Republican legislative leaders in the House and Senate unveiled an alternative budget that nonpartisan fiscal analysts say will slightly decrease the deficit in future years.
The Republican budget doesn’t eliminate the more than $939 million deficit in 2016, but it reduces it by $34 million. Gov. Dannel P. Malloy’s budget and the budget put forth by the legislature’s two budget writing committees increase the deficit in 2016 by about $130 million and $181 million, according to nonpartisan fiscal analysts.
But it’s unlikely the Republican budget will get very far. With no seat at the negotiating table, Republican legislative leaders are left to pitch their ideas to the public or any Democratic lawmaker who will listen.
In order to balance the budget, Republicans propose eliminating about $336.8 million of what they described as gimmicks in the Democratic budgets. They said one of those “gimmicks” is the $155 million in surplus funds Malloy wants to give back to taxpayers. Malloy proposed giving $55 checks to about 2.7 million taxpayers with surplus funds from this year’s budget. The legislature’s two budget writing committees kept the proposal in their budgets.
If Republicans had a say they would eliminate the state Earned Income Tax Credit, which was established in 2011. The budget allocates about $120 million a year toward the credit that goes back to the working poor, who don’t necessarily pay income taxes.
Cafero said the governor established the program claiming he wanted to help the working poor at the same time as he increased the sales tax and eliminated the tax exemption on over-the-counter-drugs.
“He gaveth with one hand then took away with the other and claimed we’re helping out the working poor,” Cafero said. “The working poor who had to drive their car and pay higher gas taxes. Who had to get aspirin and cough medicine over the counter and paid taxes for the first time. Who tried to put clothing and footwear on their kids and had to pay a tax on it.”
He said Republicans would restore those tax exemptions to where they had been for decades.
Ben Barnes, Malloy’s budget director, said the most “troubling” aspect of the Republican proposal is the elimination of the Earned Income Tax Credit. He said Ronald Reagan called the program “the best antipoverty, the best pro-family, the best job creation measure to come out of Congress.”
The state program is a percentage of the federal Earned Income Tax Credit. Economists widely believe the credit gets spent immediately in the local economy because the people who receive it don’t earn enough money to save it.
“But the governor won’t sit there and say the $1.8 billion he took out of the economy in higher taxes hurt jobs,” Sen. John McKinney, R-Fairfield, said. “People in the real world don’t believe adding that money creates jobs and taking $1.8 billion out doesn’t hurt jobs and the economy.”
McKinney was referring to Malloy’s tax increase during his first year in office. It was the second largest increase in the state’s history behind the 1991 establishment of the income tax.
But Barnes wasn’t buying the rhetoric.
“After months of grandstanding, Republicans in the legislature have once again failed to produce an actual budget proposal, instead choosing to issue a political document that’s heavy on rhetoric, but devoid of any actual detail,” Barnes said in a statement. It “contains $54.8 million in phantom spending cuts that are not detailed anywhere. Finally, it does all this and yet their bottom line spending is less than 0.1 percent different from the governor’s proposed budget. So much for cutting spending.”
The Republican budget increases funding by about $199 million in some areas, but it cuts about $226.7 million in current spending and eliminates about $54.8 million in spending through policy reductions.
It also further reduces the state’s debt burden by paying off the 2009 Economic Recovery Notes.
The Democrats borrowed close to $1 billion back in 2009 in order to help balance the budget. Instead of paying off the last $196 million of those Economic Recovery Notes, the Democratic budgets delay payment until 2018.
Cafero said that’s wrong, which is why the Republican budget finds the money to pay off that debt.
Republicans also believe it was wrong to raid the municipal revenue sharing program established in 2011 by the increase in the sales tax.
Republicans proposed restoring the fund and adding back $26 million. Municipalities like the fund because it’s one of a few unrestricted funds available.
Like Barnes, House Speaker Brendan Sharkey, D-Hamden, wasn’t impressed with the Republican proposal even though municipal revenue sharing is an idea he embraces.
“It is typical Republican fare — targets the poor and middle class, and claims illusory spending cuts,” Sharkey said. “The reality is that the legislature and the governor have put together a budget that’s balanced, pays down debt, saves for the future, and puts some money back in the pockets of hard working families.”
The General Assembly has until May 7 to send a budget to Malloy.