The budget gimmicks Gov. Dannel P. Malloy promised to avoid on the campaign trail in 2010 have made their way into his second two-year budget proposal, according to sources who have been briefed.
From eliminating municipal aid programs like Payment In Lieu of Taxes or PILOT — which helps towns recover a portion of the money they would have collected on tax exempt state properties — to borrowing large amounts of money and redefining the spending cap, Republican and Democratic sources said Tuesday that Malloy’s two-year budget seems to be full of smoke and mirrors.
Sen. Minority Leader John McKinney, R-Fairfield, said his staff was given a budget briefing Tuesday morning and were told the budget Malloy will unveil Wednesday would increase spending 9.7 percent over the next two years and is about $1 billion over the state spending cap as the cap is currently defined. McKinney said Malloy attempts to redefine the constitutional spending cap in order to get around it.
McKinney, who will announce his own run for governor this spring, said Malloy obviously doesn’t want to continue bipartisan budget discussions because “he’s already knocked us out of the park.”
By proposing a 9.7 percent spending increase, Malloy has set the floor in budget negotiations with the Democrat-controlled legislature and “that’s what I don’t understand,” McKinney said.
Malloy spokesman Andrew Doba was surprised Republican lawmakers would share some of the details of the briefing with the news media.
“In an attempt to begin budget negotiations in a bipartisan manner, [the Office of Policy and Management] briefed Republican leaders on the proposal earlier today,’’ Doba said in a statement Tuesday. “It’s unfortunate that Senator McKinney and Representative Cafero used that confidential briefing and their ambitions for higher office to serve as an opportunity to leak half truths about the governor’s budget. It may not fit in with their political agendas, but tomorrow the governor is going to present a balanced budget with no new taxes, one that grows our economy and creates jobs.”
House Minority Leader Lawrence Cafero was not available for comment Tuesday, but McKinney maintained that even though he didn’t attend the briefing with his staff there was no indication the information shared was supposed to remain confidential.
“This is the most disingenuous and dishonest budget I’ve ever seen,” McKinney said.
Taxes and Revenues
As promised, Malloy’s budget does not increase taxes, but it does extend the electric generation and corporation taxes that were scheduled to expire at the end of the fiscal year.
Democratic lawmakers have been vocal about their desire to keep their promise and allow at least the electric generation tax to sunset.
Malloy had previously said he “would not consider continuing existing taxes as raising taxes.”
The revenue package also reduces the Earned Income Tax Credit from 30 percent to 25 percent in the first year. The $110 million credit was distributed between about 180,000 households during 2011.
In addition to extending the taxes or lowering credits, Malloy’s budget also would raise about $750 million in new revenue, according to McKinney.
In order to do this, Malloy delays repaying the $1 billion Connecticut borrowed in 2009. By refinancing those Economic Recovery Notes and delaying payment until 2018, Malloy is able to free up millions in spending for the two-year budget, according to McKinney.
Malloy also will look to securitize about $600 million in order to help the state transition to Generally Accepted Accounting Principles. Malloy’s administration made compliance with the accounting standard a priority, but has failed to fully realize the plan because it would mean the state would need to come up with about $1.2 billion on top of the current deficit. In order to comply with GAAP, the state must account for the expenses in the year they were incurred. Currently, the state uses a modified cash basis accounting method, which allows it to spend money before it’s counted toward the bottom line.
It’s unclear at the moment exactly which state asset or revenue stream Malloy will securitize in order to get the money. Former Gov. M. Jodi Rell proposed securitizing revenue from a state-operated version of Keno, which is one of the games available at the Indian casinos. Democratic lawmakers instead responded by offering to securitize a surcharge on consumers’ electric bills. In the end, the two sides agreed to use about $1 billion in Economic Recovery Notes to close the budget gap — the same notes Malloy wants to delay paying until 2018.
Municipalities
Malloy was praised by local officials Tuesday for finding a way to increase the Education Cost Sharing grant to cities and towns, but he may be panned tomorrow by those same local officials who are likely to be upset that he’s eliminating or converting the Mashantucket Pequot grant and PILOT for state-owned property.
McKinney said it’s his understanding Malloy’s budget uses the PILOT money to fund the increase in education aid to municipalities, and he converts the Mashantucket Pequot fund into a capital program for every town except the ones that are home to the two Indian casinos.
Town Aid Road would also be converted into a capital program that will go on the state’s credit card, instead of coming from the state’s general fund.
“I do believe there are missing pieces he did not share with us,” McKinney said, referring to rumors Malloy would eliminate the motor vehicle tax. In order to make whole the municipalities that collect the tax, the state may replace it with some type of state funded grant, but the governor’s office was unable to offer details. A media briefing has been scheduled for 10:15 a.m.
Local elected officials are expected to receive a briefing at the governor’s mansion in the morning.
Malloy embraced at least one Republican idea. According to McKinney, the governor will propose consolidating all six legislative commissions that serve minority communities.
Support authentic, locally owned and operated public service journalism!
The commissions for Latinos, African-Americans, Asians, women, elderly, and children will be consolidated into one under the governor’s budget proposal. It’s a small cut in the grand scheme of things, but currently the six commissions cost the state about $2.7 million a year to operate.
Democratic lawmakers are likely to push back against the proposal since they are “legislative” commissions that don’t answer to the executive branch.
Pensions
Malloy made a big deal about previous Republican governors’ decisions to postpone payments to the state employees pension fund, but McKinney said that’s exactly what he does this budget.
