HARTFORD, CT—Republican legislative leaders, who refused to sign onto a spending plan earlier this week, presented their own two-year budget Thursday. But it was out of balance before the press conference even started.
The Republican plan would spend about $20 billion in the first year and $20.3 billion in the second year of the budget, which is about $71 million less than Gov. Dannel P. Malloy’s budget in the first year, and $173 million less in the second year. The 2017 budget is $19.8 billion.
However, the proposal was out of balance as soon as it was released at a Legislative Office Building press conference because income tax receipts had already fallen about $450 million, or about 30 percent behind budget estimates.
Department of Revenue Services Commissioner Kevin Sullivan, who receives data about tax collections every day, said even he was surprised by the magnitude of the erosion.
“I was surprised overall that it continued to shrink as rapidly as it did,” Sullivan said.
On Wednesday income tax receipts were down $293 million, which means they almost doubled overnight.
House Minority Leader Themis Klarides, R-Derby, and Senate Republican President Len Fasano, R-North Haven, maintained that they would continue to revise their budget proposal as new revenue figures are released.
Fasano said Republicans have met their obligation to present a budget using the same revenue figures the administration and Democratic lawmakers used to craft their budgets. Those budgets are also now out of balanced based on the latest revenue figures.
“There’s going to be criticism, but don’t criticize Republicans because we have a budget we’re willing to pass,” Fasano said. “The Democrats have nothing to put on the table.”
Fasano said they are doing the best they can and they’re willing to continue the conversation at the negotiating table. Klarides said the numbers are changing every day and they wanted to get something out there.
“You cannot fix a problem unless you acknowledge what it is,” Klarides said.
The legislature’s nonpartisan Office of Fiscal Analysis and the Office of Policy and Management are expected to agree to updated revenue figures on Monday. However, at the moment it means there’s another $1 billion over the next two years lawmakers will need to add to the $3.6 billion deficit that already exists.
The Republican proposal, like the spending plan released earlier this week by the Democratic majority, would not shift $400 million in teacher pension costs from the state to the towns. The Republican proposal also makes changes to the Education Cost Sharing formula, eliminates the Citizens Election Program, and eliminates the Municipal Revenue Sharing Account, which was created in 2015 to take 0.5 percent of the state sales tax and share it with municipalities.
The proposal also includes a tax hike on some taxpayers despite the insistence of Republican lawmakers that their budget doesn’t include any tax increases.
Like Malloy, the Republicans would eliminate the property tax credit for some filers. The Republican proposal would exempt homeowners with dependents and the elderly, so if you’re married without children, own property and make less than $100,000 a year, a tax hike is on its way. Republican estimate getting the rid of the credit for some homeowners would generate about $55 million a year. Malloy proposed eliminating the entire $200 property tax credit for all homeowners.
“We’re adding back from what he eliminated,” Klarides said.
She said they added back the property tax credit for certain groups, but they also decided to phase out income taxes on pensions and Social Security.
“When you look at the whole picture, the relief that middle class people are getting every day is above and beyond what they’re getting now,” Klarides said.
The Republican budget also assumes Malloy will find the $1.56 billion in labor savings over the next two years through negotiations with state employee unions.
The Republican plan also does not include cigarette tax increase or a fee increase for pistol permit holders. It also does not increase the bottle deposit fee from a nickel to 10 cents.
Senate Majority Leader Bob Duff, D-Norwalk, called the proposal “half-baked.”
But Republicans said Democrats are just upset because they were unable to pass a spending plan earlier this week because it would have required a tax increase. The spending plan that the Appropriations Committee failed to vote on earlier this week increased spending over what Malloy proposed by about $400 million over two years.
Fasano dismissed Duff’s criticism saying he “likes to Tweet silly things like a high school kid.”
House Speaker Joe Aresimowicz, D-Berlin, said they appreciate the effort the Republicans put forth with their budget proposal. He said he looks forward to sitting down and negotiating a budget.
The governor’s office struck a similar tone.
“While we are still reviewing the details of their plan, the Republican budget released today appears to be an earnest effort to balance our state budget,” Kelly Donnelly, a spokeswoman for Malloy said. “We appreciate that they’ve put their ideas on the table. The governor looks forward to sitting down with all legislative leaders in the days ahead to continue the conversation about balancing our budget while strengthening our state economy.”