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Corporate Tax Cuts and $350 Million In Spending Reductions Coming In Special Session

HARTFORD — Democrats expect to cut corporate taxes, reduce overall spending by $350 million and start to close the state's juvenile training school for boys in a special legislative session on Tuesday. The policy and budget changes to eliminate the deficit are more than originally expected, including a constitutional lockbox for transportation spending that legislators failed to pass during the regular legislative session earlier this year.

The special session is necessary because the state’s sluggish economy has led to lower-than-expected tax collections. The largest and most important category is the state’s personal income tax, which legislators estimated would increase by 5.4 percent in the current fiscal year. But that projection was sliced to 3.8 percent only five months after legislators established the budget for the current year.

The legislature is working to cut projected deficits of $254 million in the current fiscal year and $552 million next year. Earlier this year, lawmakers passed a statutory lockbox, which many believe would have less impact than a constitutional amendment. If the resolution for the amendment passes in the legislature with three-quarters of the vote, the measure could be put on the election ballot for November 2016 in a high-turnout presidential year. If the measure passes by less than three-quarters, then it would not be placed on the ballot until 2018. Senate Democrats announced Monday that they have the votes for budget cuts, corporate tax cuts and the lockbox.

They also will take the first steps toward closing the Connecticut Juvenile Training School for troubled boys, a controversial facility that was built in Middletown 14 years ago during the administration of Gov. John G. Rowland. The total amount in net cuts, after accounting for business tax cuts and other moves, is $350 million in the current fiscal year’s $20 billion budget. Those cuts will translate into $212 million in the 2017 fiscal year because some changes are one-time moves for the current fiscal year only.

Democrats Better Make Serious CT Budget Cuts Democrats Better Make Serious CT Budget Cuts More than half the money originally cut by Gov. Dannel P. Malloy will be restored for the state’s hospitals, but the hospitals will still be receiving $30 million less in the current fiscal year and $30 million less in the next fiscal year, according to budget documents obtained by The Courant. “While this may or may not be a bipartisan vote, it is a bipartisan package in the sense that a number of things that we talked about over the past month on both sides of the aisle have been incorporated into this final package,’’

Senate Majority Leader Bob Duff said Monday. Lawmakers will also vote on improving the unitary combined reporting tax — a controversial tax that has been opposed strongly by Fairfield-based General Electric Co. GE has threatened to move its corporate headquarters out of Fairfield, but legislators believe the chances of the company staying have sharply improved recently as the legislature makes changes on the unitary tax and complicated financial provisions called loss carry-forwards.

The loss carry-forwards were addressed in a budget-implementation bill, and the unitary tax will be addressed Tuesday. GE is also concerned about the state's long-term liabilities for state employee pensions, and Malloy has taken the first steps on grappling with that problem through a detailed study by Boston College researchers. GE had been looking for the state to start taking action on certain key financial issues, and that action will be taken Tuesday. The total tax cuts for corporations would be about $10 million in the current fiscal year and $19.3 million in the second year, according to documents given to Democrats.

“To the business community, what we’re doing on business taxes and also transportation are some of the biggest issues to the business community,’’ Duff said. “That’s why it’s important for us to bring up the lockbox, along with the business taxes. The issue of the combined reporting, along with the transportation lockbox, are extremely important to how they perceive the state and how we’re moving our finances along. … It’s something that is very important to the governor.’’ Documents given to legislators show 16 pages of detailed cuts in a wide variety of programs.

Those include $34 million in reductions for Medicaid out of a budget of nearly $2.5 billion because of a drop in caseloads. Other cuts include $6 million from magnet schools, $3 million for inmate medical services, $1.45 million for the Open Choice school program, $1.35 million for regional vocational-technical schools and $1 million in statewide marketing at the Department of Economic and Community Development. Other reductions include $93 million from the executive branch that can be made by Malloy during the fiscal year. The state also expects to save $20 million in overtime costs over two years, along with $3.5 million in the current year by delaying raises for managers until March 2016.

The cuts also include more than $250,000 from the Agricultural Experiment Station in New Haven for mosquito control, wildlife disease prevention, equipment and expenses. Senate President Pro Tem Martin Looney of New Haven said the cuts are “not as painful as some of the ones’’ proposed by Malloy. Because the cuts are spread out over many agencies, programs will be “nicked rather than cut deeply,’’ Looney said. Senate Republican leader Len Fasano of North Haven said Republicans also favor closing the juvenile training school by December 2016. With only 68 youths currently housed in the 38-acre, prison-like campus, the state is spending $543,000 per youth per year to run the training school, Fasano said.

Of the 68 youths in the maximum-security school, about 20 to 23 are considered violent, Fasano said. The juvenile prison was designed to house as many as 250 troubled boys when it was built. The fenced-in school was constantly in the headlines during the Rowland administration and beyond. If it is closed, the state must decide the next steps to take.

“We could sell it,'' Fasano said. “We could lease it out.'' Based on agreements made in closed-door negotiations, Fasano said he was surprised that details started trickling out at the Capitol on Monday. “My understanding of negotiations were that things stay silent'' until Tuesday's special session, Fasano said. Concerning the juvenile training school and potentially creating a commission on the state spending cap, Fasano said, “I haven't seen any of that language.'' When asked how many Republicans would vote for the budget package Tuesday, Fasano said he needs more information. “I do not know what they're bringing up,'' he said. “At least from a theoretical standpoint, we are in favor of the constitutional lockbox as a caucus,'' Fasano said.

“We have to read the language to figure out exactly what they're lock-boxing. ... It depends on the words that are going to be used.'' Republicans have long favored the business tax changes on the unitary tax and various corporate tax credits. “We think the business end is a very smart thing to do,'' Fasano said. “We certainly don't want to give anybody any signals out there that we're against that.'' Reprinted from Hartford Courant

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