Leaders from both legislative caucuses met with Republican Gov. M. Jodi Rell Friday afternoon and reached a tentative agreement on a 2010 deficit mitigation package that the House hopes to pass next Tuesday.
Following the meeting lawmakers said they were unable to convince Rell to support a package that includes a tax on wealthy estates and a hospital earnings tax, so it’s likely they will be voting on this plan that Rell proposed earlier this week.
The plan includes spending cuts, no cuts to municipal aid, and no tax increases. It will erase most, but not all of the $371 million deficit.
“We have a basis for an agreement,” House Speaker Chris Donovan, D-Meriden, said Friday afternoon. After months of arguing and political posturing “we’re pretty close.”
Donovan said he couldn’t talk too much about the negotiations because he hasn’t spoken privately yet with his 114-member caucus.
“I think we’re in a good place,“ Sen. President Donald Williams, D-Brooklyn, said shortly after the meeting. “All sides are hopeful we’ll be voting on a package next week.”
And while he said Democratic lawmakers aren’t giving up on an estate tax, Rell still isn’t sold, Williams said.
Will the tax on wealthy estates be in the package?
“Probably not,” said Williams. “But we’re not giving up on it.”
Sources close to the negotiations say the legislature’s Democratic majority could try and pass a separate bill to increase the estate tax, but it’s more than likely Rell will veto it.
When Rell vetoed the deficit mitigation package that included the estate tax in December, the legislature’s Democratic majority decided not to override it because it didn’t have the votes. In order to override a gubernatorial vote the Senate needs 24 votes and the House needs 101 votes. In December the vote on a similar estate tax package was 97 to 39 in the House and 22 to 12 in the Senate.
As for the hospital tax, which Rell first proposed, it’s not part of the package, lawmakers said.
“It’s a work in progress,” Williams said of the hospital tax. The legislature’s Finance, Revenue, and Bonding Committee passed a bill that included a 5.5 percent hospital tax which raised $207 million. Lawmakers say the hospital tax will help the state leverage an enhanced federal reimbursement in Medicaid funds, which will then be distributed back out to the hospitals that serve poorer patients. Republicans don’t like the proposal because some hospitals win while others lose under the formula. However, Democratic lawmakers argue the tax will sunset in two years.
House Minority Leader Lawrence Cafero, R-Norwalk, said he feels pretty good about Friday’s meeting. He said the Republicans have been saying more cuts and no tax increases for a long time now. The plan floated Friday reflects those concerns, Cafero said.