Maria Horn

A Responsible State Budget: Approved by the House of Representatives and the Senate On Time and Without Gimmicks

On Monday, Connecticut’s House of Representatives stepped up and passed a tough budget that squarely addresses our state’s serious financial challenges and puts us on a stable path for the future. Yesterday the Senate followed suit. Although it is not perfect and there are parts that I argued against, the budget we passed is fiscally responsible, while also making targeted investments in education, job growth, and economic development for our state and our children’s future.

This budget funds our state’s reserves at historic levels. The so-called “Rainy Day Fund” now has real cash in it so the state can face an economic downturn. This budget protects town funding levels. This budget holds the line on spending: the bulk of the spending increase goes to legally mandated fixed costs: the increase in variable expenses like education and health care is just 0.3 percent in the first year.

This budget passed the House with my support and not a single Republican vote. I have heard their mantra: “Where are the cuts?” My answer: This budget realizes more than $450 million in state employee healthcare savings and more than $5 million in contracting savings. As a vice chair of the Appropriations Committee, I participated in weeks and weeks of negotiations, and I will continue to beat the drum to find efficiencies. But to put things in perspective, since 2009, Connecticut has reduced the number of union, non-union and managerial state employees by 16%.

Here are some key points:

Taxes

While the focus of those opposing this budget is on tax increases, there is no increase in the income or sales tax rate, something that few thought possible when we started the session. This budget also reduces some taxes and rejects several of the Governor’s proposed ideas to broaden the sales tax. The tax cuts: Entertainment venue admissions taxes are cut in half from 10% to 5%. Craft beer breweries will enjoy a new tax credit to help grow this booming industry. The business entity tax is eliminated as of January 2020, helping small businesses and encouraging start-ups. The capital base tax on corporations will phase out by 2024. And, for those of you who enjoy the many beautiful lakes in our region, we also rejected the Governor’s proposed increase in the boat tax.

It’s true that this budget removes exemptions from some areas that will now be subject to a sales tax. This budget modernizes the state sales tax by including digital goods and certain electronically delivered software. It also adds a new 1% tax on prepared meals, as well as liquor, soft drinks, sodas, and beverages ordinarily dispensed at bars or soda fountains. This budget also includes a new “mansion tax,” which is a surcharge on home sales over $2.5 million, but this is reimbursed if the seller remains in Connecticut.

Teachers’ Pensions

It is essential that Connecticut tackle its unfunded pension liability directly and in a way that is sustainable today and into the future. I identified this as a priority, and many of you shared your concern about this issue with me. This budget takes that challenge on by setting aside $380 million of the current year surplus to shore up the teachers’ pension fund, ensuring that we continue to honor our legal requirements to bondholders, give confidence to teachers that their pensions will be there when they need them, while making the state’s contributions sustainable and predictable. This produces budget savings of $372.8 billion over the two-year term of the budget.

Many of you voiced your opposition to the Governor’s proposal to shift some of the cost of teachers’ pensions onto our towns. I agree with you and this was one of the issues I drew the line on during negotiations on the budget. I made it clear to the Governor and to Democratic leadership that I would not support a budget that included that. With the support of other legislators, we prevailed.

Aging Adults

I heard from many aging residents in our towns concerned that the rising cost of living was pushing them out of their homes and the communities they love. I am pleased that the Democrats held steadfast and will increase the income thresholds which taxpayers may deduct Social Security income and phase out the pension and annuity tax. This budget also rejects the Governor’s asset test for the Medicare Savings Program for low-income seniors, expands funding for Meals on Wheels, and provides a rate increase to nursing homes. Not only does the rate increase provide staff with a more livable wage, it also prevents unnecessary state spending on federally required temporary staffing by averting a labor strike.

Protecting our Most Vulnerable

This budget expands Husky A Medicaid coverage to 3,500 people who had lost their healthcare, creates a new LGBTQ health and human services network, and fully funds programs for the developmentally disabled.

Economic & Workforce Development

This budget recognizes the importance of developing small businesses, minority, and women-owned businesses with the expansion of the Angel Investor tax credit, a tax credit for those who invest at least $25,000 in an approved business. It also establishes a workforce development pipeline to better match curriculum with employer needs, including an advanced manufacturing focus to fill the thousands of skilled jobs that are currently open.

Environment and Family Farms

To create a healthier planet and care for the environment that is such an important part of our economy in the Northwest Corner, this budget will reduce waste by implementing a 10-cent tax on single-use plastic bags followed by full ban in 2021. This measure both protects our natural environment and reduces recycling costs for our towns. The budget creates rebate incentives for the purchase of electric vehicles to help reduce polluting emissions. The budget also protects the Passports to Parks account, repealing any diversion of funds from these funds.

The Community Investment Act (CIA) has been an important source of funding in our district, supporting agriculture, open space, affordable housing, and historic preservation. The Governor proposed folding this money into the General Fund, but we fought successfully to preserve the separate account. We also provided an additional $1 million in funding to help sustain dairy farmers.

Education
This budget increases funding for higher education to help stabilize tuition and improve long-term stability of our college and university systems. It promotes “open source” online college textbooks to reduce costs. It also establishes debt-free community college to ensure that all students have access to college.

We were able to maintain current levels of Education Cost Sharing (ECS) funding to our towns, and rejected the Governor’s proposal to accelerate phase-out for towns deemed overfunded under the current formula. The budget also invests in afterschool programs, ensuring that rural districts like ours receive a significant share of the funding that can also be applied to transportation costs.

Hospitals
One of the first issues I researched as a member of the Appropriations Committee was the very complex relationship between the hospital tax and federal reimbursements, and the existence of a lawsuit against the state with a potential $2 billion liability. I am very pleased to say that we have reached an agreement with the hospitals that removes that potential liability, funds local hospitals, improves healthcare access, and protects thousands of jobs.

As I said before, this budget isn’t perfect. We’ve worked to ensure that it reflects our values and aspirations for the future. With this budget, I believe we offer not only growth but security for the residents of Connecticut. Having passed both the House and the Senate, the budget goes next to the Governor for signing. If there are additional budget items you are interested in, please feel free to contact me.