The Register Citizen (Torrington, CT)
Lamont’s budget avoids broad tax hikes
Governor’s 2-year, $46 billion plan proposes 2% spending increase
HARTFORD — Gov. Ned Lamont on Wednesday proposed a middle-of-the-road, two-year, $46 billion budget for a state that remains under a dark shadow of the coronavirus, which has stifled the economy and killed 7,300 residents.
Kicking off the state budget debate with its June 9 deadline, Lamont asked lawmakers to approve his “Connecticut’s Comeback” plan by using anticipated federal pandemic-relief money to erase shortfalls of $1.3 billion in each of the next two fiscal years.
The plan would send nearly $200 million more to cities and towns in the fiscal year that starts July 1, mostly from federal stimulus dollars already approved in December. It neither adds nor cuts regular state programs significantly
Lamont’s plan avoids broadbased tax increases such as an income tax hike on wealthy residents, which the progressive wing of legislative Democrats would like to see. Lamont proposed a $90 million-a-year mileage tax on large trucks to help pay for highway and bridge improvements after his tolls plan failed in 2019 and 2020.
He also wants lawmakers again to withhold $377 million that was scheuled to go to cities and towns, from the last hike in the state sales tax. That change, along with the postponement of a smaller, scheduled business tax cut, would help plug the projected shortfalls of the next two years.
Lamont would also impose a wholesale tax on gasoline as part
of a Northeast regional “transportation climate initiative.” That would eventually raise at least $80 million a year and would either raise pump prices by no more than 5 cents a gallon, as Lamont’s budget chief contends, or by 17 cents, as Republicans insist.
Further revenue would come from the full legalization of marijuana, which has not yet passed the legislature; as well as sports and online gambling, which also has not passed, and which remain the focus of closed-door negotiations with the two Native American tribes that operate casinos.
“Massachusetts dispensaries are advertising extensively here in Connecticut,” said Lamont, who campaigned in 2018 on the full marijuana legalization, and said the state should legalize “rather than surrender this market to outof-staters, or worse, to the unregulated underground market.”
Politically, Lamont, a Democrat in the third year of his first term as governor, walked a line down the middle with a plan that liberal Democrats and conservative Republicans all criticized as not bold enough to meet the challenges of the pandemic.
His five-point proposal focuses on beating COVID; making the state more affordable for the middle class; upgrading transportation; modernizing state government; and growing the economy. Spending would increase by 2 percent in the first year and 3.5 in the second.
Republicans said using huge sums of yet-unapproved federal stimulus money is not responsible and leaves the state vulnerable in two years, when the money runs out. They also said cities and towns should receive the full allotments of federal dollars plus scheduled increases from the state. But when asked, the GOP leaders of the House and Senate did not suggest alternative financing, saying they would look at the details in the coming weeks.
Liberal Democrats were clear on how to finance the added help they want to see for people slammed by the pandemic recession: Tax the rich. Lamont and Melissa McCaw, the governor’s budget chief, made it clear that’s the wrong strategy at a time when people can, and do, move where they want, unfettered by having to work in offices.
“Inevitably, there will be trade offs, just like the many families across this state do with their own budgets,” Lamont said in a 25-minute online address. “And just as those same families are managing and struggling through the economic implications of a global pandemic, so are we.”
While state finances have remained on track, thanks to a surprising increase in sales and income-tax revenue and an influx of about 20,000 new residents, Lamont stressed the need for more workforce training to cut unemployment resulting from the pandemic shutdown. He would name a statewide workforce development chief.
The shortfalls result largely from rising debt, pension costs and health care expenses, combined with lower revenues in the recession. The state’s own emergency reserves, which will reach a record $3.5 billion later this year, could be used to fill gaps now but McCaw said the reserves should be held for future years — which also show shortfalls of more than $1 billion.
Lamont voiced relief that Congress seems to finally be heading toward another stimulus package, which, McCaw said, could lead to an infustion of as much as $2.6 billion directly to state coffers according to the latest proposals.
