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Conn. Gov. Dan Malloy Pushes Economic Recovery In Second Budget

Connecticut Gov. Dan Malloy (file / credit: Official White House Photo by David Lienemann)

Connecticut Gov. Dan Malloy (file / credit: Official White House Photo by David Lienemann)

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HARTFORD, Conn. (CBSNewYork/AP) - Gov. Dan Malloy unveiled the second, two-year budget of his administration on Wednesday, promising to move Connecticut closer to recovery from the national recession by continuing investments in education and job development.

Predicting criticism from the General Assembly’s minority Republicans, Malloy defended the multi-million-dollar efforts to help lure companies to the state, arguing it’s “incumbent upon state government to pursue jobs” and stimulate economic growth.

“Burying our heads in the sand is not a strategy. And sitting still is not an option,” the first-term Democrat said.

Malloy began his budget address on Wednesday asking lawmakers to keep in their hearts the families of the 26 victims of the Sandy Hook Elementary School shooting in Newtown, the first responders, educators and other touched by the massacre.

“Whatever differences we have in this building over the next several months, they will be trivial compared to what happened in a quiet town in southwestern Connecticut,” he said, urging lawmakers to work with him cooperatively to reach a final budget compromise over the coming weeks.

LINK: Malloy’s Budget Fact Sheet (PDF)

Malloy is going to need lawmakers’ help this session.

His budget relies on legislators approving changes to the state’s constitutional cap on spending, a move that requires a three-fifths majority of the General Assembly. The governor wants certain expenditures to be exempt from the cap, such as grants to distressed municipalities and certain debt payments.

Unlike his last two-year budget in 2011, which raised taxes by $2.6 billion over two years, Malloy said this latest plan includes no new tax increases. However, the bill does continue a surcharge on the corporation tax and continues taxes on electric generators and insurance premiums that were scheduled to expire.

Malloy’s plan also calls for exempting the first $20,000 of the assessed value of vehicles from local property taxes. That means someone who owns a car with a market value of $28.571 would no longer pay any property taxes on that vehicle. While it means a $560 million per year loss in revenue to municipalities, Malloy’s budget director, Benjamin Barnes, insisted that cities and towns will be “kept whole.”

Malloy said he will cut $1.8 billion in services, but “cuts made her in Hartford don’t come at the cost of higher property taxes around the state.”

But big city mayors like Bridgeport’s Bill Finch are forecasting big losses of revenue from the proposed elimination of the car tax.

Finch told WCBS 880 Connecticut Bureau Chief Fran Schneidau that elimination of that tax alone will cost his city $17 million in revenue.

He added that if the governor’s proposed cuts are implemented, the proposed cuts would be disastrous and would result in one of the largest local tax hikes to be imposed in Bridgeport.

State Republican Party Chairman Jerry Labriola Jr. was skeptical of Malloy’s pledge of no tax increases, saying his spending plans “has more tricks than a magic show.” He said the extended taxes, such as the power plant tax, will be passed along to ratepayers.

“If the governor wants an `honest’ budget, he could start by being honest himself,” Labriola said. “He is playing a shell game with this budget and the taxpayers who will foot the bill for it.”