Democratic leadership in the General Assembly and Gov. Dannel P. Malloy have reached a compromise “in principle” on a new, two-year state budget Friday, according to sources.
Complete details of the compromise are not available yet, but according to sources it will rely on an alternative accounting method for federal reimbursed Medicaid dollars. The budget Malloy proposed is about $1 billion over the next two years over the spending cap under current budgeting rules. Malloy was unable to garner the three-fifths majority in the Senate he would have needed to make the changes he proposed in February when he released his budget.
Sources say a last-minute pitch by the American Heart Association to raise cigarette taxes by 95 cents per pack didn’t make it in, but the deal does eliminate a digital download tax that would have brought in tens of millions of dollars from iTunes fanatics.
The negotiated budget also continues the tax on electric generators, but to a lesser degree, according to sources.
The electric generation tax was first implemented in 2011 with the promise that it would sunset July 1, 2013. Malloy’s original budget proposal continued the tax and estimated it would levy about $76 million a year. The Democrat-controlled Finance Committee sought to rearrange some of its borrowing priorities in order to help sunset the tax.
Sources say it continues in the budget deal reached late Friday night, but raises less money.
Dominion, which runs the Millstone Nuclear Power Plant in Waterford, pays about half of the tax at the moment. But company officials couldn’t promise they would not move to pass the tax on to their customers if the legislature failed to sunset it this year. On Friday afternoon, Attorneys General Martha Coakley and Peter Kilmartin, of Massachusetts and Rhode Island, wrote lawmakers thanking them for sunsetting the tax at the same time that they warned them they would be keeping a close eye on the issue.
Coakley and Kilmartin argue it will raise electricity rates not only in Connecticut, “but it unfairly raises the rates of all ratepayers throughout New England and New York, and puts the region at a competitive disadvantage to attract jobs and invest.”
The negotiated budget also restores the $25 exemption for clothing and shoes by mid-2015. The exemption, which was eliminated in 2011, was a Malloy proposal aimed at middle-class tax relief.
Sources say there also will be a few more spending cuts and it’s unclear at the moment exactly how the negotiated budget handles the cuts to the 32 acute care hospitals in the state. Republican lawmakers were not included in budget negotiations.
The legislative session ends June 5. Sources said a deal on the budget will be finalized over the weekend and a vote could come as early as Wednesday next week.