Democratic legislative leaders came up with a budget that closes a $920 million deficit, but they don’t have the votes to pass it and Gov. Dannel P. Malloy has said he wouldn’t sign a budget he didn’t negotiate.
So where does that leave them?
House Speaker Brendan Sharkey, D-Hamden, said they want to have conversations with Malloy about “creating a budget” that they can pass and which the governor will sign.
“We’re not going to vote on this until we exhaust those conversations with the governor,” Sharkey said.
Sharkey said the governor received their budget proposal Thursday about an hour before Democratic leaders held a 12-minute press conference where they abruptly cut off questions from news media and walked away.
Until Thursday, Malloy and the legislature’s Republican minority were the only ones with budget proposals that addressed the full scope of the deficit. Democratic lawmakers presented it to their caucuses Thursday morning behind closed-doors to see if there was enough support to pass it without having to negotiate with Malloy.
The Democratic budget proposal would use a series of sweeps from various off-budget accounts and would bank on $60 million in revenue from businesses who would voluntarily give up their tax credits for two years.
“We’ve had preliminary indications that it’s quite popular with businesses,” Senate President Martin Looney, D-New Haven, said of the tax credit delay. “It is entirely voluntary and businesses will be able to decide whether it will be in their interest to take the credit for which they are eligible.”
The businesses would get a more valuable credit if they wait until 2019 to claim it.
Joe Brennan, president and CEO of the Connecticut Business and Industry Association, said the increased credit may be attractive to some businesses, but he’s worried about how it would increase the state’s costs in the future.
The tax credit deferral pushes more costs into the future and CBIA is concerned about whether the state will have the ability to pay.
The state is facing a $2.3 billion deficit in 2019.
Bonnie Stewart, vice president of legislative affairs for CBIA, said she appreciates the effort put forth by Democratic lawmakers to cut spending, but those spending cuts have to continue into the future to be meaningful.
“One-time monies don’t take care of 2018, 2019 and beyond,” Stewart said.
At least $39 million in anticipated one-time revenue is attributed to an expected increase in legal settlements received by Attorney General George Jepsen’s office.
“This is the lowest bar I could ever imagine for fiscal responsibility,” Senate Minority Leader Len Fasano, R-North Haven, said of the Democratic budget proposal.
Fasano and House Minority Leader Themis Klarides, R-Derby, said most of the spending cuts in the Democratic proposal are one-time revenues and won’t help lower future deficits.
Republicans put forward a budget proposal on Monday. They said businesses are taking a risk if they think two years from now under a different legislature, they’re going to get the tax credits promised in the Democratic proposal.
Democratic lawmakers had initially pitched increasing licensing fees, but the proposal was considered a tax increase and did not have the support of moderate Democrats in the Senate.
Democratic legislative leaders said their package represents what they believe should be the priorities for the state of Connecticut. Sharkey said it doesn’t use the Rainy Day Fund, it doesn’t borrow, and it doesn’t increase taxes.
Malloy has said that he wouldn’t sign a budget that did any of those things. However, Malloy also told the Associated Press Thursday that it is “unimaginable” he would sign a budget passed by the Democratic controlled legislature that wasn’t negotiated with his office.
“We also want to be clear that the governor has serious concerns about this proposal, and he could not support or sign it in its current form,” Devon Puglia, a spokesman for Malloy, said Thursday. “It relies on hundreds of millions of dollars in one-time revenues and unrealistic savings targets.”
Puglia added that the Democratic proposal “is still too close to the status quo; it contains too much ‘business as usual.’”
However, with a proposal now on the table budget negotiations can begin in earnest.
Democratic lawmakers were initially planning on running a budget that Malloy was likely to veto, but the measure didn’t have as much support as they thought.
After 5 p.m. Democratic legislative leaders left a 30-minute meeting with Malloy,
Senate Majority Leader Bob Duff said the meeting was “just a conversation – nothing specific.’’ Duff added he expected the discussions would continue with the governor in an effort to reach a consensus budget plan.
Jack Kramer contributed to this report.