Governor is optimistic for budget compromise
With mixed feelings about the budgets approved this week at the General Assembly’s committee level, Gov. Ned Lamont said Friday that he’s optimistic that a deal can be reached on a $24.1 billion spending package to take effect on July 1.
But for starters, the governor noted there is a glaring, $784 million difference between the tax package approved by the legislative Finance Committee and the spending plan approved by the Appropriations Committee.
Looking ahead to the start of closed-door meetings next week to begin negotiations, the governor said there is plenty of room for compromise.
“They’re coming from two slightly different directions, but I think we’re going to get there,” Lamont said. “I’ve given them a couple of my broad principles.”
The governor warned that the fiscal rules created during a bipartisan legislative budget in 2017, limiting spending and revenue, are important to follow. He warned that prior to that year, the state would bounce from fiscal crisis to surplus, to fiscal crisis again.
Lamont also doesn’t like efforts to avoid the spending cap by moving some line items away from the actual budget.
“We’ve had three years of surpluses and we’ve been able to pay down a lot of debt,” Lamont said. “I just want to make sure we don’t get tempted to go back to the old days, where we got into trouble.”
The current projected surplus is $1.7 billion in the state budget year that runs
“I think we’re all pretty close.”
through June 30. Both legislators and Lamont have different ideas on how to use hundreds of millions of dollars in federal American Rescue Plan Act (ARPA) funding.
“The other piece, which I worry about a lot, is people using one-time monies, for example ARPA monies, to make a down payment on long-term ongoing expenses,” Lamont said. “That’s bad practice. All that does is leave you with a cliff in 2024.”
Jeffrey Beckham, the acting secretary of the Office of Policy and Management following the recent resignation of Melissa McCaw, said the Finance Committee budget included an attempt to evade the statutory cap on tax revenue.
“If you take the Finance Committee revenues and the spending proposed by Appropriations, they are out of balance by $784 million,” Beckham said. “Those two work products are not aligned at all in terms of what we have to live with. They’re going to have to get aligned a little bit before we sit down.
“If you use the revenues that the governor proposed in his budget but then take the spending from Appropriations, we would have a General Fund balance and we’d have about a $31 million surplus.”
In February, Lamont proposed tax cuts of $336 million, including reductions in local car taxes. Lawmakers however, offered different approaches from the Finance and Appropriations panels. Beckham saidwhile the calculated use of ARPA funding seems to top out at $179 million in allowed tax cuts, Lamont has proposed using even less: $174 million.
“I think we’re all pretty close,” Lamont said of the atmosphere leading into the annual dance between lawmakers and the executive branch. “We all want to cut the car tax. We know it’s an unfair tax. We know it penalizes those towns in particular that have a higher mill rate.”