Republicans propose budget; Democrats continue negotiating

HARTFORD » Gov. Dannel P. Malloy was negotiating with Democratic legislative leaders Tuesday, but both said they don’t have a two-year budget deal to announce.

“I’m hopeful, but there’s no white smoke,” Malloy said following a meeting in his office with Democratic legislative leaders.

Senate Democrat President Martin M. Looney, DNew Haven, said the governor gave them feedback on their latest spending and revenue proposal and they went back to “develop a response to the perspectives he offered.”

As of Monday the proposal no longer includes an increase in the sales tax, but there’s still no decision about how they would make up for the loss of revenue from the tax hike.

Rank-and-file Democratic lawmakers who were at the Capitol Tuesday expected that they would receive a draft document by at least today. Until they see a document many lawmakers have been reluctant to say whether it would have their vote.

Earlier Tuesday, Rep. Josh Elliott, D-Hamden, said he made it clear that if any changes were made to a previous budget proposal then he reserved his right to change his mind.

Looney said legislative leaders would be working Tuesday evening to finalize a budget agreement.

“Things are moving and they’re moving fast,” Malloy said.

He said he’s asked Democrats if they have any new revenue ideas to speak about those publicly. He said he never wanted to raise the sales tax, but he did want to get the discussion going.

Malloy estimated there would be a final budget ready in the next 24 hours.

House Speaker Joe Aresimowicz, D-Berlin, said he intends to hold a vote on a budget Thursday.

Meanwhile, Republican legislative leaders said they do have a two-year budget they can run Thursday.

The budget, which no longer includes reductions in the property tax credit or sweeps of clean energy funds, is balanced largely through the savings realized from changes in 2027 to the state employees contract.

The Republican budget says the cost of living increases for retired state employees won’t be funded until the state employee pension fund is funded at 80 percent. And no overtime payments would be calculated as part of pension payouts for current state employees and they proposed that contributions to the pensions go up to 7 percent.

Senate Republican President Len Fasano, R-North Haven, said that would generate savings in 2018 and 2019 because it means the state would not have to contribute as much in those years to the pensions, knowing those changes would be made.

“We can anticipate and work those into what we need to pay between now and 2027,” House Minority Leader Themis Klarides, RDerby, said.

She said those changes to the spending and bonding caps and other structural changes they proposed generate about $600 million in savings.

But it’s unclear whether the savings tied to the changes made to the state employees contract in 2027 would pass legal muster because there’s a provision in the State Employees Bargaining Agent Contract that says any changes must be made through collective bargaining.

Fasano said he had lawyers look at that language and believes it would withstand any scrutiny.

The Republican budget also includes $85 million over the next two years from the owners of the Millstone Nuclear Facility in Waterford. The money is an “application fee” for the opportunity to bid on state contracts regarding electricity generation. It wouldn’t guarantee that the Public Utility Regulatory Authority would award them the bid.

Malloy said he’s opposed to taking what amounts to “ratepayer” funds to apply for an opportunity to bid.

“If you’re going to raise somebody’s taxes be honest about it,” Malloy said.

He said he’s not comfortable with the idea of requiring companies to pay an application fee to bid. Malloy said he likes his executive order which essentially requires Dominion Energy to share information about its finances with regulators.

Moving Forward

Republican legislative leaders refused to say which Democratic lawmakers have come to them to ask for information about their budget. However, they said they’ve granted the requests.

As far as raising their budget for a debate, Aresimowicz has consistently said Republicans will have a chance to call their budget. But that also poses a risk for Democrats. It means there’s a small chance that a Republican budget could pass.

“Sure, every budget has a chance to pass, but that’s why people buy lottery tickets, too,” Malloy said. “Everybody has a chance of winning.”