Malloy had proposed contributing an additional $125 million a year above the actuarially required contribution to the pension fund to ensure its future solvency. Connecticut has one of the worst funded pensions in the nation.
McKinney said it’s just one more promise Malloy is breaking.
More State Budget news

Lamont Signs Another 24 Bills Monday
Gov. Ned Lamont signed another 24 bills Monday, including one that changes what police have to do to inform a family after the death of a loved one, and one that increases funding for children’s mental health.
Keep reading
Stefanowski Talks Abortion, Employee Raises & Budget In First Press Conference
For a half-hour Wednesday, Bob Stefanowski stood outside the state Capitol and fielded questions on abortion rights and state employee raises in a sign the Republican candidate plans to run a more conventional campaign in this year’s rematch with Gov. Ned Lamont.
Keep reading
Lamont Signs The Budget
Alongside Democratic legislative leaders, Gov. Ned Lamont signed the $24 billion budget adjustment Monday that includes $600 million in tax relief. That’s more than they anticipated they would be able to offer Connecticut residents this Election year because revenue came in higher than expected, but it still creates about an $800 million deficit in 2024. …
Keep reading
ANALYSIS | It’s A Wrap: The Winners and Losers of the 2022 Session
It was a short legislative session, but the House and the Senate were able to move a lot of business this year, including the passage of a $24-billion budget with around $600 million in tax cuts.
Keep reading
Connecticut Acts To Help Its Lead-Poisoned Children
After decades of inertia, Connecticut is finally moving to help its thousands of lead-poisoned children and prevent thousands of other young children from being damaged by the widespread neurotoxin.
Keep reading
Bill Bolstering Contracting Oversight Board In Jeopardy After Lamont Administration Raises Concerns
It passed unanimously in the Senate, but a bill that would give the State Contracting Standards Board greater oversight over state contracting appeared stalled in the House Wednesday on the last day of session. “The governor and I have not talked about the bill,” House Speaker Matt Ritter said. “The commissioners have sent us a…
Keep reading
Senate Approves Tax Cuts, Sends $24B Budget to the Governor
The state Senate gave final approval late Tuesday to a $24 billion election year budget plan that includes around $600 million in tax relief while enabling the state to make an $3.5 billion payment on its unfunded pension debt. Senators voted 24-12 at around 10:30 p.m. to send the midterm budget adjustment to the desk…
Keep reading
House Green-Lights $24B Budget
On a party-line vote early Tuesday, the House passed a $24 billion budget adjustment package containing more than $600 million in tax cuts which Democrats heralded as “historic” and Republicans derided as temporary. Lawmakers voted 95 – 52 at around 12:20 a.m. to send the 673-page budget document to the Senate for consideration before the…
Keep reading
Budget Materials
The General Assembly is preparing to debate adjustments to the $24 billion state budget. Below are a few of the documents we’ve been provided as back-up materials. The budget, HB 5506. Town runs. Car tax impact on municipalities. Finance Committee Power Point.
Keep reading
Lawmakers May Vote for First Pay Increase in 20 Years
With legislative retirements mounting, lawmakers on both sides of the aisle were considering Monday raising the salaries of General Assembly members for the first time in more than two decades and indexing their pay in the future. During a morning press briefing, House Speaker Matt Ritter told reporters that funding for pay raises had been…
Keep reading
Amid Surging Revenue, House Prepares to Vote on Budget Adjustments
Connecticut’s House of Representatives was expected to vote Monday on a $24 billion budget adjustment package, buoyed by revised revenue predictions that exceeded expectations by more than $350 million. The revised consensus figures released Monday confirm the surge in revenues that enabled Gov. Ned Lamont and legislative Democrats to reach an agreement last week on…
Keep reading
Dems Detail Budget Deal With $500 Mil in Tax Cuts, Extension of Gas Tax Holiday
Legislative Democrats and Gov. Ned Lamont’s administration announced Wednesday the details of a $24.2 billion budget adjustment package, which they say provides around $500 million in tax relief including extending a gas tax holiday until December. Lamont and legislative leaders outlined the agreement during an afternoon press conference in the state Capitol building. Both chambers…
Keep reading
Health Care Workers Call for New Hires
After a record number of health care workers are expected to retire this year, health care staff called on Gov. Ned Lamont to commit to filling 1,000 vacant positions by August 1 of this year. A record 1,137 state workers who notified the state that they will retire this year comes at a moment of…
Keep reading
Senate Joins House And Votes To Give Raises, Bonuses To State Employees
The Senate gave final approval by a 22-13 vote on a plan to give unionized state workers a set of raises and bonuses. The plan, negotiated by Gov. Ned Lamont’s administration and a coalition of public sector labor unions, provides three years of 2.5% raises and step increases as well as a total of $3,500…
Keep reading
House Advances Labor Deal In Historic Vote
Lawmakers in Connecticut’s House of Representatives signed off on a plan to give state workers a set of raises and bonuses Thursday in a mostly partisan vote on a negotiated labor agreement. The House voted 96 to 52 in support of the deal with 1 Republican, Rep. Tom Delnicki of South Windsor, joining all Democrats…
Keep reading
Republicans Propose Last-Minute Tax Package
Legislative Republicans pitched a $1.2 billion tax relief plan Thursday which reduces state income, sales and gas taxes and proposes to join other states in suing the federal government to challenge restrictions on spending pandemic relief funds. House and Senate Republicans announced the plan during a state Capitol press conference Thursday morning. It cuts the…
Keep reading