Home Economy Though ‘not perfect,’ Connecticut budget earns mostly plaudits

Though ‘not perfect,’ Connecticut budget earns mostly plaudits

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Any symbolism implied by Gov. Dannel Malloy’s signing into law the two-year, $41.3 billion bipartisan state budget agreement on Oct. 31 was apparently purely coincidental, as a majority of observers viewed it — for the most part — as more treat than trick.

connecticut state budgetAs Joseph McGee, vice president, public policy and programs at The Business Council of Fairfield County, told the Business Journal: “No one’s going to love it — there’s something in there for everybody to hate.”

Still, McGee said, “There are good things in it. It’s a very good beginning — but we still have a long road to go.”

Brian Flaherty, senior vice president, public policy at the Connecticut Business and Industry Association, was more effusive in his assessment.

“We finally have a budget that the economy can grow under,” he said. “This gives us a sense of confidence that Connecticut can continue to build and sustain jobs.”

Flaherty noted that it is incumbent upon the state legislature — which passed the budget by a 33-3 majority in the Senate on Oct. 26 and by a 126-23 tally in the House a day later — to follow through on such promised reforms as a constitutional spending cap, municipal mandate relief and required legislature votes on all collective
bargaining agreements.

While saying that 123 days without a budget, the lengthiest such stalemate in the state’s history, “was definitely a long time,” Flaherty said it was worth it.

“We stood by the governor’s insistence that we have a budget that would allow the economy to grow,” he said. “In the past we have seen budgets that were slapped together to meet a deadline, and we have seen legislators who cared more about whose name was on a budget than what was in it.”

The next few years will still be “challenging,” Flaherty said, “but this puts us on a pathway for the next two years that businesses can count on.”

Praise for the bipartisan approach to finalizing the budget was consistent.

“Residents deserve a General Assembly that, despite their differences, can come together to debate and deliver solutions that will turn our economic difficulties around and create more opportunities for everyone,” CBIA President and CEO Joe Brennan said after the legislature passed the budget but before Malloy had weighed in.

Saying that the state’s financial straits were “the result of years of poor economic growth and bad policy choices,” Brennan added, “Our problems didn’t happen overnight and they won’t be solved overnight either, but this budget package begins to set Connecticut on a better path.”

Brennan said his organization was “still concerned about the requirement that the state set wage rates for companies accessing Department of Economic and Community Development assistance, which could ultimately discourage businesses from using those funds to invest in Connecticut.”

Legislative leaders were also exuberant about the budget’s passage.

“Today is a positive day for Connecticut,” Democratic Senate Majority Leader Bob Duff of Norwalk said. “The bipartisan budget protects taxpayers and businesses, prioritizes students and education, invests in our economy and makes responsible long-term reforms. Starting today, communities and school districts across the state will have the resources they need to provide services and educate our students.”

Senate President Pro Tempore Martin M. Looney of New Haven said, “This budget truly meets the needs of our state by investing in our workforce, our students and our state colleges and universities, while providing cities, towns and boards of education with certainty and predictability. At the same time, this budget makes important systemic reforms that will result in significant long-term savings and pays down Connecticut’s pension liabilities.”

“This is a day of hope for the people of Connecticut,” declared House Republican Leader Themis Klarides of Derby. “The budget we have put in place includes historic spending constraints that will hedge against future deficits.”

“While this budget is not perfect, it reflects the core Republican components of spending restraints, less borrowing so that we can finally start living within our means,” Klarides said.

The Business Council’s McGee said that simply having a budget in place at last, along with such provisos as adopting changes to the estate tax and insurance premium tax, which are designed to enhance the state’s economic competitiveness, should send a positive signal to businesses considering making Connecticut their home.

“The legislature did some hard work to cut state spending,” he said. “What they’ve done is show that they’re hearing what businesses have been talking about, including the cost of competing with other states. It shows that we are getting our house
in order.”

Another positive review came from Gian-Carl Casa, president and CEO of the Connecticut Community Nonprofit Alliance.

“It is an enormous relief that the governor has signed the budget and ended four months of debilitating uncertainty for Connecticut’s nonprofits,” he said. “Our members have been underfunded for more than a decade and since July have been operating under an executive order that closed down or reduced scope and hours for many programs across the state that provide vital services for thousands
of individuals.

“While this budget is not perfect,” Casa said, “it supports many programs and provides a framework for moving forward.”

Still uncertain at press time was the fate of the hospital tax. The governor line-item vetoed appropriations in support of a new hospital tax proposal, citing its unsound legal basis in federal law. Malloy asked
lawmakers to pass what he called “the workable language” his administration had provided to “make the proposal legal and
successful.”

“The governor’s line-item veto of hospital supplemental payments undermines the agreement to maximize federal funds for the benefit of the state, hospitals and the patients they serve,” Connecticut Hospital Association CEO Jennifer Jackson said.

“In his line-item veto letter, Gov. Malloy articulated concerns with language in the state budget document related to hospitals. Hospitals have addressed his concerns,” Jackson said. “We agreed to one change the state suggested, and we pointed out that the language in the budget approved by the General Assembly is similar to language used and approved in other states.”

On Nov. 1, Comptroller Kevin Lembo said that based on revenue and spending through Sept. 30, the state remained on track to end the current fiscal year with a $93.9 million deficit under the provisions of the Governor’s Executive Order Resource Allocation Plan.

The new biennial budget, as well as updated consensus revenue projections expected later this month, will have a significant impact on the outlook in future months, Lembo said.

In a letter to the governor, Lembo said that Connecticut, dogged by persistent revenue uncertainty and three consecutive months of job loss, continues to lag the nation in economic performance.

In particular, Lembo said areas that warrant close watch include underperformance in both the sales tax and the estimated payments portion of the personal income tax.

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