Connecticut Gov. Ned Lamont had harsh words on Thursday for a two-year revenue plan from the legislature’s tax-writing committee that his administration said moved roughly $400 million out from under the state spending cap.
“If you don’t like the spending caps, vote ‘em out but don’t play games,” Lamont said during a late morning press conference in his state Capitol office.
The governor’s comments follow two days of legislative action to advance a counter-proposal to the $50.5 billion budget plan he recommended back in February. On Tuesday, the Appropriations Committee moved a roughly $51 billion spending plan to be paid for by a revenue package advanced Wednesday by the Finance, Revenue and Bonding Committee.
In broad strokes, the two plans largely reflect the priorities pushed by the governor’s office, though the General Assembly’s response spends more on legislative priorities while remaining under a statutory spending cap and the finance package slightly scales back a broad-based income tax cut proposed by the governor in favor of other tax relief proposals.
Lamont and his budget chief, Jeffrey Beckham, said the two legislative plans were not aligned. The appropriations plan outspent the revenue provided by the tax plan by around $240 million over two years, Beckham said.
The administration said many of the details would be ironed out through negotiations with lawmakers in the coming weeks and the exact amount of money the state was working with would be uncertain until consensus revenue estimates are released at the start of May.
However, the governor drew a hard line on adherence to a set of fiscal guard rails, which limit state spending and require excess revenue to pay down Connecticut’s long-neglected unfunded pension liabilities. Lamont, a fiscally conservative Democrat, has advocated maintaining those guardrails and the legislature voted to continue them for at least five years earlier this session.
Beckham said the finance proposal called for diverting a total of about $400 million, largely from revenue that exceeds forecasted amounts, so it would not be counted against the state spending cap. The committee has proposed sending most of that money to aid municipalities, Beckham said.
Lamont said the tactics worried him and pledged to avoid them.
“When you start moving some muni-aid off budget, when you start siphoning off revenues, all of the sudden your budget is out of whack and you violated your own spending caps,” Lamont said.
“My pledge to you is that we’re going to get an honestly balanced budget without gimmicks, with significant tax cuts for the middle class and honoring the commitments to folks most in need,” he said.
In an interview Thursday, Senate President Martin Looney defended the accounting maneuvers employed by the finance plan as tools to direct some of the state’s resources, including an expected $3 billion budget surplus, toward necessities that had been underfunded for more than a decade.
At least some of the inflation-driven increases in sales tax revenue should be available to support a variety of inadequately funded service providers, he said. Meanwhile, the municipal aid the governor described should be removed from under the spending cap, as it had been prior to bipartisan changes made in 2017, Looney said.
“Historically, that funding had been outside the cap and I think we can make a strong case that it should be again because there are extraordinary needs in the poorest municipalities in the state, especially in the wake of the pandemic,” Looney said.
However, the governor’s remarks echoed those of Rep. Holly Cheeseman, an East Lyme Republican, who objected to the finance proposals budgeting techniques during Wednesday’s meeting.
“One may not argue with the intended destination of this money, I have the issue of how it is accomplished and that we are basically bypassing that statutory requirement that we set in place for another five years,” Cheeseman said. “In the belief of my caucus, and I may get some sympathy in the Executive Branch, that this is not the way to go about directing funds where they may very well be needed.”
Senate Republican Leader Kevin Kelly agreed.
“I applaud the governor for continuing to push for an honest, balanced and ‘gimmick-free’ budget,” Kelly said. “He is absolutely correct to highlight the fact that our responsible fiscal guardrails – which were unanimously renewed just two months ago – have served our state well and must be respected.”
However, the spending cap has left many legislative Democrats feeling that their proposed budget leaves too many needs unanswered, especially given the projected surplus.
Earlier this week, many members of the Appropriations Committee lamented that their budget plan provided only a 1% increase in funding for a network of nonprofits that provide much of the social services once offered by state government.
Meanwhile, Democratic legislative leaders released a joint statement Wednesday, calling for additional investments in a variety of areas.
“As we move forward, we will be looking at finding ways to bolster funding in a number of critical areas – including nonprofits, public schools, higher education, healthcare and childcare workers, paraprofessionals and group homes – while still protecting the fiscal health of the state and providing residents with historic tax relief,” Looney and House Speaker Matt Ritter said.
Lamont suggested he may be open to providing additional funding for nonprofits if the coming revenue estimates provided the state with additional fiscal latitude.
“If we have a little bit of flexibility, that’d be a priority for me to do a little more help for not-for-profits,” he said.