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August 25, 2019Cart

Business

by Fairfield County Business Journal
by FCBJ

Connecticut state Senate overwhelmingly approves budget

Connecticut’s nearly 17-week budget impasse took a major step toward resolution overnight, as the state Senate delivered a bipartisan vote on a state budget to close a projected $3.5 billion deficit over the next two years. The budget includes policies from both Democrats and Republicans.The overwhelming 33-3 vote is veto-proof. It now goes to the House, where it is also expected to pass by a majority later today.

Gov. Dannel Malloy, who vetoed a GOP-sponsored budget last month, had no immediate comment.

“After months of negotiations, Democrats and Republicans have worked together to produce a truly bipartisan budget that invests in our economy, maintains strong levels of education funding and protects local property taxpayers while rejecting damaging cuts to higher education and scholarship programs,” said Senate President Pro Tempore Martin M. Looney (D-New Haven).

“The bipartisan budget protects vital social-service programs and job-training programs,” he said. “Above all, it makes good on our commitments to our cities and towns.”

“Had lawmakers not united our efforts to reach this compromise, our towns, cities, schools and core social services would be facing devastating cuts that would cause irreparable harm to our state in both the short and long term,” said Senate Republican President Pro Tempore Len Fasano (R-North Haven).

Fasano added, “In all my years at the Capitol, I have never seen leaders come together to have such an open and honest dialogue about so many issues.”

“As a result of this bipartisan budget, Connecticut will continue to make critical investments in innovation, manufacturing, bioscience, green energy and other emerging industries while holding the line on taxes and making substantial structural changes in order to achieve long term savings,” said Senate Majority Leader Bob Duff (D-Norwalk). “Once this budget becomes law, communities and school districts across the state will have the resources they need to provide services and educate our students.”

“This compromise budget restores millions of dollars to our towns and cities, our schools, and to core state services,” said Deputy Senate Republican President Pro Tempore Kevin Witkos (R-Canton). “At the same time, it reduces future spending by implementing a spending cap and bonding cap among other structural changes.

“While we cannot resolve all the state’s financial problems in one budget,” Witkos continued, “this compromise plan implements many long-fought-for reforms that will set Connecticut on a new path to begin to stabilize government so that our economy can grow and flourish.”

The bipartisan budget:

Restores Education Funding, Implements New Funding Formula
The budget includes a new education cost-sharing formula that takes into account factors regarding Connecticut Coalition for Justice in Education Funding (CCJEF) and Meskill court decisions, enrollment, poverty, wealth and number of English language learners, among other factors. It averts the need for the local education cuts contained in the governor’s executive order.
It also creates a new formula to ensure education aid is directed proportionally to towns based on need. Wealthier towns with shrinking populations will see small decreases in aid and poorer towns with growing populations will see gradual increases in aid over time. For charter schools, per pupil grants are increased by $250 and funding is provided to allow for grade growth.

Provides Municipal Support and Mandate Relief
The budget provides predictable municipal aid and averts the deep municipal cuts contained in the governor’s executive order, minimizes reductions in aid and also does not shift teacher pension costs onto towns and cities.

Malloy and other lawmakers had previously exempted 10 percent of retired teachers’ pensions from the state income tax, beginning with returns filed in the spring of 2016, and increased it to 25 percent this past April. That exemption was scheduled to grow to 50 percent next spring, but the new budget suspends that change.

Present-day teachers’ annual contributions to their pension fund will grow from 6 to 7 percent of their salaries starting in January – a $775 yearly increase for the average teacher and school administrator. That income will result in a reduction of the state’s contribution to the pension fund by $18 million this fiscal year and $38 million next fiscal year.

In addition, the car tax cap is maintained but capped at 39 mills in year one and 45 mills in year two, with the state reimbursing the difference for those towns with mill rates exceeding the caps.

Makes Targeted Spending Cuts
The budget makes targeted spending cuts and reductions to agency accounts and rolls forward lapses made last year excluding cuts to core services. It also implements overtime savings of 10 percent and a hiring freeze on non-24-hour nonunion positions. Manageable reductions were made to higher education institutions, including a $134 million reduction to UConn and UConn health, while aid for scholarships for low- and middle-income students was preserved.

Protects Core Social Services
The budget protects funding for core social services and programs that benefit people in need. It fully funds day and employment services for individuals with intellectual and developmental disabilities. It also protects funding for mental health and substance abuse treatment programs.

Supports Seniors and Cuts Taxes on Retirees
Aging-in-place initiatives are protected by restoring funding for the CT Home Care Program and opening it to new participants, increasing funding for Seniors Meals and non-ADA dial-a-ride, and preserving the personal needs allowance. The budget also lowers taxes for retirees by eliminating the tax on Social Security income and pension income for single filers with an adjusted gross income below $75,000 and joint filers below $100,000.

Stabilizes the State’s Transportation Fund
The budget implements a plan to stabilize the Special Transportation Fund by dedicating transportation-related revenues to fund transportation needs. Without that change, the fund has been projected to be insolvent by 2021.

Includes Structural Changes
In addition to balancing the budget over the next two years, legislative leaders said the budget includes policy changes that will shape the state’s future and put it on healthier financial footing. Those changes include an enforceable spending cap, bonding cap of $1.9 billion, municipal mandate relief, and additional policy changes for long-term savings.

Tax Changes
The budget includes a 45-cent cigarette tax increase, a fee of 25 cents on ride-sharing services and the scaling back of tax credits. It also includes hospital changes as agreed to by Connecticut hospitals to leverage more federal funding. The budget does not impose broad sales tax increases or income tax increases.

Supports Hartford
It seeks to provide support to Hartford to prevent the city from declaring bankruptcy. It will implement new oversight of Hartford, offering $20 million in state aid through a new Municipal Accountability Review Board and $20 million in debt payments to support the city. Along with that funding will come increased oversight and requirements to reduce city expenses.

Crumbling Foundations
It provides aid to help homeowners impacted by crumbling foundations in eastern Connecticut. It establishes a special public benefit captive insurance not-for-profit company to manage funding and a transparent and open process to distribute this funding to assist homeowners.

Funds State Parks and Tourism
The budget implements the bipartisan Passport to Parks program dedicating a $10 biennial fee to fund parks and in exchange would allow free entrance to all state parks with a Connecticut license plate. It also creates a new Marketing, Culture and Tourism account beginning in FY 2019 funded with 1.5 percent of the current hotel occupancy tax, dedicating that portion of the current tax to stabilize tourism funding.