Legislature Approves Compromise Budget

The state’s House of Representatives on Oct. 26 approved a state budget after nearly four months of the fiscal year, closing a $3.5 billion deficit without raising income taxes while also installing historic spending constraints. The budget was approved in House, and in the Senate hours earlier, with more than enough votes to upend a veto from Governor Malloy.

”The budget we have put in place includes historic spending constraints that will hedge against future deficits. While this budget is not perfect, it reflects the core Republican components of spending restraints, less borrowing so that we can finally start living within our means,” House Republican Leader Themis Klarides said. “This is a day of hope for the people of Connecticut.”

The budget passed 126-23 in the House and 33-3 in the Senate.

Klarides said the state will be able to close the massive deficit with less than a 1 percent increase in taxes and fees. The bulk of the tax hikes are on cigarette sales and the hospital taxes that will be refunded by the federal government once the state completes its application to the federal agency that administers Medicaid and Medicare.

The budget features a variety of spending constraints:

  • An annual bonding cap of $1.9 billion in borrowing, a half billion less than what Connecticut put on its credit card last year;
  • A revenue cap that prevents the state from spending all the money it expects to take in annually. Somehow we always seem to fall short of revenue projections;
  • A volatility cap that will automatically send any access revenue to the Budget Reserve Fund.

Current law allows state employee union contracts to go into effect without a vote by the legislature. In a huge concession reached during negotiations with Democratic leaders, votes by the House and Senate will be required before a contract can become law.

Additional budget details:

  • Provides education funding to cities and towns, adverting Gov. Malloy’s devastating executive orders;
  • Includes strong spending cap provisions, which received enough votes to be protect under the State Constitution;
  • Doesn’t shift the cost of teachers’ pensions to municipalities;
  • Includes historic municipal mandate reform that will provide local property taxpayers long-term relief, including increases to prevailing wage thresholds;
  • Doesn’t rely on income and sales tax hikes, or a new cell phone and restaurant taxes

DOCUMENTATION:
Municipal & Town Runs
Account Totals
Budget Policy Changes
Revenue Policy Changes

Klarides OpEd: What Republicans Get In This Deal

The loosening of the Democratic stranglehold on state government following the 2016 elections has led to a compromise budget deal that fundamentally alters the way Connecticut’s government is paid for by imposing historic spending controls, something Republicans have sought for decades. [Read the entire piece in the Courant]

 

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Since spring, House and Senate Republicans issued 10 budget proposals between them–including the historic bipartisan budget approved in both chambers but vetoed by Governor Malloy. View info from that budget here.