HARTFORD, Conn. (AP) — Despite coming together on responses to the Newtown school shooting, Connecticut Republicans and Democrats parted ways Thursday over whether the latest legislative session will help improve the state’s economic outlook.
A day after the General Assembly wrapped up the five-month session, Republican leaders said the two-year $44 billion budget passed by majority Democrats guarantees slow economic growth because of spending increases, extending taxes that were set to expire and various borrowing initiatives. The budget’s bottom line becomes $37.6 billion after $6.4 billion in federal Medicaid funds are shifted out from under the state’s constitutional spending cap.
But Democratic legislative leaders and Democratic Gov. Dannel P. Malloy maintained that the session helps keep the state moving in the right direction economically, highlighting how no new taxes were increased, payments were made to state pension plans, and investments were made in education and economic development.
“Listen, I got hired to turn this place around,” Malloy told reporters during a briefing Thursday. “We were in the worst shape …. That’s where we were. And we’re in substantially better shape than where we were when we began.”
Malloy’s comments came as the U.S. Commerce Department’s Bureau of Economic Analysis reported that Connecticut was the only state where the economy shrank last year. It contracted by a fraction of a percent. The report showed that the biggest drag on the state’s economy came from the finance and insurance sector. That report was fodder for the minority Republicans.
“Connecticut is the only state in the country where our economy shrank in 2012,” Senate Minority Leader John McKinney, R-Fairfield. “We’re dead last in economic growth and the only state in the nation where the combined total of goods, services and salaries shrunk. That is a failure and that is a result of that different road that Dan Malloy took us down.”
McKinney was referring to Malloy’s efforts two years ago to cover a massive budget deficit with a combination of tax increases, labor concessions and spending cuts. Republicans have complained the plan relied too heavily on tax increases.
McKinney and House Minority Leader Lawrence Cafero Jr., R-Norwalk, who were not asked by the legislature’s majority Democrats to participate in the budget talks and did not offer a GOP alternative budget, contend that approach continued this year. The Democrats’ budget bill extends various taxes that were set to expire, such as a 20 percent surcharge on the state’s corporate income tax, and did not scrap a looming, automatic increase in the gross receipts tax on gasoline that could result in a 4-cent-per-gallon increase at the pumps July 1.
Both lawmakers, who are each considering runs for governor in 2014, predicted that future tax increases would be likely. The legislature’s Office of Fiscal Analysis has projected a $712 million gap in the first year of the two-year budget.
Malloy dismissed that projection.
“They’re predicting deficits assuming that all conditions remain the same,” he said. “I think what we’ve shown fairly broadly in this administration is that conditions don’t remain the same. We’re eliminating waste. We have numbers built in the budget that in fact do that.”
House Speaker Brendan Sharkey, D-Hamden, called the legislative session “a huge success” and contends voters should be pleased there are no new tax increases.
“What most people care about is whether their income taxes are going up, whether their sales taxes are going up, whether corporate taxes are going up,” he said. “Those are not happening.”
Sharkey also took issue with the Republicans’ criticism of the budget, especially since they didn’t offer up an alternative.
“The bottom line was that the Republicans checked out on this issue weeks ago,” he said. “And when they say publicly it’s not our job, it’s not our job to engage on the budget and offer these solutions, that’s proof that they’ve checked out.”
