Democratic legislative leaders emerged from closed-door negotiations with Gov. Ned Lamont Friday afternoon with a tentative understanding for a two-year state budget which raises no taxes and scraps plans to join a regional compact on gas prices.
Both sides separately addressed reporters on the plan — which no one was quite willing to call an agreement — for a two-year, $46 billion budget after weeks of negotiations and public positioning.
Following the meeting, House Speaker Matt Ritter backed away from plans to run a budget vote over the weekend without Lamont’s approval. There appeared to be renewed confidence that the legislature could pass an agreed-upon deal at some point next week before the session expires at midnight Wednesday.
“Alright, I think we’re getting to a budget,” Lamont told reporters during a late afternoon press conference in his office. “You know God is in the details, so we’re going to find out over the course of the next 48 hours.”
A notable casualty after the Friday talks was Lamont’s proposal to have Connecticut join the Transportation Climate Initiative, a cap-and-invest program that would raise gas prices. During the meeting, lawmakers told the governor they did not have adequate support for it.
“The sticking point is, it would cause [an] increase in the gasoline tax to low-income people,” Senate President Martin Looney said.
The governor signed onto the multi-state agreement late last year, but it required approval by the legislature. Lamont walked away from the concept just hours after appearing at a rally outside the state Capitol building pushing for adoption of the initiative.
“It’s always a struggle trying to figure out how to get Connecticut to pay for transportation,” Lamont said. “Everyone stands next to me at the bridge but doesn’t always want to pay for that.”
Ritter said TCI may find more support among lawmakers in the future if more states sign onto the agreement. The governor said he had assurances from legislative leaders that they would run another proposal to enact a highway user fee on tractor-trailer trucks as part of a different bill.
The two sides found common ground on another sticking point involving how much municipal aid spending falls under the state’s spending cap. Lawmakers had hoped to budget $300 million in sales tax receipts that are redistributed to towns outside of the cap. Lamont opposed the idea.
Under the framework discussed Friday, $150 million would be counted under the cap and $150 million would not. The half outside portion would be capped so it could not increase in the future, Lamont said.
Legislative Democrats had earlier abandoned proposals to increase taxes on wealthy residents through a capital gains surcharge and a new so-called consumption tax. They also gave up on a new tax on digital media companies. Despite compromises, both sides praised the possible deal as progressive.
The plan could vastly expand health care coverage by making insurance coverage essentially free for more than 30,000 people on the state’s health insurance exchange. It would also expand the state’s earned income tax credit from 23% of the federal EITC to 30%, sending more money back to Connecticut’s lower-income families.
Ritter said arriving at a budget deal was a difficult process because legislative leaders not only had to reach an agreement the governor could accept, but one which the various camps within his caucus could stomach.
“We have so many — I don’t want to say, factions in the caucus is the wrong word — ideologically different people and so it takes time and I’m not sure, no matter how much money you have or how little money you have, you can do that quickly,” Ritter said.
In some ways, Looney said the large sums of federal stimulus funding available to the state actually made crafting a budget more difficult this year.
“The reality is, expectations are higher oftentimes when you have more money,” Looney said. “It’s almost like, you don’t see major battles in probate court over small estates. The big battles are where there’s money involved.”
With TCI and tax increases off the table, it is conceivable that the budget may find bipartisan support. Ritter said leaders had shared the plan with their Republican counterparts and expected to hear feedback.
House Minority Leader Vincent Candelora said Republicans would be reviewing the tentative agreement.
“Some of our ideas have been incorporated so there is good stuff and certainly you’ve got to weigh the good with the bad,” Candelora said. “I love the fact that there are no tax increases in this budget. I don’t think the state needs them.”
However, he said if Democrats pass Lamont’s proposed highway user fee on trucks as a separate bill, it would likely complicate potential Repubulican support for the budget plan.
In a statement, Senate Minority Leader Kevin Kelly called the shift away from proposed tax increases a win for working families in Connecticut.
“We look forward to reviewing the details of the budget,” Kelly said. “It’s important to not only avoid placing more financial burdens on Connecticut residents, but also to preserve the policies that are slowly improving the health of our state’s finances. We must abide by and respect the state’s spending and bonding caps – policies Republicans successfully fought for in 2017 and the reason we have a historic Rainy Day Fund and surplus today.”