On October 25th the General Assembly adopted a full biennium budget after months of negotiations, vote attempts, and a veto. A September Special Session saw a proposal crafted by Democratic leaders and the Governor fail to a Republican proposal, which was ultimately vetoed by Governor Malloy. As October began, legislative leaders from both parties took a different approach to settling the dilemma. They began negotiations amongst themselves, without the Governor, in order to reach a bipartisan compromise.
Legislative leaders held about a dozen talks before coming to a final agreement. On the day of the Senate vote, the final document was being prepared by legislative attorneys and staff was not released until 11pm. Both chambers ultimately approved the measure with a veto-proof majority, which was also sufficient for passing the constitutional spending cap included within the budget.
The constitutional spending cap was approved by voters in a 1991 referendum, but the legislature has been unable to adopt one since. Legislative leaders reached a compromise that keeps pension obligations outside of the cap until 2027. The agreement also includes a $1.9 billion cap on bonding, and a volatility cap that ensures funding of the State’s rainy-day reserve.
The FY 18 – 19 budget approved state aid to Hartford in effort to help the city avoid bankruptcy. However, Mayor Bronin has since indicated that the option remains on the table. The budget also included sweeps to energy efficiency funds, which have triggered a lawsuit from members of the solar industry. Some legislators have said its already safe to expect that deficit mitigation will be necessary early in 2018, once revenue receipts come in. Nonetheless, the budget agreement has been viewed largely as a success as it avoided major tax increases and included structural reforms that have long been advocated for.
The bill passed 33-3 in the Senate, 126-23 in the House and was signed by Governor Malloy a few days after its passage. However, the Governor exercised his line-item veto authority to reject the appropriations for the Hospital Tax and Medicaid Reimbursement provisions. Shortly before the House voted, the Governor’s staff said they had found an error in those sections. The Governor has previously said that the federal reimbursement that those provisions ensure, required the measure to be approved by October 13th. The Governor maintains that the sections need to be corrected and is calling for the legislature to hold a technical session to address it.
Once the House voted on the budget they took up the Millstone Bill (SB 1501), which was passed by the Senate during a special session in September. The bill approves an RFP for nuclear facilities to acquire state aid. It was signed by the Governor despite his insistence that it remains unnecessary, given Dominion’s failure to comply with his executive order that asked them to disclose their financial standing to PURA.
Meanwhile, the budget also included cuts to CT-N, changes to state election contribution laws, and an error in the section pertaining to the renter’s rebate program (also to be addressed during the technical session). Sources have indicated that the legislature may convene as early as next week for the technical session, to address any errors in the budget. It is not intended for this session to be used to tackle any substantive issues, other than making corrections to the Hospital sections and renters rebate program. The budget and its contents will certainly remain a focus during the 2018 legislative session, which begins in February.