The governor, a Democrat, is proposing a $43.8-billion two-year budget proposal 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 Wilton 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, a move that could cost the town a substantial amount 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 press 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.
Noting she and the governor agree on the extent of the state’s fiscal problems, “we do not agree on the solutions,” state Rep. Gail Lavielle (R-143rd District) said. Ms. Lavielle, who is the ranking member of the General Assembly’s Commerce Committee, represents a majority of Wilton. “The governor emphasized the need for a sustainable financial future for Connecticut, but did not recommend significant structural changes that would stop the state from spending faster than it can raise revenues to pay for it. Instead, he outlined a budget that increases borrowing and spending at a time when the state suffers from a chronic spending problem, 9% unemployment, and a steadily shrinking workforce.”
According to a press release issued by Ms. Lavielle, the state’s budget deficit for fiscal years 2014 and 2015 totals $2.46 billion dollars. Mr. Malloy’s plan borrows $750 million to help pay for the day-to-day expenses of state government, while increasing spending by more than 9%. “A spending increase of almost $2 billion is not something you expect to see when we’re facing a $2.5 billion deficit,” Ms. Lavielle said.
Mr. Malloy’s plan proposes to borrow $122 million for state aid to cities and towns, the release said. It closes the budget gap by bonding more than $3 billion, moving $900 million out from under the state spending cap, and by extending the electric generation tax, caps on insurance premiums, and the corporate tax surcharge. It also implements the “Amazon tax” on online purchases.
“Business owners tell us every day that inconsistent tax policy is one of the most significant factors holding them back from investing in Connecticut and creating jobs,” Ms. Lavielle said. “Once again, these policy changes send the message that Connecticut is not a state friendly to business.”
Ms. Lavielle commended the governor for proposing to make the bipartisan spending reductions implemented in December permanent, and for joining Republicans in proposing to consolidate agencies.
“Getting our spending under control, our economy moving, and creating a more business-friendly environment must be our top priority, and I am afraid this budget does not deliver on any of these,” she said.