Conn. State House Approves Budget Deal

HARTFORD, Conn. (CBSNewYork/AP) - Connecticut's House of Representatives early Sunday morning approved a state budget deal reached between legislative Democrats and Gov. Dannel P. Malloy that expands gambling in Connecticut and shifts about $6 billion in mostly health care spending for the poor from under the state's constitutional spending cap.

While the proposal does not include large-scale tax increases like the ones included in the budget passed two years ago, the General Assembly's minority Republicans still criticized this latest plan for its policies, saying it does not fix the state's fiscal woes.

"We're still inching forward. We're putting it together with duct tape, and Band-Aids, a little spit and glue. So much so, to fill holes we're relying on things like Keno, things we haven't even studied or heard about,'' said House Minority Leader Lawrence Cafero Jr., R-Norwalk, referring to how the bill authorizes the Connecticut Lottery Corporation to institute the game of chance that's based on the drawing of numbers.

But House Majority Leader Joseph Aresimowicz, D-Berlin, noted how the two-year, approximately $44 billion budget represents the key funding priorities of the legislature such as major technology and science investment at UConn, the continuation of public school reform and the protection of state aid to cities and towns. The budget attempts to cover a projected $2.5 billion deficit.

"We're doing what you promised your constituents when you wanted to come up here and you wanted them to vote you up here,'' Aresimowicz told the House members. "You're making a difference.''

The bill passed along party lines, 95 to 48, following a five-hour, overnight debate that ended shortly after 5 a.m. Sunday. The legislature's minority Republicans, who did not participate in the budget negotiations, all voted no.

Minority House Republicans said the plan does not fix the real financial problems in the state, WCBS 880's Monica Miller reported.

In a statement, Gov. Malloy said the budget deal is imperfect but shows that the state's priorities are in order.

"This budget contains no new taxes, and includes some modest but important tax relief for every family struggling to make ends meet. This budget makes substantial investments in public education, so that our children, no matter where they live, can go to schools that will prepare them for the future. This budget continues our unprecedented economic development agenda, so that we can continue to compete aggressively for jobs while protecting the jobs we already have. This budget honors our past obligations by finally funding our pension system, saving Connecticut's residents billions of dollars down the road," Malloy said in a statement. "And last but certainly not least, this budget is fully balanced under Generally Accepted Accounting Principles."

The bill now moves to the Senate, which is scheduled to hold a vote on Monday. The legislative session ends Wednesday.

Like their House counterparts, the Senate Republicans will likely criticize the plan for shifting $6 billion in mostly Medicaid funds from under the cap that's been in place since 1991, when Connecticut enacted a personal income tax.

But the Democrats argued Connecticut is one of the only states in the country with a spending cap that counts federal Medicaid reimbursements toward the mandatory spending limits. They said the 100 percent Medicaid reimbursement Connecticut is set to receive under the federal Affordable Care Act after expanding eligibility should not crowd out spending on other key programs, such as education.

"We are the only state in the country that does not budget 100 percent federally reimbursed funds in this manner,'' said Rep. Patricia Widlitz, D-Guilford, the co-chairman of the legislature's revenue committee. "We are allowing the people of the state of Connecticut to access as many federal funds as we possibly can.''

Both Democrats and Republicans raised concerns about the expansion of gambling in the budget bill.

Lawmakers said the proposal adds 600 lottery terminals and allows Keno. Both the Mashantucket Pequot and Mohegan Tribes, which contend they have exclusive rights to such games under their compact with the state, would receive up to 12.5 percent of the gross Keno revenues.

"I'm very disappointed this in here,'' Sen. Andrea Stillman, D-Waterford, referring to Keno. "I understand the problems we're facing. I'm disappointed that we're using another opportunity for gambling in this state.''

The package does not include a proposal by Malloy to auction off electricity services for about 800,000 customers who've yet to choose an power company.

In an interview with The Associated Press on Saturday, the governor's chief of staff, Mark Ojakian, said the administration decided "in order to get many other things through in the budget, we had to compromise'' and forgo the auction plan, which was opposed by the Connecticut AARP, other entities and many lawmakers.

Malloy had proposed the new arrangement to spur companies to sell cheaper electricity by steering the customers into less expensive energy plans. Participating companies would bid for the right to sell power to these customers on standard-offer plans, providing the state $80 million in revenue.

Highlights of the budget bill include a tax amnesty program, extension of a 20 percent surcharge on the corporation tax for two years, a two-year moratorium on film production tax credits and a three-month extension of a temporary tax on electric generation facilities. Also, starting June 1, 2015, the bill exempts clothing and footwear costing less than $50 from the state's 6.35 percent sales tax.

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