Christine Stuart photo
Sen. Toni Harp, D-New Haven, goes over the Democratic budget proposal Thursday surrounded by Rep. John Geragosian, D-New Britain, Rep. Cameron Staples, D-New Haven, and Sen. Eileen Daily, D-Westbrook. (Christine Stuart photo)

(Updated 5:30 p.m.)The Democrat-controlled Appropriations and Finance Committees proposed a two-year budget Thursday that includes tax increases, borrowing, and spending cuts.

At a press conference this morning the Democratic co-chairmen of the two budget writing committees said their budget spends about $164 million less than Republican Gov. M. Jodi Rell’s $38.4 billion two-year proposal. It also cuts about 25 percent of managerial positions at the Department of Children and Families and reduces the amount of municipal aid cities and towns receive through the Mashantucket-Pequot grant by about $49 million over two years.

“I think we did a good job going through the governor’s budget line-by-line,” Rep. John Geragosian, D-New Britain, said.

In addition, Democrats said they want to borrow up to $500 million this year to help the state with the current fiscal year 2009 deficit and use the $1.4 billion rainy day fund for the deficits in 2010 and 2011. On the revenue side, the Democrats will try again to pass a “progressive” income tax starting at 6 percent for couples making $250,000 a year. The percentage jumps to 7 percent for those making over $500,000, 7.5 percent for those making over $750,000, and 7.95 percent for those making more than $1 million per year. Currently, all of those income brackets pay 5 percent.

Also, the income threshold for the $500 property tax credit residents currently receive would begin to disappear under the Democratic proposal. Currently if you are married and don’t make over $100,000 a year, then you receive the full $500 property tax credit, but Democrats want to change it so that by 2010 only those with an adjusted gross income under $25,125 would receive the full $500 tax credit. The credit drops on a sliding scale for incomes between $25,125 and $47,625. Those couples making more than $47,625 will no longer receive the credit.

Democrats would also impose a 30 percent tax on corporations over three years and suspend Connecticut’s popular tax-free week. They also plan on eliminating dozens of tax exemptions on various items from child car seats to car washes to media payroll services.

The various tax increases proposed by the Democrats are expected to generate about $3.25 billion over the next two years.

Sen. Toni Harp, D-New Haven, said the governor balanced her budget on the backs of low-income family and children by cutting health care programs 43 percent and education programs by 19 percent. She said that’s not how the Democrats are going to balance their budget.

Rep. Cameron Staples, D-New Haven, said Thursday’s proposal was consistent with how the state solved its budget deficits back in the early 1990s and during the 2002-03 recession. “It’s an honest budget and will allow us to move forward,” Staples said.

The budget pie chart presented by the Democrats Thursday said 27 percent of their budget is spending reductions, 37 percent tax increases, 17 percent federal stimulus dollars, and 19 percent from the rainy day fund.

The Democratic plan also restores the 23 commissions and agencies the governor cut in her February budget proposal and moves their budgets into the general fund.

Christine Stuart photo
Senate Minority Leader John McKinney and House Minority Leader Lawrence Cafero talk about how disappointed they are in the budget proposal (Christine Stuart photo)

Republicans said at a press conference Thursday afternoon that they were disappointed in the proposal.

“When all is said and done it will be the biggest tax increase in this state’s history,” Senate Minority Leader John McKinney, R-Southport, said. He said it’s not appropriate to reach into the pockets of Connecticut citizens without first looking at spending cuts

And he said he is “frightened” by the level of borrowing.

House Minority Leader Lawrence Cafero, R-Norwalk, said while everything is on the table, including taxes, the public demands the legislature to go through every line item first. He said the Democratic budget proposal just trims around the edges.

But Republicans said they would not be releasing their own alternative budget proposal this year unless Democrats refused them a seat at the table to work together on the budget.

Late this afternoon Gov. M. Jodi Rell reacted to the Democratic budget proposal saying that if it went through the House and the Senate as it was presented today “I would veto it.”

Christine Stuart photo
Gov. M. Jodi Rell reacts to Dems budget proposal (Christine Stuart photo)

Despite having Democratic majorities in both chambers Rell doubted if the legislature would be able to override a vetoed based on the budget package presented Thursday morning. She said it was a budget package full of “phantom” cuts, which allowed the Democrats to retain state spending at its current level while the state tries to weather the “deepest budget deficit ever.”

She said the tax increases included in the budget proposal average about $1,000 for every individual in the state of Connecticut.

Robert Genuario, Rell’s budget secretary said their proposed tax increases would mean an individual making $35,000 a year would be paying $450 more per year in taxes. Married couples making $50,000 a year would see their taxes go up $500, he said. “This is not a tax increase targeted toward the wealthy,” Genuario said. “It increases taxes on every taxpayer in every income bracket.”

Rell said now that they gotten their own budget proposal together perhaps the two sides can sit down and get to work. Democratic lawmakers said that’s exactly what they want to do.

In a letter to Rell, Speaker of the House Chris Donovan and Senate President Donald Williams, said, “In an effort to keep momentum going at this crucial moment, we respectfully suggest that negotiations between the Appropriations and Finance Committee Chairs and Secretary Genuario begin immediately.”

This afternoon the Appropriations Committee voted 36 to 20on the spending side of the proposal mostly along party lines. Sen. Joan Hartley, D-Waterbury, Sen. Bob Duff, D-Norwalk, Rep. Linda Schofield, D-Simsbury, Sen. Gayle Slossberg, D-Milford, Rep. Terry Backer, D-Stratford, were the five Democrats to vote against the proposal.

The Finance, Revenue and Bonding Committee voted 38 to 18 on the tax package and only three Democrats crossed party lines to vote against it. Sen. Andrew McDonald, D-Stamford, Rep. Chris Perone, D-Norwalk, and Rep. Tim O’Brien, D-New Britain were the three Democrats that voted against this tax package .