No closure yet on new state budget

First layoff notices go out to state employeesHARTFORD — Marathon sessions last week in the state Senate and House of Representatives resulted in the swift passage of Gov. Dannel P. Malloy’s proposed two-year 2011-13 budget, but details regarding specific spending cuts remained unclear this week as the governor negotiated givebacks from state employees.As expected, Malloy began issuing layoff notices to state employees Tuesday morning, in preparation for the possibility of a stalemate.“After more than two months of talks, I’m afraid that my administration and the state employee unions have not reached agreement,” Malloy said in a statement Tuesday. “Our talks have been respectful and forthright so far, and I remain willing to continue the discussions if the unions are willing to do so. However, we must all be willing to work toward a settlement that Connecticut taxpayers can afford in the long run.”The impasse follows a political victory for Malloy last week, as the state House and Senate quickly passed his proposed budget. Rejecting a succession of amendments from Republicans, the state Senate voted 19-17 and the House voted 83-67 in favor of the two-year, $40.1 billion package, which cuts many services, increases taxes and calls for $2 billion in concessions from state employees — an estimated $22,000 per worker — in the next two years.The operating budget for fiscal year 2012, which begins July 1, is $19.8 billion, including $1.54 billion in cuts. Fiscal year 2013 comes in at $20.3 billion, reflecting $1.8 billion in cuts. Malloy said he still needs another $1 billion in cuts for the upcoming fiscal year, and $1 billion more in the second year, to balance the budget. “I have directed OPM to begin issuing layoff notices in an orderly fashion to the first 4,742 state employees,” Malloy said. “Those layoffs will result in savings of approximately $455 million. I’ve also directed OPM to begin the process necessary to cut an additional $545 million in spending; those cuts, many of them programmatic, will be spread across state government, and will, in all likelihood, result in additional layoffs.”Connecticut’s sales tax increases from 6 to 6.35 percent, with higher taxes for corporations and on hotels, entertainment venues, cigarettes and alcohol. Income taxes will go up on families making $200,000 to $400,000 per year and the state’s highest earners will pay 6.7 percent, retroactive to Jan. 1. The approved budget raises $2.6 billion in taxes for the next two years and increases spending by 2.8 percent in the first year and 2.3 percent the next. Malloy quickly signed the budget into law last week, calling it “another important step toward much-needed fiscal stability,” but underscored the importance of negotiations with state employees. On Friday, Malloy released a “Plan B” budget, which calls for the layoffs mentioned this week. Cuts to municipal aid and other programs will take effect if negotiations with state employee unions do not result in an agreement on concessions.“I’m disappointed because I think we jumped the gun,” said state Sen. Andrew Roraback (R-30) in an interview Monday. “I don’t think we should have taken up a budget before knowing what kind of agreement the governor was going to achieve with state employees. It’s putting the cart before the horse.”Roraback said last week that Connecticut residents will be taxed “from head to toe” under the approved budget and said he believes the hardest-hit residents will be middle-class citizens. “The irony wasn’t lost on me that big business supported this budget,” he said. “United Technologies said they liked the budget at the same time they were shifting jobs out of Connecticut. It’s hard to reconcile why big business signed off on the budget, but they did.”As far as concessions go, Roraback said he also feels for state employees who are being asked to make significant sacrifices. “I for one don’t think it’s fair to expect someone who is working for the Highway Department, maybe making $48,000 per year, to be expected to give up $20,000,” he said. “There are some top-level bureaucrats who are making $140,000 or $160,000 per year who should be asked to give back more.”State Rep. John Rigby (R-63) said he was disappointed with the budget and the way it was debated, with a lack of input from Republicans. “What we have is a massive tax increase and we still don’t know what’s to come,” he said. “Even the governor is not clear on what’s going to happen.”Rigby said Republicans put forth their own budget which would not have increased taxes. The zero-increase budget, along with all other Republican motions, was defeated by the Democratic majority.Criticism of the state budget did not just come from Republicans. Several Democrats broke ranks with the majority in both the House and Senate, noting the budget is $2 billion out of balance and requires what many see as unfair penalties to state workers.Supporters of the budget countered that families making $100,000 a year will only see their income taxes increase by about $20 this year, and that a balanced budget will make Connecticut a more attractive state for job creation. State Rep. Roberta Willis (D-64) said there were no easy decisions on the budget this year. Nobody wants increased taxes, she said, “but the decisions had to be made. We had to get our fiscal house in order.” Malloy talked a lot about shared sacrifice, Willis said, and tried to keep the budget as fair as possible. “Still,” she said, “the Legislature made some positive changes to the governor’s budget.” Those changes included reinstating a property tax credit in the amount of $300 a year, maintaining the earned income tax credit and keeping three additional cents off the gasoline tax. “When gas is between $4.19 to $4.33 a gallon, as I saw on the way to Hartford today,” Willis said, “and the public hears the state is putting three more cents on, that’s just a pebble in people’s shoes. We at least took away that constant reminder of increased taxes.”The governor said he would focus on negotiations with state employees ahead of a May 31 deadline to achieve concessions or submit his alternate budget.“Make no mistake,” the governor said. “Come July 1, Connecticut will have an honest, balanced budget in place.”