In his budget proposal delivered Feb. 6, Gov. Dannel P. Malloy focused on several key areas as he looks to grow Connecticut”™s economy and make state government leaner.
The $43.8 billion biennial budget proposal includes an additional $6 billion in capital expenditures for the 2014 and 2015 fiscal years and about $1.8 billion in cuts to state services.
“Connecticut families have had to buckle down, make tough decisions, pay their bills, make sacrifices and find compromise,” Malloy said to legislators in his budget address. “So must their government.”
Malloy said his budget keeps the state “firmly in balance.” But as individuals and organizations pore over the details, some ”” including the Connecticut Business and Industry Association (CBIA) ”” have voiced concerns about the state”™s spending allocations, tax policies and borrowing habits to pay for investments.
Legislators will vote on the budget June 5. The budget will run from July 1, 2013, to June 30, 2015.
The Business Journal examines the individual sections of the governor”™s proposal.
No new taxes
Malloy”™s budget includes no new taxes but extends several taxes set to expire in June, including the corporate tax surcharge, electric generator tax and a limit on the insurance premium tax credit.
CBIA officials have spoken out against the extensions, calling for both broader spending cuts and a more competitive tax system.
Businesses may not have gotten a break this session, but Malloy”™s budget did include two provisions to reduce taxes on the middle class. Under the proposal, the first $20,000 of a car”™s assessed value would no longer be taxable beginning in the 2014 fiscal year, while clothing and footwear under $25 would be exempt from sales tax starting in the 2015 fiscal year with the exemption increasing to $50 the following year.
More funding for education
Among the most widely discussed aspects of the budget are the proposed investments in education, beginning as early as pre-kindergarten and through college.
The proposal would either preserve or increase funding for the majority of the state”™s early child care and primary and secondary education programs.
Malloy calls for state funding for primary and secondary education initiatives to increase by $119.5 million in the 2014 fiscal year and by $215.2 million in the 2015 fiscal year, including $152 million in new Education Cost Sharing funding over the two years for what is currently a $2 billion program.
The governor also proposed to invest $2 billion in the University of Connecticut over 10 years in an effort to bolster the science, technology, engineering and mathematics fields.
Connecticut Voices for Children, an independent research and advocacy group, applauded Malloy”™s continued commitment to education but also criticized how he plans to fund the initiatives through “one-time revenues” and “substancial borrowing that will burden our children tomorrow.”
Investing in business
To help businesses grow and create jobs, the budget would provide $100 million each year to the state Department of Economic and Community Development to continue to provide low-interest loans and other incentives to businesses to either stay in or relocate to Connecticut, and calls for $100 million in funding over two years to continue the Small Business Express loan program.
Additionally, Malloy called for a $200 million investment in the Bioscience Connecticut initiative over a 10-year period, aimed at growing the state”™s bioscience industry.
”˜Harmless”™
Though some have criticized Malloy”™s proposals for municipal aid as being confusing, officials have guaranteed that municipalities would be held “harmless” under the proposed budget.
The budget calls for Municipal Aid Adjustment grants of $47.2 million in the 2014 fiscal year and $31.6 million in the 2015 fiscal year to ensure no town or city sees lower funding than it currently receives.
In addition, the plan calls for grants available under the Town Aid Road program to increase $30 million each year, and for funding under the Local Capital Improvement Program to increase $56 million each year.
Proposed bond authorizations in the biennial budget include $1.1 billion to assist towns and cities in school construction projects, $1 billion in clean water and drinking water grants and loans, $100 million for Urban Act grants used largely to promote community conservation and development, $40 million for Small Town Economic Assistance Program grants for smaller communities, and $40 million in Open Space Acquisition grants.
