The Middletown Press (Middletown, CT)
Lamont, Dems spar over state budget
HARTFORD — After an initial negotiating session between majority Democrats and Gov. Ned Lamont’s staff, there seem to be at least a couple of points of contention that have to be cleared up if the General Assembly is to approve a new budget and adjourn on tim eat midnight May 4.
House Democrats want to create a new $600 credit for low- and middle-income families with children in 2024. Lamont is standing by his $363 million tax -cutting plan, centered on increasing the state’s property tax credit.
They have a difference over the possible use of extra tax revenue above and beyond the mandatory reduction of debt. Senate Democrats want to redirect some of the extra revenue for major new investments in preschool, both of which Lamont opposes.
Speaker of the House Matt Ritter, House Majority Leader Jason Rojas and a top senator on the taxwriting Finance Committee pointed out those potential conflicts on Wednesday, noting that while only three weeks are left in the budget-adjustment session of the legislature, they are confident that compromises can be reached, along with dozens of other pieces of legislation that are priorities.
“He’s never been a big
fan of the child tax credit,” Ritter, D-Hartford, told reporters of Lamont’s position. “Whereas in our caucus, it might be the single most popular thing proposed in the last couple of years. So that’s going to have to get worked out. I fully support the credit. I think it makes a lot of sense. It was very effective in the pandemic. That’s one issue that I see needs some negotiation.”
A 2017 law, called a volatility cap, limits lawmakers to spending only 99 percent of revenues that may be spent in any fiscal year, which will slide up over the next few years to 98 percent, where it will stay. It could add up to about $320 million in the fiscal year that ends June 30.
But Lamont believes that spending it on anything other than reducing longterm debt is an unacceptable
way to dodge the state’s mandatory spending cap.
Surpluses in the pandemic, the emergency reserves — sometimes called the Rainy Day Fund — have stayed at the maximum $3.15 billion, while hundreds of millions of dollars have been transferred to pension funds.
Sen. John Fonfara, DHartford, the longtime co-chairman of the Finance Committee, said in an interview that he believes the best way to invest extra state money during a period of surplus revenue is to help disadvantaged children in their preschool years.
“Right now, that fund is at $320 million,” Fonfara said in an interview in his Capitol office. “It will get to $500 (million), $600 million by the end of the decade. Here it is only 2022-2023 and we’re at $24 billion (state budget), so to get to $30 billion, two percent of that is $600 million. So I said let’s redirect this. We’ll figure out how to do it where it wouldn’t interfere with the spending cap. Let’s invest in children who are starting off well behind and never catch up. Where most children start kindergarten ready, these children don’t and through their whole lives, many of them stay behind.”
He said early investments in children makes more sense than paying off long-term obligations such as public pensions. “I am hoping we can convince the governor to see that,” Fonfara said. “I understand it’s an election year and it’s easy for someone to say ‘Oh you’re going back on your promises to invest these dollars to retire debt.’ I think we can do both.”
“There’s probably enough revenue where you can do some tax cuts,” Ritter said. “You can’t break spending caps and no one is looking to do that. There are rules of the road and we anticipate following them.” State fiscal analysts project a nearly $1.8 billion surplus in the budget that runs through June 30.
“Right now we do have a significant Rainy Day Fund and we’re seeing surpluses,” said Rojas, D-East Hartford, a former chairman of the Finance Committee. “A lot of it is coming out of this kind of very kind of volatile period in our economic history, and we want to be sure that in the long term, we’re not making commitments right now that we can’t keep into the future. It seems to be in the back of the mind of the governor, too.”
“Five years ago, all we ever would have talked about is our long-term debt,” Rojas said. “Now that there is a lot of money available, nobody is talking about long-term debt, but we should continue to pay down that debt because that will allow us to free up some additional revenue within the operating budget, but also address what has been a very long-term issue, which is probably not top-of-mind for the average taxpayer, as where tax cuts are. But I think for all of us as policy makers who have been around for a very long time, we can’t lose sight of those longterm debt obligations that we have.”
On another item that was featured in initial discussions on Tuesday, a bill proposed by Lamont on lowering the rate of local car taxes that was adjusted last week by the budgetwriting Appropriations Committee has a higher threshold rate.
Ritter, D-Hartford, said that on the spending side of the $2.1 billion budget to take effect on July 1 seem to be going well. “Sounds like they may have to compromise on the car tax to go with the Appropriations budget,” Ritter told reporters prior to the Wednesday House session. Lamont proposed a statewide mill rate of 29 — a tax of $29 on each $1,000 of value — while the committee approved a 32.46 rate.
Ritter said he believes Lamont’s team seems willing to move toward the 32.46 rate. Ritter said that in his city, if that mill rate is approved, the local car tax bills that are mailed out in June may be 12 mills lower than January. “That is an absolute, clear signal of a tax cut for folks,” Ritter said. “I think will be very helpful and gladly received. It is inherently unfair that a Toyota in East Hartford costs more than in a lower mill-rate town.”
Lamont, speaking with a few reporters after an unrelated event outside the Capitol Wednesday afternoon, said that his proposal for a mill rate of 29 would mean more communities could have lower tax rates for personal motor vehicles.
“The approps version sort of followed our lead and gets pretty close,” Lamont said. “You know, we’re going to get a car-tax cut. Look, I like our version. Our version includes a lot more towns and provides a more significant tax cut for people. Now you sit down and negotiate around a table.”