should protect our hospitals, lower our energy costs, and truly help our municipalities, but we must have an honest debate. We can even honor the governor’s vision by supporting bioscience initiatives responsibly, not just another $1.5-billion cash infusion for UConn.
“My sincerest hope is that every one of my colleagues in the legislature understands the opportunity that lies before us and is willing to act,” said Mr. Carter.
The governor’s budget is now in the hands of the state legislature.