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Connecticut Has A Budget, Minus Rell's Signature

CHRISTOPHER KEATING

September 02, 2009

Ending the longest budget battle in state history, Gov. M. Jodi Rell said Tuesday that she will allow a budget plan written by the legislature's Democratic majority to become law without her signature.

The two-year, $37 billion budget includes an increase in the state income tax for millionaires, reduces the estate tax and increases the cigarette tax by $1 to $3 per pack. Rell is allowing the budget to take effect Sept. 8 even though her original proposal in February called for no tax increases, a goal she advocated for months. (Pictures: Gov. Rell Announces Budget Decision)

Her much-awaited decision Tuesday brings to a close a seven-month clash over taxing and spending that ended without a bipartisan compromise.Rell did use her line-item veto authority to reject $8.3 million worth of Democratic pork-barrel spending in the two-year budget, including $100,000 for the AIDS Interfaith Network and $50,000 for the Valley-Shore YMCA in Westbrook, both of which had been sharply criticized by House Republican leader Lawrence Cafero during the floor debate Monday night.

Among other cuts, Rell also rejected $1 million to be spent over two years for a "fall prevention" program that would teach the elderly how to avoid slipping on throw rugs or in other situations, spending that had also been sharply criticized by Republicans. (Link: Capitol Watch Blog)

"The Democrats just could not cut, once again showing they are unwilling — or simply unable — to make meaningful reductions," Rell told reporters during a news conference on the Capitol's south portico.

But after a summerlong soap opera at the Capitol, Rell said a veto would simply send the state back to the drawing board and potentially postpone a resolution to the budget impasse for months. When asked at the news conference if she thought a veto would delay a resolution until Columbus Day, Rell responded, "I was thinking more like Thanksgiving." (Capitol Watch: State Legislators In Now-Infamous Solitaire Photo Identified)

Democrats seemed unfazed by Rell's veto of $8.3 million in earmarks and were relieved that the long budget battle was over. Senate Majority Leader Martin Looney, a New Haven Democrat, said the items were "a relatively minor issue overall in a $37 billion budget."

He noted that Rell had pushed for her own various "add-backs" that will become law in the final budget, including restoration of expenses and salary money for operating the lieutenant governor's office and more than $700,000 for the governor's office over two years for things such as dues for the National Governors Association.Democrats strongly opposed Rell's numerous attempts to cut the budget, and they held press conferences to show their support for public education, libraries, Head Start, financial aid for college students and the state's 62 family resource centers that provide services in public school buildings.

Although Rell dismissed the idea that the final budget was a compromise, Looney said: "There were compromises all along the way. Every budget is a compromise."

One compromise, he said, involved changes to Connecticut's estate tax — changes that Democrats had opposed through the years. The new threshold for collecting the estate tax will be $3.5 million, meaning that no tax will be owed for anyone who dies with less than that amount. Currently, the threshold is $2 million.

In addition, the legislature voted to eliminate the "cliffs" in the estate tax, which have angered Republicans since being enacted in 2005 in what some legislators described as a drafting error. Regardless of whether the language was an error or written purposely by lawyers, the legislature never changed the cliffs — until now.

Under the current law, a person who dies with $1.99 million owes no estate tax at all. But because of the cliff, a person who dies with one dollar over $2 million owes taxes on the entire $2 million, rather than only on the portion above $2 million. As such, the person just above $2 million owes more than $100,000 in taxes, while the person just below $2 million owes nothing.

Republican legislators voted unanimously against the Democratic budget, and many of them urged Rell to veto it.

"I agree with the governor's criticism of the budget, but I'm disappointed that she didn't veto the bill," said Senate GOP leader John McKinney of Fairfield. "At no time did the Democratic majority ever show a willingness to consider serious reductions in spending. It was quite clear that they were never going to reduce spending. The Democrats have the budget they want."

Cafero railed against the budget during debate on Monday. Before Rell's press conference Tuesday afternoon, Cafero said he did not know what Rell would do.

"I don't see any reason why she would sign this unless she just wanted it over with — and that's not a good enough reason," Cafero said.

Cafero said the budget will only create problems in the future.

"I have no doubts that the huge holes this budget creates will once again have to be filled with tax increases," he said. "While I understand Gov. Rell's urgency at getting a budget done to keep Connecticut working, as governor she plays a far different role than the legislature. This budget will ultimately cause more harm than good."