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In an age of bitter partisanship, Republicans and Democrats often disagree on the biggest issues of the day.
But in an unexpected twist, 22 Connecticut Republicans voted early Wednesday morning to support a Democratic-written budget because it contains no new tax increases.
After a debate lasting about three hours, the state House of Representatives voted 116-31 with four members absent shortly after midnight.
Republicans had battled sharply against Democrats for months — pushing back hard on their plans to increase the capital gains tax by more than 25%, create a consumption tax on the state’s wealthiest residents, and impose a digital advertising tax on technological giants that retailers said would trickle down to mom-and-pop stores seeking to advertise.
But Gov. Ned Lamont opposed many taxes with a veto threat, and the two-year, $46.3 billion budget now contains no major tax hikes. He said he was not surprised by the Republican support.
“No, I’m not,’' Lamont said when asked by the Courant. “It’s a good budget. It makes health care more affordable. It makes education more affordable.’'
The annual budget would increase by 2.6% to $22.7 billion in the first year and by 3.9% to $23.6 billion in the second year. Although the total spending increase over two years is nearly $1.5 billion, the measure is below the state-mandated spending cap in both years - a goal of Lamont and Republicans.
After a marathon day at the state Capitol, the House voted after a day of long debates on a new truck tax and extending health insurance coverage to undocumented children. Lawmakers are facing a deadline of midnight Wednesday for the end of the 2021 regular session. Some lawmakers say that a bill legalizing recreational marijuana could spill into a special session if they do not finish their work, but no final decisions have been announced on a special session.
House Republican leader Vincent Candelora of North Branford said Republicans helped defeat a proposed $50 million tax hike on health care insurers and potential gasoline price increases through the now-blocked transportation climate initiative.
“Our caucus is very pleased that they have seen the light,’' Candelora said of Democrats. “I think it’s a budget that won’t harm the state of Connecticut with tax increases.’'
On the House floor early Wednesday morning, Candelora said the state could be facing a “cliff’' with fiscal problems when the federal stimulus money runs out.
“It sets us up for a difficult vote two years from now,’' said Candelora, who voted in favor of the bill.
Besides Lamont and Republicans, the tax increases were strongly opposed by the 25-member House Moderate Democratic Caucus, led by Rep. Patrick Boyd of Pomfret and Rep. Kerry Wood of Rocky Hill.
The tax increases were avoided, in part, by an unexpected $2.6 billion in federal coronavirus stimulus funds from President Joe Biden’s administration, along with record-setting increases in stock prices on Wall Street. Fairfield County millionaires and billionaires have been paying large amounts of capital gains taxes through the personal income tax as the Dow Jones Industrial Average, S&P 500 index, and Nasdaq composite Index have all set records over the past year.
While the budget did not include tax increases, the House voted separately Tuesday night to create a new highway usage tax that Lamont had proposed on large tractor trailers. The money will be used to repair the state’s roads and bridges after Lamont’s plan for electronic highway tolls was rejected by the legislature.
The tax still requires approval by the Senate, which was debating the bill early Wednesday morning.
Rep. Terrie Wood, a Darien Republican who opposed the bill, said the budget process needs more transparency and lawmakers should not say there are no tax increases when large commercial trucks will pay more taxes.
Lamont described the overall fiscal plan as “one of the most important budgets in the state in a long time’' that increases spending in key areas.
“It could be a real game-changer if we play it right,’' Lamont said. “It starts with the biggest expansion of day care and child care in the history of the state — and what that means in terms of giving kids the very best start in life and what that means in terms of allowing their parents to get back to work.’'
The measure includes increases for summer learning camps and full funding for the revised formula for the crucial education cost-sharing grants that go to each town, Lamont said.
The federal funding has proven to be a major difference as Democrats and Lamont crafted the budget behind closed doors.
“We’re making investments in this budget that will be transformative for our state and give everybody the opportunities they deserve,’' Lamont said recently.
The budget funds everything from suicide prevention programs to dental care for prison inmates.
The Democratic-controlled legislature made sure that some of the biggest winners were the state’s cities, which will be receiving increases while some affluent suburbs will remain flat-funded at their lower levels. Hartford, which currently receives the highest total in the state in education cost-sharing funds at $209 million, will see increases to $212.5 million in the first year and $215.9 million in the second year.
When all forms of aid are calculated, including education Hartford’s current total of $274 million would increase to $299.8 million in the first year and $303 million in the second year.
New Haven will receive education increases to $162.8 million in the first year and $165.2 million in the second year.
Glastonbury at $5.3 million, Farmington at $843,000, and Avon at $584,000 will all remain flat-funded for education at their current levels for the next two years. Simsbury, which currently receives $6.3 million, will see increases to $6.5 million in the first year and $6.7 million in the second year.
Republican had concerns, however, that the legislature is bailing out the UConn Health center in Farmington, as it has in the past. The state is providing an additional $50 million in the current fiscal year to the health center, where professionals have generally higher pensions and health care benefits at John Dempsey Hospital than other hospitals in Connecticut. The list of the state’s highest-paid pensioners generally include retired doctors and other workers at UConn Health.
“Primarily due to the state’s unfunded legacy costs, the fringe benefits for our employees have been increasing at unsustainable rates,” UConn Health CEO Dr. Andrew Agwunobi testified earlier this year. “In fact, UConn Health’s fringe benefit rates are over 65.2% versus an average of approximately 26% compared to other area hospitals — with the majority of the difference being attributable to these unfunded legacy costs.”
On the House floor, Rep. Toni Walker, the longtime co-chairwoman of the powerful appropriations committee, said, “UConn Health Center, for the last two years, has been in the red severely.’'
The finances of the health center have been a long-running issue with the legislature, dating back at least to 2000. Then-Senate Republican leader Len Fasano of North Haven said last year that the state has repeatedly bailed out UConn Health over the past two decades and should no longer do so.
“UConn Health has been a fiscal disaster from the beginning,” he said at the time. “The fringe benefits are killing UConn. We shouldn’t bail them out. We need to sell UConn Health. We need to get rid of it. We’ve got to cut our losses. We need to make a hard decision.”
In a budget victory for low-income families, Democrats are touting a compromise on subsidies for the state’s health insurance exchange.
Legislators originally called for expanding HUSKY A, a popular insurance program for low-income families. But Lamont then proposed a separate idea to spend additional money to cover premiums and deductibles on the state’s health insurance exchange. That plan would cover about 40,000 residents - far beyond the original Democratic plan that would have expanded HUSKY A to cover an additional 8,000 residents.
At the same time, Lamont’s plan would include a package of “wraparound services,’' like dental care, that would be paid by Medicaid.
The budget also includes $90 million over the next three years in federal money for private, nonprofit providers, but officials said they were still looking for further details in the complex document. They are seeking funding increases for homeless shelters, mental health and substance abuse programs, food pantries, and juvenile justice and prison re-entry programs that have provided services since the coronavirus pandemic started sweeping through the state in March 2020.
“Given the state’s fiscal condition and the size of the projected surpluses, the state has the ability to treat all providers — and the people they serve — equitably,’' said Gian Carl Casa, chief executive officer of the Connecticut Community Nonprofit Alliance.
Christopher Keating can be reached at firstname.lastname@example.org