2016-2017 Legislative Status Report
We hope you are enjoying your summer; your State Legislature sure isn't. As you've probably heard, the General Assembly ended the 2016-17 regular session without approving a state budget. This Public Policy Update provides you with the latest information on the state budget crisis from Chamber Lobbyist Armando Paolino III, while also letting you know about legislation the Chamber fought for and against during the past session and how that legislation fared.
State Budget Update
As we predicted, there is still no state budget and minimal hopes in the short-term future for agreement. This includes full budgets voted for the next biennium, as well as the mini-budget proposed by Governor Malloy, the five budgets offered by the Senate and House Republicans, and the expected vote on July 18th by the House Democratic caucus.
Also coming this month is an expected vote by the state employee unions on the modification ($1.57 million annually) to the contract negotiated with Governor Malloy. That vote is expected by mid- to late July, setting the stage for the next act in the ongoing saga of restructuring Connecticut's cost of government and, ultimately, getting a budget in place that does not rely on new taxes and fees for individuals and businesses.
Going into the July 4th holiday weekend, Governor Malloy was forced to issue an Executive Order Allocation Budget in order to allow the state government to continue operating. The failure of the majority party to act on any budget forced a budget that adjusts 5% to 10% across the board. The Governor had offered a mini-budget aimed at getting a short-term, three-month budget in place focused on priorities to operate the government based on adjustments to last year's budget, while providing time for reaching agreement on a full budget.
At the heart of the debate on the state budget are several factors: ballooning overhead, in the form of labor and benefit costs that include retirement funding; a continuing slide in state revenue generation, now in its third year and what many refer to as a self-induced continuation of the recession that began in 2008, nine years ago. Add to that financial picture marginal party control in the House and a dead tie (save for the Lieutenant Governor voting) in the Senate, and you have the makings of a long and difficult debate over how to put Connecticut on the path to recovery.
The focal point for the next few weeks is the House Democrat budget proposal, which includes a 10% increase in the state sales-and-use tax from 6.35% to 6.99%, and a new municipal local- option sales tax at 1% for cities and towns to tax food and beverages in restaurants and bars.
Legislative Republicans have proposed several alternative budgets that call for nearly double the adjustments to state overhead costs, at $2.2 billion annually, as well as reforms to pension accruals and health and retirement participation. They cite the average state employee overhead costs as high as 80% of salary. Moderate Democrats in the House and Senate are weary of the last election and a public weary from promises that tax increases will solve the state's fiscal crisis again.
Stay tuned as we keep you up to date on the back room negotiations toward reaching a budget.
Following is a list of bills I submitted testimony for on behalf of the Chamber during the 2017 session and how the bills fared:
HB 6208, An Act Increasing the Minimum Wage: Proposed raising the state's minimum wage to $15 per hour by 2022. Would increase the rate by 50 percent over a five-year period, and then require calculating future annual increases based on the inflation rate. Chamber opposed; Not raised for a vote in House or Senate
SB 001 & HB 6212, Both Titled An Act Creating a Paid Family and Medical Leave System In The State: Proposed creating a state paid family and medical leave system funded by payroll deductions. Chamber opposed; tabled
HB 7229: An Act Concerning the Creation of Connecticut Brownfield Land Banks, Revisions to the Brownfield Remediation and Revitalization Program and Authorizing Bonds of the State for Brownfields Remediation and Development Programs. Chamber supported; approved in both House and Senate
SB 837, An Act Concerning Apprenticeship Opportunities for High-Growth, High-Demand Jobs, and SB 947, An Act Establishing a Waiver Process for Manufacturing Technology Teaching Faculty: SB 837 provides an opportunity to assess the state's apprenticeship programs and to look for additional opportunities for such programs to address the lack of skilled workers to meet demand; SB 947 proposes expanding the pool of qualified Manufacturing Technology teaching candidates to include those who may lack an advanced degree but have years of relevant industry experience. It also would streamline the waiver process and allow relief from traditional education requirements based on relevant experience. Chamber supported; tabled
SB 970, An Act Concerning Program Modification at Independent Institutions of Higher Education: Proposes allowing private, for-profit, regionally accredited universities based in Connecticut (Post University) to participate in the current hiatus from program approval by the state Office of Higher Education. Streamlined process was approved for all private nonprofit institutions last year; bill would extend the same opportunity to Post U. Chamber supported; tabled
HB 6372, An Act Repealing the Business Entity Tax: Proposes eliminating the state's $250 business entity tax, which now must be paid every other year. Chamber supported; died in committee
HB 6511, An Act Concerning Terms Pertaining to the Constitutional Spending Cap: This was one of numerous proposals addressing the cap. This bill proposed definitions for "increase in personal income" and "increase in inflation," as well as defining what expenditures would be included under the cap. Chamber supported; died in committee
HB 7322, An Act Concerning State and Local Revenue; SB 1054, An Act Concerning Various Tax Rates, and SB 1055, An Act Concerning Stranded Tax Credits and Strategic Economic Development. Testimony was submitted on all three bills in one document. The Chamber opposed tax increases proposed in HB 7322 and SB 1054, including eliminating sales tax exemption for nonprofits, assessing property tax based on 100% of market value vs. current 70%, and increasing the personal income tax rate on "high earners" to 7.49% from 6.99%. We supported SB 1055, which would allow use of stranded tax credits toward economic development and capital projects. HB 7322 died in committee; SB 0154 tabled; died in committee