A key legislative committee is calling for rejection of Gov. Dannel P. Malloy’s highly controversial plans to change the education cost-sharing formula and to force towns to share one-third of the cost of teachers’ pensions.
Under intense pressure from mayors and first selectmen for nearly three months, lawmakers are calling for the same funding of the educational cost-sharing formula as now. The state is sending more than $2 billion in cost-sharing funds to municipalities in the current fiscal year, and that number would remain the same in each of the next two years under the committee’s plan.
The educational formula was among the most controversial changes recommended by Malloy when he released his proposed budget in early February. While the committee recommends changes to the internal components of the spending formula, it is recommending no change in the total amount of ECS funding – providing a huge sigh of relief for cities and towns.
The Democratic-controlled committee’s recommendations were made in a thick budget document that was released Tuesday morning by the budget-writing appropriations committee. Tuesday is a major day at the state Capitol as the committee is expected to vote later on a series of spending items ranging from prisons to education and the courts
Overall, the Democratic committee would spend about $200 million more each year than Malloy – meaning an increase of $400 million over two years. While Malloy sought to spend $20.097 billion in the next fiscal year, the committee wants to spend more – $20.296 billion. Over two years, the committee would spend $41.03 billion to fund state government.
House Republican leader Themis Klarides said that Democrats were going down the wrong path with increased spending and proposed tax increases.
“We’re losing revenues,” Klarides said. “We’re losing taxpayers. We’re losing businesses.”
Luke Bronin Hartford Mayor Luke Bronin speaks to the media before a hearing of the General Assembly’s Finance Committee Hartford Mayor Luke Bronin speaks to the media before a hearing of the General Assembly’s Finance Committee See more videos
Legislators and mayors were still reading the budget Tuesday and trying to digest the changes. Hartford mayor Luke Bronin, whose city would have received millions of additional dollars under Malloy’s now-rejected proposals, said, “Until I see the whole package, I can’t comment on it.”
With higher spending, legislators said there will be more pressure to increase taxes in order to meet the levels of spending.
Despite huge gains in the stock market on Wall Street over the past six months, state coffers have not been overflowing with money. Republicans say the reason is partly due to the departure of Fairfield County billionaires and millionaires who have moved to Florida and other low-tax states and are no longer paying millions into Connecticut coffers. The budget recommendations were made on the same day that the Nasdaq Composite Index hit a record-breaking 6,000 for the first time.
But Rep. Josh Elliott, a liberal Democrat who serves as vice chairman of the finance committee, said the state is facing budget deficits because past tax increases were “not enough” – despite complaints by Republicans that the tax increases had helped cause the state’s problems in the first place.
“In the last 10 years, yes, we’ve had two income tax increases,” Elliott said. “In my mind, they were not enough. That’s why we’re here today. That’s why we’ll be talking about this over and over again. Because we’re not doing enough to raise revenue.”
Sen. L. Scottt Frantz, a Greenwich Republican, said he personally knows an investor with a net worth of $15.6 billion who moved out of Connecticut. The problem, Frantz said, is that the numbers are so high for one person that making up the tax loss is difficult.
“We’ll need 15,000 new millionaires to make up for that one person,” Frantz said.
The budget battle is far from over. All recommendations made Tuesday are subject to final approval by the House of Representatives, the Senate and Malloy. No final deals are expected until June at the earliest.
In one of the busiest days of the legislative year, two committees are working simultaneously Tuesday on the spending and taxing sides of the budget.
Cities and towns
The appropriations committee will focus on restoring cuts proposed by Malloy that included the plan to ask municipalities to collectively pay more than $400 million annually as a one-third share of teachers’ pensions. Currently, the state pays 100 percent of the employer cost and the towns pay nothing. The teachers contribute 6 percent of their salaries toward their pensions.
In a one-line explanation in the budget book, the committee recommendation said: “Maintain full state funding for the TRS retirement contribution.”
The committee accepted the explanation by the Council of Small Towns