Connecticut Governor Dannel Malloy's two-year, $40 billion budget proposal contains more than $1.3 billion in spending cuts. It outlines a $100 billion transportation plan that he says will take 30 years to complete. And Malloy says it contains no tax increases, although Republicans disagree on the definition of a tax increase.
During the 2014 gubernatorial campaign, Malloy promised not to raise taxes. And, in his budget speech, he said his proposal eliminated some taxes and scaled back others to protect Connecticut's middle class- for example, by cutting the state's sales tax by .4 percent, reducing it from 6.35 percent to 5.95 percent.
Republican Senator Rob Kane of Watertown said a cut that low wouldn't affect much if other tax credits weren't sustained—in particular, a tax exemption on clothes purchases under $50 that was scheduled to go into effect this summer. Malloy said he would remove that exemption.
"We're always moving pieces on the board, so the constituent, the voter, unfortunately can't keep track," he said.
Malloy also said his budget eliminated the business entity tax, a flat fee of $250 that critics said unfairly hurt small businesses. Some Republicans said the budget undoes its own tax cuts by including hidden tax increases.
"We have to do our due diligence and look at all the fine print to find out," said State Senator Tony Hwang of Fairfield. "If we get rid of the Business Entity Tax, what are we taxing or asking to absorb that loss? I want to make sure we're not robbing Peter to pay Paul."
Malloy also proposed temporarily scaling back some tax credits for businesses. Connecticut Business and Industry Association president Joe Brennan said even though Malloy promised he'd bring the tax credits back in the future, businesses aren't convinced. Malloy didn't follow through, he said, on a promise to roll back an increase in the corporation tax.
"The concern is that most businesses are not going to have confidence that those increases will take place," Brennan said. "We can't count on things that are promised one year, that they're going to be delivered another year."
Malloy said the proposal contains $1.3 billion in spending cuts over two years- a necessity, he said, to balance the budget.
"The vast majority of these cuts are choices that, under ideal circumstances, Connecticut would not have to make," Malloy said in his proposal speech. "But, as our economy continues to recover, tough choices are needed."
Some non-profits expressed concern the budget would curtail their services or force them to close altogether. In Bridgeport, a non-profit called Career Resources saw the $275,000 in annual funding for its STRIVE program eliminated. The program gives job training to ex-convicts.
"We knew it was a tough budget year," said Career Resources CEO Scott Wilderman. "We knew there might be a reduction...I don't think we ever expected an elimination."
Hwang said he worried the proposal could threaten non-profits, especially those serving children and the elderly.
"The potential changes and cuts to these programs could have long-term impact," he said. "You know, we have some of the great, great non-profits in our community. It took 30 to 40 years to build up that kind of care, but literally, with the stroke of a pen, we could destroy them."
Ben Barnes, Malloy's Budget Director, told the State Legislature's Appropriations Committee the administration proposed many cuts it hoped not to have to make. He said he hopes after negotiations with lawmakers, those cuts won't be necessary.
Barnes apologized for a miscalculation in the budget. Malloy had originally promised the budget would be delivered under the state's annual spending cap, as outlined in the state's constitution. But the budget for the new fiscal year exceeds the cap by $55 million, rather than $6 million under the cap. In the second year, the budget is now $80 million below the cap, rather than $135.8 million.
Malloy said he wouldn't revise the budget to bring it under the spending cap.
"We've gotten it off my desk," he said. "It's now to the legislature. I had no expectation a week or two weeks ago that they would adopt my budget as I presented it."
Barnes blamed the error on data pulled from an outside vendor.
