Gov. Dannel P. Malloy and Democratic lawmakers sat down for the first time Monday to begin negotiations on the two-year, $40 billion budget.
There’s been speculation about how exactly those negotiations will go because the two sides are far apart and there are only three weeks left in the legislative session.
Malloy campaigned on a pledge not to increase taxes and even though the budget he submitted to the General Assembly in February maintains a number of taxes, it didn’t propose any increase in income or sales taxes. The Democratic spending proposal reinterpreted the spending cap to allow for an additional $1.5 billion in spending over two years, and the Democratic tax package called for a $2.4 billion increase in taxes. Most of the spending the Democratic proposal restored centered around Malloy’s proposed cuts to the social safety net.
Asked Monday if he would veto a tax increase proposed by his own party, Malloy said he doesn’t need to threaten to veto things.
“That sometimes can be viewed a little incendiary,” Malloy said with a smirk. “But I also think I’ve been very clear in the past. I put out a budget back in February . . . we think that’s the appropriate framework.”
He said “hard decisions are going to have to be made, but somehow we’ll find a way to make them.”
Malloy declined to say whether he would be giving Democratic lawmakers a bottom line. He said they were able to get a budget done four years ago when Connecticut had the “largest per capita deficit” in the nation, but even Democratic lawmakers are quick to point out the difficulty of this year’s budget.
Meanwhile, business leaders, veterinarians, home builders, dry cleaners, and taxpayers from across the state came to testify against the $2.4 billion tax package proposed last month by the Democratic majority.
More than 100 people signed up to testify and more than 800 pieces of written testimony were submitted to Republican lawmakers who believe many of the Democratic tax proposals, such as a sales tax on veterinary services, didn’t receive a proper public hearing.
Joseph Brennan, president and CEO of the Connecticut Business and Industry Association, said the Democratic tax package and its proposal to broaden sales taxes on a variety of services will “cascade throughout the economy.” He said the tax package will impact virtually every business in the state and have a detrimental impact on the economy.
Brennan said the state’s economy was beginning to bounce back in 2014, but he said this tax package is likely to hinder economic growth.
Jim Brown, vice president and general manager of William Meyer Inc., a moving company, told Republican lawmakers that it’s moving more companies out of Connecticut than it’s moving into the state. He said there is a direct correlation between the companies moving and the “anti-business” stance the state has taken with its tax policy.
Dr. Arnold Goldman of the Connecticut Veterinary Medical Association said taxing veterinarian services will only impact people struggling to care for their animals and “act as a new tax on the poor and working class.”
He said research shows that increasing the cost of care will cause owners of these animals to seek less of it. He said that could cause a public health issue because many animals are vaccinated against diseases they could share with humans.
Others told Republican lawmakers that increased revenue is the only way to fund a budget that doesn’t cut into the social services the way Malloy’s proposal does.
Paul Acker, acting director of the peer support program Focus On Recovery – United, said the current tax structure doesn’t distribute the financial burden equitably among residents. “No one wants new taxes, but we want a tax system that’s fair,” he said.
Acker pointed to the elimination of the tax exemption for renovation and repair on residential properties as a way to collect approximately $25.3 million in revenue that could be used to restore funding for mental health services.
“It’s going to cost the state more money as people end up in prisons and emergency rooms and other areas that we have no control over. It’s better to have services that are going to help people recover and get back on with their lives,” Acker said.
Velma Williams-Estes, a Meriden mother who cares for her adult daughter with intellectual and developmental disabilities, said the state’s wealthiest residents and large corporations have been allowed to shirk their fair share of taxes for too long.
But in order to make them pay, she said, state leaders will need political courage.
“For years, they had the courage to say ‘no’ to our most vulnerable citizens,” Williams-Estes said. “All of this work has helped to protect the rich and big corporations and allow them to get richer, but does not provide the full funding needed for people with [intellectual and developmental disabilities].”
Tom Swan, executive director of the Connecticut Citizens Action Group, said his group was glad the Republican budget proposal would restore some of Malloy’s social service cuts, but they are disappointed to see Republicans “play political games on the revenue side.”
Swan said he doesn’t recall the Finance, Revenue, and Bonding Committee holding a public hearing on the final tax proposal, but he added that the problem with the Republican budget proposal is that it funds services by relying upon unspecified labor savings and doesn’t offer a solution for how to pay for the additional services it funds.
Malloy said Republican lawmakers were not invited to Monday’s meeting.