Democrats, Gov. Lamont moving closer to agreement on two-year, $46 billion budget deal that wouldn’t include tax hikes on the rich

Hartford Courant (CT)

Negotiators are getting closer to a comprehensive state budget agreement in which Democratic legislators could back off from their high-profile push for major tax increases on the wealthy in exchange for multiple spending priorities, officials said Wednesday.

Democrats are pushing for a transformative, $2 billion infrastructure bonding plan to help distressed cities over the next 10 years, creation of “Baby Bonds” that involves awarding $5,000 to poor children at birth in a state-administered account to help them eventually attend college and increased funding to expand the HUSKY A health insurance program for low-income families under Medicaid, among others.

Top Democrats emerged with smiles on their faces from closed-door talks with Gov. Ned Lamont at his Capitol office Wednesday, saying they had finished a “very productive” meeting on Democratic spending priorities.

House Speaker Matt Ritter of Hartford, a key player in the talks, said Lamont was open to the spending ideas that Democrats outlined, adding that he is optimistic that negotiators can strike a deal before the regular legislative session adjourns on June 9.

Democrats are pushing their top spending priorities at the same time that Lamont has threatened to veto a package that includes raising capital gains taxes by 2 percentage points and creating a new consumption tax on the rich that Republicans say is actually an increase in the state income tax.

“Everybody knows my position on taxes,” Lamont said when asked by The Courant after the meeting. “We just talked about an honestly balanced budget — a budget that provides opportunity for folks who have been left behind and hardest hit, especially over this last year, but really over this last generation as well. And to get this economy moving again and make it work for everybody.”

When told that Democrats said he was open to their ideas, Lamont responded, “That’s good. I hope they were open to what I was laying on them.”

Referring to other negotiations such as successful talks on online gambling, Lamont said, “We’ve been on the half-yard line on a lot of issues this year, and we got most of them in the end zone, haven’t we? We’ll get this one into the end zone.”

But Senate President Pro Tem Martin Looney, a New Haven Democrat who has served in the legislature since 1981, stressed there has been no final deals on either the tax or spending sides of the budget.

“There hasn’t been any agreement regarding the revenue side,’' Looney said after the meeting. “We have very strong support in our Senate Democratic caucus for an increase in the capital gains tax - a very strong majority of our caucus. ... You can never say you’re close until you actually have a deal. There could be one sticking point at the end that turns out to be more difficult’' than originally expected.

Ritter said that if everything goes well, the two-year, $46 billion budget could be completed in the next seven to 10 days. He outlined a laundry list of items that Democrats want in order to vote for the budget.

“For our caucus, the idea of continuing the ECS formula is really important,” Ritter said of the education cost-sharing grants that go to all municipalities. “For our caucus, the idea of HUSKY A expansion is really important. For our caucus, the PILOT program that we adopted in early February is really critical. For our caucus, an infrastructure plan and investment in cities that is targeted is really important. For our caucus, having a budget that invests in mental health and invests in social services and juvenile justice programs is really important.”

The key Democratic “pillars,” as Ritter calls them, also include raises for nurses in the SEIU 1199 New England health care union that recently avoided a nursing home strike that was a high priority for Ritter.

Looney said the 10-year infrastructure plan, which would be paid through bonding, is complicated.

“The devil is in the details,’' Looney said later outside the Senate chamber. “The governor has been very abstemious about using bond funds up to now - with his debt diet and all of that. We believe the time has come to be more aggressive in bonding use as a tool for economic development in our state. There are also human capital concerns as well as bricks-and-mortar concerns. Traditional bonding, in terms of capital projects, is not enough to solve our problem.’'

Looney has spearheaded the drive to help cities like New Haven and Hartford by increasing the payments in lieu of taxes for communities with tax-exempt properties that include hospitals, colleges, and state operations.

Insiders say that House and Senate Democrats have been clashing sharply over taxes as personified by the positions of Sen. John Fonfara of Hartford, one of the biggest proponents of tax hikes, and Ritter, who understands Lamont’s veto threat and always takes a practical approach on passing bills. Ritter, though, said Wednesday that the House will start passing a series of Senate-written bills starting next week after the Memorial Day recess.

“I know people want to talk about this House-Senate [divide]. It’s fine,” Ritter told reporters. “Everybody’s happy. Everybody knows their bills are going to run. We’re going to get it done. ... It’s going to be fine.”

Ritter continued, “Everybody’s hugging, happy. I don’t want narratives about fights in the House and Senate. We’re all happy. We’re all hugging.”

Under the Democratic plan for “Baby Bonds,” the state would award $5,000 to children if their birth was paid by the Husky A health insurance that is set aside for low-income families. State Treasurer Shawn Wooden, who has been pushing for the plan, would invest the money for each child, and it could grow to $15,000 or more by the time the child reaches the age of 18 — allowing them to use the money for college, start a business or eventually buy a home.

The major program of long-term investments in distressed cities could reach $2 billion over 10 years in a bonding plan that would be similar to the UConn 2000 program that transformed the state’s flagship university.

Democratic lawmakers are also pushing proposed increases in the earned income tax credit for working families and a new child tax credit against the state income tax that was crafted by Rep. Sean Scanlon, a Guilford Democrat who co-chairs the legislature’s finance committee. Democrats want the earned income tax credit to be boosted to 30%, up from the level of 23% that was reached as part of the bipartisan budget in 2017.

Senate Republican leader Kevin Kelly of Stratford criticized Lamont’s plan for a highway use tax on tractor trailer trucks, which he says will eventually lead to price hikes on items like food that are transported around the state in trucks.

“Even as we see historic levels of federal funding coming to Connecticut and a surplus this year, Democrats cannot help themselves,” Kelly said. “They want even more. They are putting the bullseye directly on the wallet of working- and middle-class families. Even the governor, who says he doesn’t support tax increases, is still pushing for new taxes that will increase the costs of gas, food and health insurance.”

Christopher Keating can be reached at [email protected].