Both the Senate and House recently voted for a budget-cutting package that reduces the state deficit for this year by $124 million. While the measure was criticized by Republicans as not going far enough to address the state’s looming state deficit — projected at nearly $1 billion for the current fiscal year — Governor M. Jodi Rell said that she would sign the package.
During the budget mitigation session, not only did Democrats reject Republican measures to symbolically cut legislators’ pay by 5 percent, but they actually increased state spending by passing a new appropriation designed to supplement existing state contracts with private custodial service companies, so they could in turn increase the value of the healthcare benefits they provide their union employees. Democrats also did not support certain cuts proposed by Governor Rell and reinserted funding for programs such as the Energy Conservation Fund, which provides rebates and grants to businesses and consumers for energy efficiency measures, the Farmland and Historic Preservation .
Carwash Sales Tax Exemption Under Attack!
There are a number of legislative proposals being considered that would roll back many of the state’s current sales tax exemptions, including the sales tax on carwashes. Imposed in the last drastic budget showdown year of 1991, the tax was repealed three years later and has been exempt since then.
The Finance Committee will be considering a number of proposals and CCA is working closely with our supporters and friends in the General Assembly to keep carwash services exempt from a sales tax.
Governor Presents Two-Year Budget
Amid worsening economic conditions, rising unemployment and a widening state budget gap, Governor Rell advised legislative leaders to brace for a difficult budget message and “a tough day.”
As has been widely reported, Connecticut faces a budget gap of more than $900 million this fiscal year, and the projected deficit for the next two years ranges from $6 billion to $8 billion. Meanwhile, the state’s unemployment rate has jumped to 7.1 percent, and many economists believe it will be a while before we see the light at the end of the tunnel.
Rell offered a no-frills budget that would eliminate agencies, raise fees, close 81 local probate courts, encourage regionalization, and cut more than 800 state jobs.
The largest cuts in state programs in years have been prompted by the massive downturn on Wall Street that has led to unprecedented deficits of $1.35 billion in the current fiscal year and as much as $8.7 billion over the next two fiscal years.
Governor Rell is proposing to close the budget gap through three major methods:
• Collecting $2 billion over three years from President Barack Obama’s federal stimulus plan
• Cutting expenses by $2 billion
• Spending the entire $1.4 billion “rainy day'” fund for fiscal emergencies.
In addition, she is expecting $570 million over two years in concessions from state employees, and she would raise about $260 million over two years from fee increases from more than 1,000 different licenses and permits. That includes everything from driver’s licenses and car registrations to liquor permits and commercial fishing .
Mandatory Paid Sick Leave
The Legislature’s Labor Committee voted last week to raise a bill requiring employers to provide paid sick leave to full-and part-time employees. This year’s legislation is expected to be similar to last year’s version which CCA helped defeat. That bill would have required all employers with 50 or more employees in Connecticut to provide their employees with paid sick leave accruing at a rate of one hour for each 40 hours worked. A public hearing on this year’s paid sick leave proposal is expected to be held in early February.
Health Insurance Legislation
A bill to open up the state employee health insurance plan to towns, not-for-profits and small businesses was introduced by the Insurance Committee. The proposal, which was vetoed by Governor Rell last year, would create a purchasing pool aimed at giving towns, not-for¬profits and small businesses the opportunity to take advantage of the state’s large purchasing power. House Speaker Chris Donovan (84th Dist., Meriden) has indicated that this is one of his top priorities this session.
Once again, the HealthFirst Connecticut Authority has delayed issuance of its final report to the Legislature. The Authority was expected to issue its final report last week but decided to postpone action until February due to the fact that some proposals do not have the full consensus of the group. Some of the proposals that do not have consensus are opening up the expensive state employee health plan to small businesses and other groups and the creation of a new state bureaucracy that would take control of the majority of the state’s health care obligations.
P.J. Cimini, Esq. is the CCA’s lobbyist and a partner in Capital Strategies Group, LLC, in Hartford. You can reach P.J. at 860/293¬2581 or email him.
