The House of Representatives gave final legislative approval late Tuesday night to a two-year, $40.1 billion state budget that Democrats believe will help Connecticut rebound from the recession and Republicans claim is financially devastating taxpayers.
It marked the first budget deal the General Assembly has reached with a Democratic governor in two decades. It’s also one the earliest budget agreements in recent memory, even though a key component _ the $2 billion in labor savings assumed in the tax-and-spending plan _ has not yet been reached with state employee unions.
The House passed the bill on an 83-67 vote after nearly 10 hours of debate, with 15 Democrats joining the unified Republicans in opposition, many concerned about the level of taxes. The Senate already passed the plan early Tuesday morning on a 19-17 vote.
House Minority Leader Lawrence Cafero, a Republican from Norwalk, pleaded with the majority House Democrats to think about their middle class constituents who are still struggling from the economic recession before supporting a budget that raises taxes by $1.4 billion in the first year and $1.2 billion in the second year.
Besides raising taxes, Democrats said the budget reduces spending by approximately $3 billion over two years, a figure that includes $2 billion in labor savings that has not yet been reached. The bill also creates $1 billion in surplus over the next two fiscal years, money Malloy said can be used to replenish the state’s Rainy Day Fund and begin paying off debts.
The long list of tax increases includes raising the sales tax from 6 percent to 6.35 percent; increasing the marginal tax income tax rates at $100,000 for joint filers, $50,000 for single filers and $80,000 for heads of households, making the increase retroactive to income earned since Jan. 1; reducing the $500 property tax credit against the income tax to $300; raising the hotel, alcohol, diesel fuel, cigarette and tobacco taxes; and eliminating sales tax exemptions on everything from yoga studios to the first $50 of clothing and footwear.
With passage of the budget, attention will next focus on the closed-door talks that have been going on since March between Malloy’s administration and the State Employee Bargaining Agent Coalition which represents 13 state employee unions. Mark Ojakian, Malloy’s lead negotiator, said last week that he hoped a deal on labor savings could be reached sometime this week. However, both sides have not revealed whether that will actually happen.