Malloy Signs Budget, Enacts Bipartisan Plan Minus Hospital Tax

One hundred twenty-three days after the General Assembly adjourned without completing a budget, Governor Malloy on Tuesday signed a two-year bipartisan compromise negotiated without his participation. Legislative leaders crafted the plan and it passed the General Assembly last week by overwhelming margins. By signing the budget, Malloy ends the longest budget stalemate in state history, but he didn’t miss an opportunity to express his concerns about several provisions of the package in his accompanying message.

Though he signed the budget, Malloy exercised his authority to veto individual line items, specifically those associated with the creation of a newly-crafted tax on hospitals. The Governor claimed that the language, as written, had an unsound legal basis in federal law and would have cost taxpayers hundreds of millions of dollars. He urged legislative leaders to quickly reconvene the General Assembly in order to rectify the problem.

The biennial bipartisan budget largely protects the vast majority of state education funding and municipal aid, but makes painful cuts in higher education and job training programs while raising taxes on the poor and working families in order to protect tax advantages for the wealthy. Read a full summary of the bipartisan budget here.

Key provisions impacting working families include:

• Requiring chamber votes on state employee collective bargaining agreements and arbitration awards.
• Establishing an irrebuttable presumption that 15% of municipal fund balances cannot be considered for an arbitration award.
• Increasing the prevailing wage threshold for new construction from $400K to $1M and requiring DECD projects over $1M to pay prevailing rate, but exempting a construction project in House Minority Leader Klarides’ district .
• Slashing higher education funding and workforce training programs.
• Cuts the Earned Income Tax Credit (EITC) that benefits the working poor while reducing the estate and gift tax that benefits the wealthy.
• Increasing teachers’ pension contributions 1% and reducing the corresponding amount the state pays into the teacher pension fund.
• Cutting the state’s share of teacher retiree healthcare and freezing the income tax exemption on teacher pension income.
• Establishing a $2 billion annual bonding cap and tightens the state spending cap.
• Limiting the $200 property tax credit to the elderly and households with dependents.
• Limiting cuts to education funding and provides additional dollars to the lowest-performing districts.
• Providing up to $40M in supplemental funding and state oversight to the City of Hartford to avert bankruptcy.