Print

Critics See Liabilities In Malloy's Session Victories

By CHRISTOPHER KEATING

June 09, 2013

HARTFORD— Gov. Dannel P. Malloy scored some key victories during the just-completed legislative session, but critics said they came at a price.

The state budget was passed, but Republicans charge that it is a porous, gimmick-filled document that will be springing holes soon.

A key bill concerning freedom of information for the families of Newtown murder victims was signed into law, but Malloy and lawmakers were criticized for crafting the measure in secret.

Mayors and first selectmen were happy because millions of dollars were restored for municipalities, but hospital executives complained that more than $500 million will be dropped from their future payments.

Malloy negotiated a bipartisan deal on gun control after the Newtown massacre, but he angered gun owners who packed the Capitol for public hearings.

When the session ended last week, the governor declared victory.

"We did some amazing things,'' Malloy told reporters. "We got a state budget on time when most of you were predicting that would be impossible and when at least one or two committee chairs thought we would be here late into the summer, if not September. We did the gun violence [bill]. We did minimum wage. We had the creation of the Department of Aging. We had the creation of the Department of Housing.''

He mentioned other accomplishments, then said: "In all, that second half of the session was a pretty darn good one. And I'll take that record and stack it up to people who don't even prepare or present a budget any day.''

Republicans, who did not offer an alternative budget, had a different view of the two-year, $44 billion spending plan and other legislation, and accused the governor of saying one thing, but doing another.

They said Malloy approved budget gimmicks after opposing fiscal sleight of hand as a candidate, allowed tax increases to be extended while calling for no new taxes and permitted his administration to write bills in secret while pledging transparency.

Senate Republican leader John McKinney, who is considering running for governor, rejected the now-approved plans for legalizing keno gambling in order to generate an estimated $27 million in the second year of the two-year budget. Democrats ripped a similar plan by Republican Gov. M. Jodi Rell four years ago, but huge majorities of Democrats in the legislature voted in favor of keno this year.

"Their resistance to cutting spending and making those tough decisions is so great that they resort to keno to solve the problems of the state of Connecticut,'' McKinney said after the session. "Imagine that, the majority party that says raising the minimum wage ... [is] so important to help people in our state who are struggling will actually resort to gambling, which we know ends up being a form of a regressive tax that falls mostly on people in lower-income brackets to balance our budget and move our economy forward. My friends, gambling is a loser any way, shape or form you look at it."

But Malloy said later that keno is a highly popular game that is widely available in surrounding states.

"New York has it,'' Malloy said. "Massachusetts has it. Rhode Island has it. Maryland has it. New Jersey has it at numerous casinos. Everybody else has it as a lottery game.''

No New Taxes?

A continuing dispute, which some lawmakers believe will spill over into the 2014 gubernatorial election campaign, is whether the legislature raised taxes.

Republicans said it is obvious that taxes were increased, while Malloy has repeatedly said the budget has no new taxes.

House Speaker J. Brendan Sharkey, the leader of the House Democrats, defended Malloy.

"When we parse the question as to what is a tax, that's a debate we can get into," Sharkey said. "But what most people care about is whether their income taxes are going up, whether their sales taxes are going up, whether corporate taxes are going up, you know, those are not happening."

"You can say that extending an existing tax is really a tax increase. You can talk about a generator tax going on for three months. We can get into the semantics of this, but the reality is this is a no new-tax budget,'' he said.

The state's gasoline tax is going up, as part of a long-term schedule set when Rell was governor. Still, lawmakers did nothing this year to stop the hike — 3 to 4 cents per gallon — starting July 1. The tax is based on the wholesale price of gasoline, which is constantly fluctuating and thus changing the amount of money that pours into state coffers.

"This is something that was set in motion many, many years ago,'' Sharkey said. "At the beginning of this session, we were facing a $1.1 billion budget deficit for next year. To take something like this off the table would only increase it.''

