State lawmakers have passed a bipartisan compromise budget bill. But the legislature's work on the bill may not be done yet.
The budget was the product of nearly a month of closed-door negotiations between Republican and Democratic leaders.
After the measure passed the Senate early Thursday morning on a 33-3 vote, it headed to the House, where it passed on a veto-proof 126-23 vote.
But Governor Dannel Malloy's office notified lawmakers that a flaw in the language of the bill regarding the hospital tax would make hospitals ineligible for federal Medicaid reimbursement, creating a $1 billion hole in the budget.
House Minority Leader Themis Klarides didn't seem concerned with the new wrinkle.
"If there is a problem, we will come in and make sure it is fixed, because the one group in this building that has protected the hospitals year after year has been the legislature and we will not let anything happen," she said.
House Speaker Joe Aresimowicz said the issue could be easily fixed with emergency legislation, rather than adding an amendment to the budget bill that just passed.
The bill now heads to the governor's desk. Malloy was not part of the latest negotiations, and he has not indicated whether he will sign the budget. But given the overwhelming support in the General Assembly, a veto override is expected in any case.
Meanwhile, advocates for low-income families say they’re happy Connecticut finally has a budget, but they're disappointed lawmakers didn’t go further to solve the state’s longstanding fiscal issues.
Ray Noonan of Connecticut Voices for Children said it’s unfortunate to see legislators going after the security of working families.
“You’ll see a cut to money that goes to groceries, that goes to gas for low-income families -- the Earned Income Tax Credit," he told WNPR. "You see a cut to the property tax credit that helps offset the regressivity -- the upside-downness I suppose -- of one of the most onerous taxes in Connecticut. You’ll see cuts to health insurance - 9,500 parents are going to be kicked off of Medicaid for only $13 million in savings, which in turn makes economic security less likely for children and families.”
Noonan said lawmakers could have been bolder in modernizing Connecticut’s revenue structure, attempting to capture more internet retail traffic, for example. He also wishes they had addressed municipalities’ dependence on the property tax, and found a more comprehensive solution to the funding crisis in teachers’ pensions.
The Connecticut Business and Industry Association praised the budget for instituting a spending and a bonding cap, and for requiring legislative votes on state employee contracts.
"This budget package begins to set Connecticut on a better path," said CBIA CEO Joe Brennan in a statement. "The final product, while not perfect, should help provide business leaders with the confidence necessary to invest and create jobs here."
The budget cuts about $143 million from UConn over the next two years. That's considerably less than what was countenanced in the Republican budget previously passed by the General Assembly.
"A cut of $309 million would have been catastrophic and we are relieved that the General Assembly was able to avoid making that kind of cut to the university," wrote President Susan Herbst to staff in an email Thursday afternoon. "That said, a two-year cut of $143 million is still a very steep reduction. It will clearly have a significant negative impact on the university and will mean difficult decisions."
The budget contains tens of millions of dollars in cuts to energy efficiency programs. Those are programs supported by a surcharge on utility bills.
Now some of that money, which was intended to promote efficiency and drive down bills, will get piped into the state’s general fund; about $175 million over the next two years.
Elin Katz, consumer counsel for the state, said she’s bothered that legislators are essentially adding a tax to utility bills.
“As a source of tax revenue, it’s very regressive,” Katz said. “It’s on your energy bills -- and so it hits the lowest income ratepayers much more significantly because they pay a much larger portion of their total household budget to utility bills.”
Connecticut’s retail electric rates are among the highest in the nation.
Leticia Colon de Mejias runs an energy efficiency company based in Windsor. She said her business will suffer because of the cuts, but she’s more concerned about her customers.
“I see the conditions that people live in, in the state of Connecticut,” Colon de Mejias said. “And I see the direct impact that this really has on low-income households, specifically.”
She said that’s because customers who paid into efficiency programs now won’t be able to reap the benefits. They’ll still pay surcharges on their bills, but now may not be able to access improvements like insulation or furnace check-ups that could have lowered their energy costs.
“Beyond the lost jobs and increased energy costs, they’ve removed the ability for them to get the energy services to reduce their consumption,” Colon de Mejias said. “All while diverting money that was specifically paid by the rate payer … into a specific fund that was meant to help them. And I think that’s really sad. It’s really a retro-active energy tax.”