Veto Prolongs Connecticut's Longest Budget Stalemate Ever

by | October 2, 2017

By Daniela Altimari and Christopher Keating

Citing deep cuts to higher education, sharp reductions in aid to needy communities, and unsound deferrals of pension payments, Gov. Dannel P. Malloy on Thursday made good on his pledge to veto the budget that cleared the legislature earlier this month.

Malloy called the Republican-written budget "unbalanced, unsustainable and unwise" and said it would undermine the state's long-term fiscal stability and essentially guarantee Hartford's bankruptcy.

The move prolongs the ongoing fiscal gridlock at the state Capitol that has already become the longest budget impasse in Connecticut history -- more than a month longer than the summerlong struggle to create the state income tax that ended on Aug. 22, 1991. The veto came as Malloy and top legislators continued bipartisan talks Thursday in an attempt to reach an agreement that would end the standoff.

Meanwhile, despite attempts to pass a bill that would increase the hospital provider tax to 8 percent, up from the current 6 percent, officials said there would be no special session Friday. The tax increase would have been part of a broader effort to close the budget gap of $3.5 billion over two years.

In the short term, the state will now continue to be operated through a series of executive orders that allow key services to remain running but also bring steep cuts to municipalities, certain social service programs and other aspects of state government.

About 85 communities would see their education cost sharing grants, the biggest source of state funding for public education in Connecticut, cut to zero in October. The Connecticut Council of Small Towns that represents more than 100 of the state's smallest communities, is seeking an override of the veto in a special session on Oct. 10 in order to avoid local property tax increases.

But Malloy stood strongly against the Republican plan and a potential override Thursday.

"This budget adopts changes to the state's pension plan that are both financially and legally unsound,'' the Democratic governor wrote in his veto message. "This budget grabs 'savings' today on the false promise of change a decade from now, a promise that cannot be made because no legislature can unilaterally bind a future legislature."

Malloy said the changes proposed to the state's pension system could expose Connecticut taxpayers to potentially costly litigation down the road.

"Prior administrations and legislatures have, over decades, consistently and dangerously underfunded the state's pension obligations,'' Malloy said. That strategy, he said, has led to crippling debt and limited the state's ability to invest in transportation, education and other important initiatives.

The two-year, $40.7 billion budget was crafted by Republicans but drew support from three fiscally conservative Democrats in the Senate and six in the House of Representatives. Republican leaders urged Malloy to sign the plan, saying it makes significant structural changes, such as capping the state's bonding authority and limiting spending. Fiscally conservative Democrats who bolted to the Republican side had criticized a Democratic budget proposal that created new taxes on vacation homes, monthly cellphone bills and fantasy sports betting, and increased  taxes on cigarettes, smokeless tobacco and hotel room rates.

But Malloy and Democratic leaders in the legislature were critical of the Republican spending plan from the start and Malloy's decision to send the bill back without his signature was widely expected.

"I think the budget that was passed in both chambers is a terrible budget for the state of Connecticut,'' House Speaker Joe Aresimowicz, D-Berlin, said Thursday after emerging from closed-door talks with Malloy and legislative leaders from both parties. "It will have toxic effect on our economy and our institutes of higher learning and it is incumbent on us ... not to overturn the veto, there are things we agree to ... but there are big things left and we should be in that room concentrating on it, not talking about a veto override."

The 1,098-page bill also contained cuts that would wreak havoc on the University of Connecticut and other public colleges, Malloy said. UConn would have seen its funding slashed by $300 million, a reduction that could have resulted in closing the law school, the nursing school or shutting down UConn Health, President Susan Herbst said.

Malloy had proposed cutting $100 million, which UConn officials had said they would accept as part of the shared sacrifice. Republicans said that Herbst and others were exaggerating the possible cuts at UConn.

Republicans, who have been working to craft an effective legislative majority with fiscally conservative Democrats, hit back.

House Republican leader Themis Klarides of Derby is not giving up, saying she and her colleagues will try to override the veto. That is a tall task because it requires a two-thirds vote in both chambers, meaning 101 votes in the House and 24 in the Senate. The crucial Republican amendment passed with 78 votes in the House and 21 in the Senate -- well short of the override margin in both chambers.

"I am disappointed he vetoed this budget,'' Klarides told reporters. "I think there is another opportunity and a responsibility by the legislators in this building to override this veto and move forward. The cuts that have to face this state education-wise, municipal aid-wise, social service-wise ... that this state will face after Oct. 1 are unacceptable and there is another way to do this."

Senate Republican Leader Len Fasano of North Haven agreed on the override, saying the veto "has now put Connecticut in chaos."

Malloy acknowledged the urgency of resolving the fiscal standoff in his veto message. "I cannot overstate the urgency of the need for all parties to come together to negotiate a realistic, responsible budget that addresses our state's fiscal issues, distributes education aid equitably and balances without the use of illusory gimmicks,'' he wrote. "I remain committed to engaging in honest dialogue with legislative leaders to reach an agreement that achieves these goals."

(c)2017 The Hartford Courant (Hartford, Conn.)