Hospitals Unhappy

Hospitals slammed the budget, saying it dramatically cuts their funding and will have devastating consequences for patients.

The budget taking effect July 1 cuts funding to hospitals by nearly $549 million, though it does increase by $15 million the state's payments to smaller hospitals such as those in Bristol, Putnam, Windham, Sharon, Rockville and New Britain. Most of that reduction is in funds from the state's tax on hospitals and the money the state pays hospitals to care for the uninsured. The hospitals conducted a grass-roots email campaign to lobby all legislators for more money.

"This is a blow to every hospital, patient, caregiver, and community in Connecticut," said Jennifer Jackson, president of the Connecticut Hospital Association.

The governor's office maintains that hospitals won't take a substantial hit because of changes related to the federal health care overhaul. A spokesman for Malloy said hospitals will receive about $1.7 billion in Medicaid payments next year and are slated to receive $1.83 billion in 2015. And the administration said that hospitals won't have to treat as many uninsured patients because the federal law requires most people either to obtain private insurance or Medicaid coverage by 2014 or to pay hefty penalty.

But the hospitals argue that Medicaid patients are actually a drag on their balance sheets, because they say they are reimbursed only 70 cents for every dollar of care they provide to such patients.

GOP Attacks

House Republican leader Larry Cafero, who is considering a run for governor, led his colleagues in criticizing Malloy's budget.

"It decimated the hospitals,'' Cafero said. "It raided over $200 million of the surplus and did something the governor said he would never do, borrowed for operating expenses. More importantly, it does not tell the world 'Come to Connecticut.' In fact, it says just the opposite. It really was a status quo budget ... reinforcing our anti-business attitude in the state."

State Republican Chairman Jerry Labriola said the budget was not transparent, mocking an often-stated theme by Malloy. He added that the budget is "a toxic cocktail of over-spending, over-borrowing and new taxes'' that should have been rejected by the legislature.

"This compost pile has more smoke and mirrors than a 70's disco,'' Labriola said. "Unbelievably, it also increases Connecticut's tops-in-the-nation per capita debt and refinances existing debt until after the 2014 gubernatorial election. There was no need to introduce a new keno game — the governor is already rolling the dice — and the families and businesses of Connecticut are the losers.''

Republicans charged that Malloy made a series of incorrect statements in his end-of-the-session speech that was made after midnight on the session's final night.

"No budget is perfect, but let's be clear,'' Malloy told lawmakers in the packed House chamber. "This budget gets the big things right. This budget was done on time. This budget refuses to kick the can down the road and properly funds our state pension obligations, saving us billions of dollars over the next 20 years. This budget invests in jobs and education and complies with generally accepted accounting principles. This budget does all that, and contains no new taxes.''

Despite Malloy's statements about the success of the budget, McKinney predicted that lawmakers will be back next session dealing with deficits.

"The non-partisan Office of Fiscal Analysis points to over $315 million in tax increases," McKinney said, noting that both the governor and top Democrats say there are no new taxes. "We heard from the governor that this budget is GAAP-compliant, when there isn't a single accountant in the state of Connecticut who would say that borrowing $750 million to cover your operating expenses is GAAP-compliant. Indeed, they would laugh in your face if you make that suggestion.''

McKinney added, "We heard from the governor that this budget does not kick the can down the road, yet his budget relies on $557 million of one-time, non-recurring revenue and leaves again — not according to Republicans, but to our non-partisan office of fiscal analysis — $1.3 billion budget deficit over the next two years. The very definition of kicking the can down the road is that you don't solve your problems now. That's the disappointment and frustration we face."

For the future, McKinney says the legislature needs to adopt a bipartisan approach that he noted was successful in passing a new gun-control law, education improvements, a jobs package and last year's deficit-mitigation plan.

"When we work together, we reach success,'' McKinney said. "And then when we work apart, we see failure."

Courant staff writers Daniela Altimari, Jenny Wilson, Jon Lender, Matthew Sturdevant, and Wes Duplantier contributed to this story.