Facing strong opposition from Democrats in both houses of the legislature, Gov. Dannel P. Malloy on Thursday dropped plans to cut $54 million in state aid to cities and towns and instead called for laying off as many as 1,000 additional state employees.
The decision came on the day before the start of the new fiscal year Friday as Democratic legislators rose up against the first Democratic governor in 20 years.
Because many local property tax bills have already been mailed throughout the state, legislators didn't want to be blamed in their hometowns for cutting municipal aid after budgets had been set.
Pro-union Democrats in the House of Representatives also rebuffed four major Malloy initiatives to save money by changing labor laws. Failing were proposals to:
*Give Malloy expanded authority to privatize services now performed by state employees who would be laid off.
*Decrease the number of accrued sick days that an employee receives annually from 15 to 10.
*Freeze and ultimately phase out the controversial "longevity payments" that veteran employees receive, currently totaling more than $40 million a year.
*Eliminate overtime pay from the calculation of state employees' pensions.
The rejection of the municipal aid cuts prompted Malloy to pledge to balance the two-year, $40 billion budget by reducing the state workforce beyond levels already announced.
"There could be up to an additional 1,000 layoffs. It is a lot of people," Malloy's senior adviser, Roy Occhiogrosso, said in an interview. "It's $54 million in municipal aid. Reducing municipal aid is not something the governor wanted to do. ... This is the legislature being involved in the process. In order to take that municipal aid off the table, there are going to be substantially more layoffs. This is why the governor didn't want to go down this road."
Regarding optimistic reports that there could be a union deal in the works by this weekend that will resolve the state's budget problems, Occhiogrosso said, "I have no idea."
House Speaker Christopher Donovan, one of the legislature's top union supporters, said: "Our hope is that we don't do any of these cuts and that the state employees eventually ratify the agreement and avert all layoffs and avert all cuts. That's our No. 1 goal. People need to keep working on that. ... We want there to be an agreement, and we're hoping that that takes place."
The rejection of the municipal aid cuts Thursday came on a day of defeats for Malloy. He had sought extraordinary budget-cutting powers for the next two years, but Democrats chopped that time frame to three months.
James Finley, CEO of the New Haven-based Connecticut Conference of Municipalities, was one of the big winners in a daylong scramble at the Capitol that involved caucuses and behind-the-scenes meetings. He said he was glad that the proposed cuts in municipal aid were reversed.
"We're good. It's rock-solid - based on concerns raised in both caucuses," Finley said.
In the House Democratic Caucus on Thursday, legislators spoke several times about news stories listing proposed cuts in aid to 22 cities and towns, including nearly $2.2 million for Hartford, nearly $500,000 for New Britain, more than $230,000 for West Hartford, and about $100,000 each in South Windsor, Windsor, Bloomfield and Simsbury.
"There was a majority of Democrats in the House that found the municipal cuts unacceptable," said Rep. Joseph Serra, D-Middletown. "The municipalities have set their budgets already and tax bills have gone out. Many of us didn't think it was fair across the board."
In the governor's proposal to cut state aid, Middletown would have lost $499,030, the fifth-highest cut in the state. Serra said it was evident that the cuts weren't fair because some cities and towns would see a much larger reduction than others.
The two most influential groups on local issues at the state Capitol - the Connecticut Conference of Municipalities and the Connecticut Council of Small Towns - fought hard Thursday against Malloy's proposed reductions.
The groups blocked all of the cuts, including millions of dollars for road construction, after-school programs and nurses in local private schools.
"Eliminating these grants will leave a big hole in the budgets of our small towns," said Elizabeth Gara, public policy director at the small towns group. "Cuts at this juncture will throw towns into turmoil, forcing deep cuts in municipal programs, layoffs of key personnel or property tax increases. ... Small towns simply can't absorb any additional cuts in municipal aid."
A Democrat said that municipal aid was "by far the No. 1 issue" and "the big hang-up" among House Democrats during their caucus.
Although Malloy was seeking extraordinary budget-cutting powers for two full years as late as Wednesday, the bill now says that Malloy's increased authority would expire Sept. 30.
By July 15, Malloy will be required to provide line-by-line details on his full budget-cutting plan to the legislature.
From July 15 to Aug. 15, the appropriations committee could hold hearings on any aspect of Malloy's plan, and then the legislature could return to the Capitol before Aug. 30 to change or reject Malloy's proposal.
Republicans complained that Democrats might choose not to call for a special session if they agree with Malloy's budget-cutting ideas.
"We're giving up our power," said House Republican leader Larry Cafero of Norwalk. "Is that what we're all about? Can't we make the tough decisions? We're saying, 'We don't want to do it. Governor, you do it.' Come on, folks. ... Let's do our job. ... This is a really historic day for the chamber - not in a good way. It's not a proud day for us."
In the Senate, the chamber voted 30-6 Thursday night to pass a bill that would accomplish Malloy's requested changes on the pension calculations and longevity payments, but House leaders refused to bring up the bill.
The failure of those two Malloy proposals affecting organized labor came hours after leaders of both the Senate and House refused to even put two other Malloy proposals into either of the two bills considered during the day - his proposal for privatizing services and cutting the number of accrued sick days.
Instead of voting on the Senate bill relating to pensions and longevity payments, Donovan said it was more important to pass the bill increasing Malloy's power to make the necessary budget "rescissions," or cuts, to close a projected $1.6 billion budget gap over the next two-year fiscal period, which begins Friday.
Under the Malloy proposals contained in the Senate-approved bill, "longevity payments" for unionized and nonunionized state employees - payments that they receive twice a year for staying in their jobs for more than 10 years - would be frozen at their current levels. The state paid $41.9 million in longevity payments to more than 34,000 state employees in the past 12 months.
Rep. Toni Walker, the New Haven Democrat who is co-chairwoman of the appropriations committee, said she hopes that the state employee unions will come around and embrace the concessions agreement, even though it has already failed to muster sufficient support for ratification.
Cafero questioned why the unions ought to have another crack at it.
"A lot of us believed ... that they had their chance to ratify the agreement," Cafero said. "They chose to vote 'no' and we have to move on and balance the budget. Am I to understand there's a possibility, or a window open, that they could ratify the agreement, which would make some of what we're doing null and void?"
Walker said that staving off mass layoffs is a priority.
"We need not expand our unemployment in the state of Connecticut," Walker said. "There is no focus on looking at the ratification of the [agreement], yet at the same time, we have to make the effort to try and understand that, by laying off people ... it is going to impact all of us."
"If the unions are able to come to some sort of ratification before the timeline, I don't think any of us are going to be so entrenched in moving away from that. If that is possible, we hope that will be worked in."
Action Thursday At The Capitol
Budget cuts: Senate gives governor limited authority to cut without getting legislative approval.
Cities And Towns: Facing opposition, governor withdraws $54.4 million cut in aid to cities and towns.
Layoffs: 1,000 more state workers targeted, raising overall layoffs to about 6,500.
Privatization: Expanded authority to allow private companies to perform state work is rejected.
Sick days: Proposed reduction in accrued sick days from 15 to 10 a year is rejected.
Reprinted with permission of the Hartford Courant.
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