“But let’s face it, the Connecticut budget is still burdened with high fixed costs accumulated over the decades, and these costs plus a COVID economy result in deficit projections in each of the next two years,” Lamont said. “With our continuing success in streamlining government, we have reduced projected deficits to less than $1 billion annually.”
The governor’s proposal includes:
⏩ Saving $91 million in the first year and $249 million in the second year, through the closure and sale of state buildings and facilities, including the closure of the Department of Revenue Services office in Bridgeport, and engaging in energy savings, including the shift to LED lighting.
⏩ A two-year wage employee freeze to save $140 million, which is the subject of active negotiations. Sal Luciano, president of the state AFL-CIO, called that “problemmatic” because state employees have agreed to numerous wage freezes in the last 15 years and many worked in highrisk jobs over the last 12 months.
⏩ A tax amnesty program would generate $76 million over the biennium.
⏩ A large increase in the number of state troopers, from 914 currently to 1,100, even as more than 200 are expected to retire by June 30, 2022.
⏩ About $2.85 million in each budget year to start broadband mapping, planning, and implementation to bring better internet service to cities and rural areas.
⏩ About $5 million to help train support 500 workers for new careers in healthcare, manufacturing, information technology, truck driving and clean energy careers.
⏩ About $1.3 million in the second year of the budget would be used to increase the number of trains on the Waterbury line from the current 15 to 22 each weekday.
⏩ Saving $160 million over the biennium by stretching out a multi-decade payment plan for the State Employees Retirement System by three more years.
⏩ An additional $100 million is provided to the 25 distressed municipalities sourced from the Coronavirus Relief Fund and state bond funds, on top of $75 million that was provided in the current budget year.
“The past year has been an exceptional challenge to our cities and towns,” Lamont said. “There isn’t a single mayor who in 2019 budgeted for a pandemic in 2020, and they are struggling to build this new reality into an already tight budget for 2021 and beyond.”
New Haven Mayor Justin Elicker, who is looking at a $66 million deficit, said he was disappointed with the governor’s proposal.
“This budget is a starting point, and while I am deeply disappointed that the governor chose not to include desperately needed revenue for our community,” Elicker said, stressing the need for more reimbursement under the state’s program to pay cities and towns that host tax-exemption property. “I intend to work with our partners in the legislature to see that these dollars are secured. They are essential for our residents’ well-being and preventing a significant property tax hike on some of our state’s poorest people.”
Democratic leaders were generally supportive, stressing that budget proposals from governors typically go through a massive review process, rewriting in committee, then closed-door final negotiations between lawmakers and executives before their reach debate on the floors of the House and Senate.
Senate President Pro Tempore Martin Looney, D-New Haven, said he liked Lamont’s proposal to add $100 million for those payments in lieu of taxes.
But Sen. Cathy Osten, D-Sprague, said she was concerned that at a time when state government is shedding employees who are heading into retirement, non-profit social service providers are in desperate need of about $460 million, which she will work toward as cochair of the budget-writing Appropriations Committee.
“I think it’s extremely important to make sure the safety net remains,” said Rep. Toni Walker, D-New Haven, the other chair of the Appropriations Committee.
Republican criticism of the proposal centered on the high cost of living in the state.
“What I don’t see in this budget are the bold proposals we need to get out of this pandemic,” said House Minority Leader Vincent Candelora, R-North Branford, who is concerned that 16,000 school children seem to have disappeared from the statewide school population amid the shutdowns and distance learning over the last 11 months.
“Fortunately we have up until April for the legislature to dissect this and see where we are,” Candelora said. “I think some of the spending cuts the governor put in his budget are certainly worthwhile.”
“This is not how you would plan a family budget,” said Senate Minority Leader Kevin Kelly, RStratford. “You don’t sit there and say I can go and plan to spend this amount of money because I’m going to get another stimulus check from Washington, and it’s going to be another $1.6 billion dollars. That’s not how Connecticut families operate, and certainly by extension the legislature shouldn’t be the same way.
Various legislative committees will soon begin hearings on the governor’s bills.