Pass­ing bud­get may re­quire bi­par­ti­san ef­fort

Use of re­serve would need GOP sup­port

Stamford Advocate - - News/From The Front Page - By Keith M. Pha­neuf

151-mem­ber House is 76 votes, a sim­ple ma­jor­ity. The same is true in the Se­nate, where 19 out of 36 votes are nec­es­sary.

House Speaker Joe Ares­i­mow­icz, D-Ber­lin, says Democrats, who con­trolled 80 seats en­ter­ing Tues­day’s elec­tion, pushed their ma­jor­ity to 92.

Ac­cord­ing to Se­nate Pres­i­dent Pro Tem Mar­tin M. Looney, D-New Haven, the Se­nate — which cur­rently is split 18-18 — now breaks down 24-12 to the Democrats’ ad­van­tage.

If all that’s needed to bal­ance the bud­get is a sim­ple ma­jor­ity, Democrats could sus­tain de­fec­tions in both cham­bers and still craft the next state spend­ing plan by them­selves.

But there’s this small hitch — the deficit.

Ac­cord­ing to the Leg­is­la­ture’s non­par­ti­san Of­fice of Fis­cal Anal­y­sis, state fi­nances — un­less ad­justed — will run 10.5 per­cent or $2 bil­lion in deficit in the first new fis­cal year af­ter the elec­tion.

By the sec­ond year of the next bi­en­nium, the po­ten­tial gap hits 12 per­cent or $2.4 bil­lion.

Tra­di­tion­ally, the first place leg­is­la­tures have turned when fac­ing multi­bil­lion-dol­lar short­falls is the emer­gency re­serve, com­monly known as the “rainy day fund” — provid- ed it holds any money.

Con­necti­cut cur­rently has $1.2 bil­lion socked away. And while Gov.-elect Ned La­mont has said he doesn’t plan to tap those funds, law­mak­ers from both par­ties have said pri­vately the new gover­nor has al­most no chance of keep­ing the leg­is­la­ture from tap­ping those funds.

Comptroller Kevin P. Lembo is pro­ject­ing the cur­rent bud­get will close with a $170 mil­lion sur­plus, and that also could be used to mit­i­gate the im­pend­ing deficit.

But even if a $4.4 bil­lion, two-year deficit is re­duced to $3 bil­lion by emp­ty­ing the rainy day fund and this year’s sur­plus, that smaller po­ten­tial gap — equal to roughly $1.5 bil­lion per year — still is large enough to force ma­jor spend­ing cuts, tax in­creases, or both.

There’s one more piggy bank leg­is­la­tors could break into, but that’s when the sec­ond vari­able — the new rule to pro­mote sav­ings — comes into play.

Leg­is­la­tors voted last Novem­ber, by a large, bi­par­ti­san mar­gin, to cre­ate what has be­come known as the “volatil­ity cap.”

It re­quires the state to save, rather than spend, any in­come tax re­ceipts from quar­terly fil­ings — which are de­rived chiefly from cap­i­tal gains and other in­vest­ment earn­ings — in ex­cess of $3.1 bil­lion per year.

This seg­ment of the state tax stream tends to surge rapidly in good times and shrink dras­ti­cally in bad times. The volatil­ity cap is in place to stop the state from spend­ing too much of th­ese rev­enue surges on new pro­grams — only to find the surge has van­ished, and the pro­gram must go on with­out it, a year or two later.

Con­necti­cut has an­other $648 mil­lion in this volatil­ity cap piggy bank, but law­mak­ers can­not crack it open un­til the end of next Septem­ber — three months af­ter the fis­cal year has ended — when Lembo’s of­fice com­pletes its au­dit of the 2018-19 fis­cal year.

If this money could be ap­plied to the deficit, the po­ten­tial bi­en­nial short­fall would fall to $2.4 bil­lion, or $1.2 bil­lion per year.

That’s still high. But com­ing off an elec­tion sea­son in which all gu­ber­na­to­rial can­di­dates an­nounced plans for ma­jor tax cuts, re­duc­ing the po­ten­tial bud­get pain of­ten is top pri­or­ity.

And there is a loop­hole in the volatil­ity cap rules that al­lows leg­is­la­tors to tap the funds early. This can be done only if:

•The gover­nor signs a dec­la­ra­tion of fis­cal ex­i­gency, which is essen­tially a bud­get emer­gency.

•And if 60 per­cent of both the House and Se­nate agree.

To achieve a 60 per­cent en­dorse­ment, that means 91 votes in the House and 22 in the Se­nate. And now the Democrats’ new ma­jori­ties — 92-59 in the House and 24-12 in the Se­nate — ap­pear much slim­mer.

If a few mod­er­ate or con­ser­va­tive Democrats don’t like a pro­posed bud­get, or if the party’s most lib­eral wing ob­jects, then Democrats might need Repub­li­can votes to get a bud­get done.

Even with­out the volatil­ity cap, nei­ther party could as­sem­ble enough votes alone in 2017 to pass a bud­get that Gov. Dan­nel P. Mal­loy would sign. It took a nine-month de­bate be­fore the two par­ties set­tled on a bud­get com­pro­mise last year.

Demo­cratic leg­isla­tive lead­ers opted Wed­nes­day not too look too far ahead. But both Ares­i­mow­icz and Looney said the prospect of an­other bi­par­ti­san bud­get de­bate was real — but not nec­es­sar­ily scary.

“When you close your mind to other peo­ple’s ideas, you’re do­ing the en­tire state a dis­ser­vice,” Ares­i­mow­icz said. “… We know that act­ing to­gether, tak­ing the “D” for Demo­crat off and the “R” for Repub­li­can, we get bet­ter re­sults,” Ares­i­mow­icz said

“It’s too soon to say how this might work out,” Looney said. “That is an is­sue we’ll have to look at.”

When asked two days be­fore the elec­tion about the prospect of need­ing an­other bi­par­ti­san com­pro­mise to solve the im­pend­ing deficit, the top Repub­li­cans in the leg­is­la­ture said, if nec­es­sary, it cer­tainly could be done.

“We can al­ways do a bi­par­ti­san bud­get,” Se­nate Repub­li­can leader Len Fasano of North Haven said. “Look at what we did” in 2017. “We could cer­tainly do it again.”

“I think you al­ways have to be open to com­pro­mise,” said House Mi­nor­ity Leader Themis Klar­ides, RDerby. “Ev­ery­one has to put out their own vi­sion for the bud­get, but then we cer­tainly could try to work to­gether.”

Michael Cummo / Hearst Con­necti­cut Me­dia

Joe Ares­i­mow­icz, DBer­lin, speaker of the state House of Rep­re­sen­ta­tives.

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