Saying the Quiet Part Out loud
The Appropriations Committee— the spending arm of the legislature — met on Tuesday (April 18) to reveal their spending plan for the next biennial. The $51 billion two-year spending budget is almost $500 million more than what Gov. Ned Lamont proposed earlier this year.
The Committee’s plan exceeds Gov. Lamont’s proposal by $37 million, or roughly 3.7 percent above current spending in Fiscal 2024. It then increases the governor’s proposal another 3.2 percent in the Fiscal 2025 by $374 million.
The committee kept the budget in the confines of the spending cap by eliminating unfilled positions that, according to Co-Chair Sen. Cathy Osten (D-19), agencies are using as a “slush fund and not positions to be funded” and carrying over money from the current year’s estimated $3.3 billion surplus.
They also eliminated positions the governor created to manage the Work, Live Ride legislation if it were to pass.
Medicaid expansions and public colleges and universities saw a bump in funding from what the governor proposed.
Sen. Osten noted that “we have not made everybody happy” because they had to adhere to the spending cap. Co-Chair Rep. Toni Walker (D-93) added, “Do we need more revenue? Absolutely.”
Even though many lawmakers were less than thrilled about not being allowed to spend like drunken sailors, the meeting went smoothly until a freshman representative opted to put her constituents before the process.
Rep. Rachel Chaleski (R-138) called for a surprise amendment to add a Danbury charter school to the list of those that were included in the budget. The amendment caught chairs Osten and Walker off guard, who complained they didn’t like them “at this point in the process.” At which point the two declared a recess.
Chaleski told the committee that “the process hasn’t worked for Danbury in six-years. We’ve done all that we’ve been asked to do, jumping through every hoop. It’s going to take a flip seat in the house or beyond. And perhaps a rare amendment or two to get this through.”
The budget includes $9.76 million for new charter schools in Middletown, New Haven and Norwalk.
Sen. Osten noted that “normally, Republican amendments that come up, are automatically voted on and voted down.” She went on to say she is a “charter school supporter” but isn’t supporting the amendment because “we don’t support Republican amendments when they come up.”
Rep. Mitch Bolinsky (R- 106) “couldn’t find words to express” that it was said on camera that “Republican amendments can’t pass or don’t pass”
Osten’s support for charter schools is on display in a 2022 candidate survey conducted by the state’s largest teacher union, the Connecticut Educators Association (CEA). She agrees with CEA’s position of opposing any public money being diverted from traditional public schools or expanding charters. The union feels that this is done at the expense of public-school students. Or is it really because not all charter schools are unionized?
Former Union Boss and Danbury resident, Sen. Julie Kushner (D-24) told supporters in the audience that she was voting no because she didn’t “think it’s best for Danbury.”
Some democrats crossed party lines in support. Rep. Antonio Felipe (D-130) said he could not continue to do the “easy thing” and vote the party line. He said that “he cannot continue to watch these people come year after year” fighting for this school and that he supports the amendment. “I’m going to do it because I’m tired of sitting down when I should be standing up.”
The amendment failed 33-20 with four Democrats siding with all 16 Republicans. The budget went on to pass with a bipartisan vote of 40-12.
Less Than a Dollar a Day…Not Even Enough for a Cup of Coffee
The Finance, Revenue and Bonding Committee bet on Wednesday (April 19) to vote on the two-year revenue proposal. Their tax plan cannibalizes the tax cuts Gov. Lamont proposed.
Most notably the restoration of the Pass-through Entity Tax (PET) is no longer on the table. The governor had proposed returning PET back to its pre-2019 level. PET was created to help business owners circumvent the $10,000 cap on state and local tax (SALT) deductions in their federally taxable income. The cap was created in 2017 in the Tax Cuts and Jobs Act, while the rate was lowered to address budget shortfalls in the 2019 legislative session. If it was included, the credit would have increased from 87.5 percent to 93.0 percent.
Another deviation from the governor’s proposal: exempting individuals from tax cuts earning more than $200,000 per year and joint filers earning more than $400,000.
Rep. Holly Cheeseman (R-37) pointed out that the proposed tax relief works out to “less than $1 per day” for middle-class married couples.
Also discussed was a new plan to eliminate the income tax for residents in certain zip codes which will be paid for with bonding. Those that live in areas where at least 30 percent of its residents have an income below the federal poverty level will be exempt from paying any income tax. This includes anyone living in these areas making $125,000 or less a year or for joint filers $200,000.
Gov. Lamont was asked about this proposal at a press conference on Thursday. He responded, “You don’t borrow money to pay for operating expenses and you do not borrow money to pay for tax cuts.”
Connecticut Private Sector Still Not Fully Recovered
The Connecticut Department of Labor (CTDOL) released March job numbers on Thursday and has recovered 96.7 percent (279,700) of the 289,100 jobs lost due to the April 2020 Covid-19 government lockdown. Broken out, the private sector has recovered 99 percent of jobs lost, while the public sector has recovered 71 percent.
The state’s unemployment rate — 4 percent — remains unchanged from last month. According to the March US Bureau of Labor Statistics report, Connecticut did slightly better than New York (4.1 percent) but trails its other neighbors with Massachusetts (3.5 percent) and Rhode Island (3.1 percent)
Employers added 1,100 jobs. 600 of the news hires came across local, state and federal governments — sectors that have lagged in pandemic recovery.
CTDOL Commissioner Danté Bartolomeo said, “This is a solid jobs report. As expected, employers added jobs at a more modest rate than January and February, but it’s clear that this is still a very strong market for job seekers at all levels of their careers.”
Five of the ten major industry supersectors increased jobs. The largest increase came from the “Professional and Business Services,” supersector which added 2,200 jobs in March.
Declines were seen in four supersectors. “Construction and Mining” lost the most jobs – 1800. Director of CTDOL Office of Research Patrick Flaherty said, “The warm winter weather had a particular impact on construction hiring. Projects that normally shut down during the cold weather remained active throughout the season, which distorted the usual employment patterns we see in the spring.”
The information sector has remained unchanged.
TCI on Steroids
Leaders of Associations that represent Connecticut’s gas stations and home heating companies held a press conference on Tuesday (April 18), pushing back on a bill that makes the TCI gas tax look like child’s play.
The bill will give the commissioner of the Department of Energy and Environmental Protection (DEEP) the ability to enter into agreements with other states and Canadian provinces, to implement taxes and fees to lower the Connecticut’s emissions.
According to Chris Herb, president of the Connecticut Energy Marketers Association (CEMA) this bill “will place a fourth tax on gasoline, (add) new taxes on diesel fuel and for first time ever, (place) a tax on heating fuel.”
The bill does not mention specific taxes or fuel types, but grants the DEEP commissioner the power to enter into any agreement they deem necessary. This could lead to higher fuel prices in the future — just like the failed TCI tax would have done.
The bill “would allow the largest transfer of power from the legislative branch to the commissioner of the Department of Energy and Environmental Protection,” Herb said. “To put that in perspective, not even the governor has that power.”