Malloy: Outline Agreed To For New Connecticut Budget

HARTFORD, Conn. (CBSNewYork/AP) - Connecticut Gov. Dan Malloy said Tuesday he and legislative leaders have agreed to an outline for a state budget that does not impose new taxes but may extend taxes that are set to expire.

``There's still work to be done in the next day or so but we're going to have a budget,'' Malloy told reporters. The legislative session is set to end on June 5.

Malloy's two-year spending proposal and a plan approved by the Democratic-controlled Appropriations Committee were about $43.8 billion, up about 9 percent. The Appropriations Committee plan would increase total net spending by $49 million beyond the governor's proposal.

Malloy said the budget does not increase taxes, fulfilling a promise he made after pushing through increases in the state income and sales taxes in his first year in office in 2011.

But he said a final budget to be voted on by the legislature could extend certain taxes set to expire this year. Those taxes would be imposed on power plants, based on kilowatt hours of power generated, and a surcharge on the corporation tax.

``That is entirely possible, yes, but we are not increasing taxes or creating new taxes,'' he said.

A key business lobbyist sees no difference between increased taxes or extended taxes.

``Anyway you call it, it's still a tax on businesses,'' said Joe Brennan of the Connecticut Business and Industry Association, the state's largest business organization.

The corporation tax, which is expected to generate about $721 million in revenue, includes a 20 percent surcharge.

Brennan said he hopes negotiations in the last eight days of the legislative session will lead to cost-cutting rather than higher taxes that will dampen a weak economic recovery and stubbornly high unemployment, which was 8 percent in April.

Businesses and Dominion Resources Inc., parent of Millstone Power Station in Waterford, say the taxes were supposed to be temporary and are fighting efforts to extend them.

``It's harmful for ratepayers in the state and a promise was made,'' said Kevin Hennessy, a spokesman for Dominion.

The attorneys general of Massachusetts and Rhode Island also have criticized the tax on generating electricity, saying it will add to the burden of New England ratepayers.

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