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Two and a Half Billion Budget Clears Senate, Now Headed For Malloy's Signature

Plugs $200 Million Deficit, Blocks Bus Fare Hikes, Raises Metro-North Tickets

By CHRISTOPHER KEATING

May 08, 2012

The Senate late Tuesday approved a $20.5 billion budget deal that raises Metro-North commuter fares, increases overall state education spending for municipalities by $100 million, blocks bus fare hikes, and creates a new state office to promote affordable housing.

The measure now goes to Gov.Dannel P. Malloy, who helped negotiate the agreement.

The bill delays the implementation of generally accepted accounting principles — a goal of Malloy's since he was running for governor. Switching the state's accounting methods to a different system would cost $75 million, and state officials said that was impossible to accomplish in tight fiscal times without a budget surplus.

The budget also closes a projected $200 million deficit in the current year, provides seed funding for a "Connecticut-made'' program to highlight items from the Nutmeg State, increases reimbursements for independent pharmacies, and does not raise taxes beyond those that were raised last year in the largest tax increase in state history.

The Senate debate began less than 16 hours after the House of Representatives had approved the budget on a party-line vote, 95-49, at 2:30 a.m. Tuesday.

The Senate debated more than three hours before approving the bill, 22-13, on a mostly party-line vote after 10 p.m.

Political insiders at the Capitol were surprised that Sen. Len Suzio, a tax-cutting, conservative Republican from Meriden, joined with the Democrats in favor of the bill. Only one hour earlier, Suzio had offered an amendment to cut the state's gasoline tax, but that was rejected by the Democratic majority.

As part of the budget compromise between Democratic legislators and Malloy, cities and towns will receive an additional $50 million for public education — money Malloy wanted under his public education plan. The compromise also provides $7.5 million for the "commissioner's network'' to help improve struggling schools — far below the $22.9 million that Malloy had sought. It also creates 1,000 school-readiness slots for pre-kindergarten students in an attempt to decrease the longstanding achievement gap between wealthy and poor districts.

Sen. Toni Harp, a New Haven Democrat who co-chairs the budget-writing committee, said the state has been facing a $200 million deficit in the current fiscal year because tax collections have been lower than expected.

"While revenues have increased, they have not rebounded to the full level anticipated,'' Harp said on the Senate floor. "Revenues are on the decline. ... The surplus that was contemplated has not materialized.''

Based on the economic projections, the estimated surplus for the next fiscal year — starting July 1 — is $15.6 million if the tax collections all arrive as expected.

Republicans, though, had a sharply different view and offered an alternative budget that was rejected by the Democratic majority, 21-14, on a party-line vote at about 9:15 p.m. Tuesday.

"It has been suggested that this state has a revenue problem. It has a spending problem,'' said Sen. Rob Kane of Watertown, the ranking Senate Republican on the budget committee. "Let's face it, ladies and gentlemen. This is not our money. It is the citizens' money.''

Republicans noted that there are three new arts-related earmarks in the Democratic budget, including $250,000 for the Bushnell Theatre in Hartford and $25,000 for the Nutmeg Games.

"I know that folks like to call them earmarks, but they really are designated funding ... reflected in the overall budget,'' Harp said.

Senate President Pro Tem Donald Williams, the highest-ranking senator, said the state's fiscal situation is much better than it was last year with a much smaller deficit.

"We would like it of course to be zero, but coming in at a 1 percent shortfall in these continued tough times, I think, is a significant accomplishment," Williams said. "So the fact that we will be able to balance this budget without the kind of major pain and suffering that we've seen the last two budget cycles, in the depths of this national recession, I think is a step forward for the state."

The Democratic budget also calls for borrowing $30 million to give to cities and towns for road repairs. . The money is normally taken from the general fund, rather than from the state's bond package.

Originally, bus fares were expected to increase by 4 percent on Jan. 1, 2013, but that will not happen under the final budget deal.

By contrast, a 4 percent increase on Jan. 1 for the Metro-North Commuter Railroad will stand. The rail line primarily serves Fairfield County commuters.

The bill continues to provide the University of Connecticut Health Center with $13.5 million for fringe benefits for the current fiscal year, which ends June 30, and another $13.5 million for the next fiscal year.

Lawmakers have bailed out the health center at least four times since 2000, and the moves are normally made by the Democratic majority during the final days of the legislative session. The money will be used to cover the "fringe benefit differential'' because employees at the John Dempsey Hospital in Farmington receive far higher pensions and health care benefits as state employees than workers at competing hospitals. The money was originally allocated previously, but the budget bill now switches the entity receiving the money from the Dempsey Hospital to the health center.

The current year's budget of $20.17 billion would increase to $20.54 billion for the year that starts July 1. The fiscal plan covers thousands of line items in about 100 major departments and agencies, including everything from dental care for prison inmates to salaries for more than 50,000 state employees. As written, the budget is $86 million under the state-mandated spending cap, and the plan is designed to close a $200 million gap for the current year.

Republicans charged that the Democrats were raiding $2.3 million from the probate court administration's fund and diverting that money "for 19 pork projects in Democrats' districts,'' including $100,000 to the city of Norwich for the Norwich Freedom Bell, $150,000 for the Windsor Arts Program, and $250,000 for theJohn S. Martinez Fatherhood Initiative.

Another issue in dispute has been whether the state should maintain a minimum of 1,248 state troopers — a level that has been codified in state law for more than a decade. Legislators have debated that as a standalone issue, but Malloy's administration has fought to strip the 1,248 minimum out of state law. The Republican alternative budget funded all 1,248 troopers, but that was rejected by the Democratic majority Tuesday night on a party-line vote.

Regarding the future, the legislature's non-partisan fiscal office is projecting that the budget would increase by 6 percent in fiscal 2014 and then by 4.8 percent and 4.0 percent in the following two years. By fiscal 2016, the overall state budget would be $23.73 billion, the fiscal office said.

Courant staff writer Jon Lender contributed to this report.