June 7, 2005
By CHRISTOPHER KEATING, Capitol Bureau Chief
In a compromise that delighted Democrats and frustrated Republicans, the House
of Representatives approved a two-year state budget early this morning that
increases taxes on businesses and estates greater than $2 million while increasing
aid to municipalities and nursing homes.
The deal, crafted over the weekend by
Republican Gov. M. Jodi Rell and Democratic leaders, was opposed
by Republican legislators who said the state should not be raising
taxes when the state's projected surplus for the current fiscal year
is $702 million - the largest surplus in state history. But Democrats
said no one expected the surplus to be so high and more than $400
million was collected this year in one-shot revenues that will not
be available next year.
Rep. Cameron Staples, a New Haven Democrat
who co-chairs the tax-writing committee, said the package increases
taxes "on those who can afford it," and that the constituents
of most legislators "will be happy to see" the wide range
of services that are funded in the $15.6 billion package. The bill
raises spending by 8.7 percent for the fiscal year that starts July
1 and 3.3 percent in the second year, according to the legislature's
nonpartisan fiscal office.
The highest drama of the evening was
whether the House had the 91 votes necessary to pass the measure,
which required a three-fifths margin because the budget exceeds the
constitutional spending cap. The final vote was 100-50 at 12:25 a.m.,
with two Democrats voting no. Only three House Republicans sided
with Rell by voting for the budget.
Rep. William R. Dyson, the former co-chairman
of the budget-writing committee who lost the battle for House speaker
to James Amann, voted no. The legislature, he said, is "always
committing the same mistakes and always repeating our history" by
spending too much, piling up debt in an unsustainable way and then
setting up the state for big deficits in the future.
Republicans were particularly disturbed
about re-imposing the state's estate tax, which expired Jan. 1. As
a result, they complained that the legislature will be retroactively
taxing dead millionaires.
Under the highly complicated measure,
estates over $2 million would be taxed at a progressive rate, starting
with 5 percent of the first $100,000 over the threshold and rising
to 16 percent for the amount above $10 million.
"My worry is a small farm of 50
acres or even a larger farm of 100 acres will be beyond that $2 million
mark," said Rep. Anne L. Ruwet, a Torrington Republican whose
father's farm still produces corn and pumpkins. "This tax is
going to hurt."
In an early test vote about 8:45 p.m.,
Democrats defeated a Republican amendment to strip the estate tax
out of the budget on a strict party line vote of 99-51.
Republicans argued that the state's
wealthiest residents would flee to lower-tax states like Florida,
but Democrats countered that the wealthy would have fled in the past
under previous estate and inheritance taxes. Democrats noted that
survivors must file an estate-tax return as long as the person owned
a home or cars in Connecticut at their death - even if the person
had moved their permanent residence to Florida.
Hammering away at the budget during
eight hours of debate, Republicans blamed Democrats for the deal
but did not criticize Rell - the leader of their party - by name.
Acknowledging the opposition among Republicans,
Rell's chief budget negotiator, Robert Genuario, said that Rell was
forced to make difficult choices to reach an agreement with the Democrats,
who control nearly two-thirds of all seats in the legislature. Rell
refused to raise the so-called millionaires' tax on the state's wealthiest
residents and agreed on the estate tax instead.
"We were looking for a budget deal," Genuario
said. "We did it to raise revenue."
The budget funds a wide variety of state
programs, ranging from dental care for prison inmates to salaries
and benefits for more than 50,000 state employees.
One of the biggest items is $2.448 billion
in aid for cities and towns, an increase of more than 5 percent over
the current year. Lobbyists for the Connecticut Conference of Municipalities
had wide smiles on their faces at the Capitol as towns have received
more funding than expected. Rell set aside $100 million from the
surplus, and Democrats pushed for even more funding on top of that.
Overall, the biggest winner was Hartford at $218.9 million, while
smaller and more affluent towns received less. In the Hartford region,
the totals include $14.7 million for West Hartford, $4.6 million
for Glastonbury, $2.95 million for Simsbury and $1.1 million for
Avon for the fiscal year that starts on July 1.
Some of the other large items include
about $1.7 billion in debt service and nearly $1 billion for prescription
drugs for the elderly, the poor, state employees, and retirees. Rep.
Denise Merrill, a Mansfield Democrat who is a chairwoman of the budget-writing
committee, said the state needs to take action to slow down the fast-rising
cost of the drugs.
The budget, Merrill said in an interview,
is filled with items that were high priorities for Democrats.
Those included restoring the popular
HUSKY health insurance program for adults and eliminating Rell's
plan for a $3 co-payment for Medicaid fee-for-service for prescription
drugs and doctors' visits.
For the first time in nearly 15 years,
an estimated 16,000 blind, disabled and elderly people will be able
to keep a 2.7 percent cost-of-living increase in their federal benefit
Previously, the cost-of-living increase
was deducted because the beneficiaries were also receiving state
supplemental benefits at the same time.
"This means those in the program who are older, some blind and disabled
have been forced to live on their same income, while the cost of living has skyrocketed
for them during this period of time," said Rep. Marie Lopez Kirkley-Bey,
a Hartford Democrat who serves as a deputy speaker.
In another priority for their caucus,
Democrats also blocked Rell's plan to increase the current $1.25
bus fare to $1.50 on Sept. 1.
During the long debate on the House
floor that lasted into Monday night, many of the comments focused
on the tax side of the 177-page budget amendment. Some complained
about the plan to increase corporate taxes by $43.4 million in the
2006 fiscal year, $50.8 million in 2007 and $16.4 million in 2008
- a total of about $110 million over three years. A Republican amendment
to strip out the corporate taxes failed on a party-line vote.
Reprinted with permission of the Hartford Courant.
To view other stories on this topic, search the Hartford Courant Archives at