“A Budget Tells Us What We Can’t Afford, but It Doesn’t Keep Us from Buying It.” — William Feather
The 2023 Connecticut General Assembly came to its constitutionally mandated end at midnight Wednesday (June 7). The final days saw lawmakers scrambling to beat out the clock to approve a new two-year budget bill and implementer.
The ‘implementer’ is a bill that changes statutes to execute the state budget provisions. Though everything in the implementer must pertain to the budget, legislators like to use this as a vehicle to slip in other language. The implementer does not go through a committee or public hearing process. It tends to be passed late at night and lawmakers when they have the power to sneak in amendments while constituents sleep. This is why the budget implementer has earned a reputation for being full of “rats”.
The proposed $51.1 billion biennial state budget (more than 800 pages) started in the House on Monday (June 5) where it passed (139-12) after a three-hour debate early the next morning. It then cleared the Senate (35-1) after five and a half hours of deliberation early Tuesday night. The bill now sits on Gov. Ned Lamont’s desk.
In a press release on Tuesday, Gov. Lamont applauded the General Assembly for its mostly bipartisan budget highlighting the state’s largest income tax cut in history, as well as increased funding to the Earned Income Tax Credit, K-12 education, childcare programs, affordable housing units and non-profit providers.
Gov. Lamont also commended lawmakers for their “fiscal discipline” and that he feels “very good knowing that here in Connecticut we can successfully work across the aisle in a bipartisan manner to do what is right for residents of our state.”
Senator Rob Sampson (R-16), the chamber’s only “no” vote on the budget, had a slightly different perspective. He correctly pointed out that in addition to the legitimate policy that guides the state on how money is spent, there are items that should not belong.
Sen. Sampson explained that “there are items that pass through one chamber after going through a committee process, but have yet to pass through the other chamber and rather than going through that aggravation,” adding, “Apparently the majority said no, we’ll just stick it in the budget. And that way it will get passed along with everything else.”
Student Loan Reimbursement Galore!
A bill that establishes a pilot program to reimburse certain residents for student loan payments passed the House (114-33) on June 1, bypassing the Senate vote before making its way into the aforementioned implementer.
Every participant in the program will be eligible to receive up to $5,000 annually and no more than $20,000, over four years of participation in the program. Awards will be given out on a first-come, first-served basis to eligible applicants who have an adjusted gross income of less than $125,000 for individual filers and $175,000 for joint filers have a student loan from any Connecticut public or private college.
$6 million is allocated to the program, including $1.2 million — or 20 percent — for administration costs.
Welfare for Hollywood
Meanwhile, the film industry tax credit’s expansion (or welfare to Hollywood) skipped the legislative process and found its way into budget, despite pushback from both sides of the ideological spectrum — including Yankee Institute and CT Voices for Children. The Office of Fiscal Analysis calculated the cost to be $6.5 million over the next two fiscal years.
All Rise — for the Honorable Judges’ Wage Raises
Deep in the budget, judges are given significant raises of $1.4 million in fiscal year 2024 and $2.8 million in fiscal year 2025. However, due to state statutes, constitutional offices like the governor, lieutenant governor, treasurer among others will also be collecting more in their paychecks.
Meanwhile, modifying the requirement that a lawyer have a decade of “active practice at the state bar” to run for attorney general (AG) as seen in a bill, that never made it out of committee suddenly appeared in the budget.
The Connecticut Supreme Court defined “active practice” as having litigation experience and having engaged in the practice of law as a primary source of income. This was decided in Bysiewicz v. DiNardo, a lawsuit brought on in 2010 to challenge the current Lt. Gov. Susan Bysiewicz’s lack of minimum statutory qualifications to serve as AG.
The new prerequisite only requires a candidate to have “engaged in the practice of law in this state for at least ten years.”
Fixing Food Deserts or Feeding Union Coffers?
No budget is complete without a payoff to the unions. This year’s budget includes a provision that feeds union coffers by requiring grocery stores established in food deserts to enter into a labor peace agreement with a union in order to receive municipal tax abatements.
Labor peace agreements are contracts made between an employer and a labor union where the employer agrees not to undermine the union’s ability to organize the workforce in exchange for the union not to strike, picket or disrupt the employer’s business.
This language was originally found in a bill that only passed the House on May 30.
It’s Not Always Sunny In Connecticut
This year’s budget missed a chance to lower costs for small businesses and to improve the state’s negative business tax climate
Gov. Lamont and House and Senate Republicans had proposed returning the pass-through entity tax (PET) credit back to its pre-2019 level — 93.0 percent. 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. PET was designed to eliminate the adverse effects of the legislation.
In a June 9 press release, Connecticut Business and Industry Association (CBIA) president and CEO, Chris DiPentima, stated the state’s “failure to restore the pass-through entity tax credit was particularly frustrating, as that was featured in three different budget proposals during the session.”
DiPentima went on to say, “That’s $60 million that could be returned to 123,000 small businesses, many of them struggling to navigate the labor shortage, inflation, rising healthcare costs and ongoing supply chain issues.
Instead, the budget does make PET optional. However, the CBIA said, “Given that federal law limits state and local tax deductions to $10,000, that is not expected to help many small businesses given Connecticut’s high tax burden.”
The ball was also dropped in allowing small businesses access to affordable healthcare. Missing from the budget was a plan to provide small businesses and their employees access to more affordable healthcare options. The policy had support from lawmakers on both sides of the aisle and the Governor’s Office.
The plan would have allowed trade associations to purchase health plans from insurance companies on behalf of their groups.
Patient advocacy groups like Health Equity Solutions and the National Multiple Sclerosis Society urged lawmakers to scrap the idea because they believed association health plans only favored healthy people.
Another disappointment was the never-ending “temporary” corporate tax surcharge being extended through fiscal year 2026. The surcharge was created in 1989 to help balance the budget and has been modified, eliminated and reinstated multiple times over the past 30 years.
The Connecticut Working Families Party (WFP) called the budget a “moral failure” in an online statement on Thursday (June 8). They were hoping lawmakers would ignore fiscal guardrails in order to provide more money for higher education, mass transit and social service programs. The statement stated, “The desire for bipartisanship sets aside equity and social justice in exchange for unnecessary votes from the Republican minority.”
They also expressed disgust with lawmakers because they failed to pass bills extending paid sick days, predictable scheduling, a higher minimum wage for tipped workers, affordable housing reforms and providing healthcare for undocumented immigrants up to age 26.
Connecticut Democratic Socialists of America also issued a statement on Thursday expressing disappointment with Democrats for failing to pass rent caps, more affordable housing and zoning reform.
Just like the Terminator’s “I’ll be back” warning, they said, “The tenant-led housing justice movement is here to stay, and next year our movement will be even stronger.”
BudgetMania: Lamont vs. SEBAC
The biggest burden to the state, the State Employee Bargaining Agent Coalition (SEBAC), is not satisfied with their $2 billion bonus and raise deal last year, taking to social media chastising Gov. Lamont over housing, energy prices, not enough government spending and state agency staffing issues.
This is a far cry from SEBAC’s March 9 statement, saying the governor was “fair and honorable” while negotiating the group’s raise and bonus agreement. However, the agreement did not include wage increases during the deal’s final year (July 2024- June 2025) — meaning they will have to re-negotiate with the governor during the 2024 legislative session.
It will be interesting to see how SEBAC’s lack of appreciation for the overly generous deal they made with Gov. Lamont will affect their upcoming negotiations.