Ahead of budget negotiations Tuesday, Gov. Ned Lamont told a gathering of Connecticut’s business leaders he would oppose some of the budgetary policies endorsed by legislative Democrats.
“You know, you gotta watch yourself when the legislature’s in session and make sure that we keep within the guard rails that the legislature set for themselves,” Lamont said during a remote address to the Connecticut Business and Industry Association’s Business Day 2022 event.
Business leaders gathered in the lobby of the Bushnell Performing Arts Center in Hartford. Lamont, who tested positive for COVID-19 last week, made his remarks over Zoom from the governor’s residence. He shrugged off the diagnosis, telling the crowd he felt fine and pivoted to expected negotiations between his administration and leaders of the legislature’s budget-writing committees.
In particular, Lamont singled out elements of the finance committee’s budget proposal that worked around a statutory revenue cap, which the legislature adopted on a bipartisan vote in 2017.
“For me, that means no hanky panky when it comes to the spending cap, no fooling around with the revenue cap, no playing games with the rainy day — these are all ways we’ve provided real fiscal stability,” Lamont said.
In an interview, Rep. Sean Scanlon, a Guilford Democrat who is co-chair of the finance committee, said the panel had tried hard to thread a needle to offer tax relief to Connecticut residents amid rising inflation while remaining in compliance with federal rules on how COVID relief funding is spent.
The plan strengthens a property tax credit, expands the Earned Income Tax Credit for the working poor, and creates a funding mechanism that will eventually be used to pay for a new tax credit for families with children.
Scanlon said legislative leaders hoped to move towards common ground during budget negotiations with the administration later Tuesday.
“That’s what we’re getting in the room to discuss. The process is probably in the fourth inning of the game,” Scanlon said. “The committees have acted, the legislature has put forward their priorities after he’d put forward his. Now we have to get in the room and figure out how to pass a budget.”
But Lamont’s message of abiding fiscal guardrails seemed to resonate with the business community at the morning event. More than one CBIA official criticized the budgetary proposals crafted by the legislature’s tax and appropriations panels.
“I will tell you, in my mind, the current budget that is being negotiated that came out of finance and approps is missing the mark for the business community,” Chris DiPentima, president and CEO of CBIA, said. “There’s great individual tax relief in there, and we need that in order to grow the population in Connecticut, but there is not a lot of tax relief in there for the business community.”
The business association encouraged its members to lobby lawmakers to consider dedicating funds to help pay down unemployment debt, which currently falls to businesses to repay. CBIA and House Republicans had planned a press event at the state Capitol on the issue later Tuesday.
Eric Gjede, the group’s vice president for public policy, said members should reach out to the several lawmakers in attendance during the business day event.
“Congratulate the ones who have already voted and signaled they are not willing to exceed the spending or revenue cap when it comes to the state budget,” Gjede said. He also suggested they ask “why is no money currently being appropriated to help relieve the business community of the massive, pandemic-related federal unemployment debt?”
David Lehman, commissioner of the Department of Economic and Community Development, said lawmakers should debate whether to address the unemployment debt in the remaining three weeks of the legislative session. He said it was a question of competing interests and the administration had prioritized paying down Connecticut’s unfunded pension liabilities with its surplus funds.
“My view right now is the best bang for the buck, to use that phrase, and I do think it helps businesses in a meaningful way, is to make those incremental payments to our pension debt,” Lehman said.
Rep. Holly Cheeseman, an East Lyme Republican on the legislature’s finance committee, was one of the lawmakers in attendance Tuesday. Cheeseman said she understood Lehman’s point, but felt that the looming unemployment debt put additional strain on businesses already feeling the burden of rising inflation and supply chain issues.
“If you had to lay off workers through no fault of your own, now you’re paying that back,” Cheeseman said. “How are you as a business to grow and thrive when you see those huge increased costs?”
Cheeseman, who objected to the finance committee’s budget proposal, said she was encouraged by Lamont’s remarks to business leaders.
“We’ve heard so much today about how the state is in better fiscal condition because of those guard rails,” Cheeseman said. “It concerns me that by removing them, we could be back in the same situation.”