The state Senate bucked a national trend of forgoing tax increases early Tuesday and instead passed a two-year, $40.1 billion budget that attempts to tackle the state's deficit with a combination of cuts, labor savings and wide-ranging tax hikes.
The Democrat-controlled Senate passed the deal reached between legislative leadership and Democratic Gov. Dannel P. Malloy with a 19-17 vote around 3:10 a.m., nearly 11 hours after debate on the bill had begun.
After voting as a group against a steady stream of amendments from the minority Republicans, three Democrats — Sens. Ed Meyer of Guilford, Gayle Slossberg of Milford and Joan Hartley of Waterbury — broke ranks and joined the GOP in opposing the package.
The House of Representatives, also controlled by Democrats, is scheduled to take up the same budget bill on Tuesday afternoon.
Malloy, who took office in January, said those who supported the package should be commended "for making the tough decisions necessary to begin the process of getting Connecticut's fiscal house in order." The state is facing an estimated $3.3 billion deficit beginning July 1, the start of the new fiscal year.
"That was a tough vote to make," Malloy said in a written statement. "It was a vote for an honest budget, one that's balanced with no gimmicks and one that will stabilize the state's finances and lead to our ultimate goal: job creation."
But Republican lawmakers warned the opposite will happen. They said the cornucopia of increased taxes — about $1.4 billion in the first year and $1.2 billion in the second year — on everything from personal and corporate income to diesel fuel, yoga studios, alcohol and pedicures hurts specific industries and everyday taxpayers still struggling from the recession.
"Hold on to your hat. We're going to tax you from head to toe and everything in between," warned Sen. Andrew Roraback, R-Goshen, the ranking Republican senator on the tax committee. "It's the middle class that is taking it the hardest with the budget."
Malloy's senior adviser, Roy Occhiogrosso, disagreed that the burden will be too daunting for the average taxpayer. He estimated a joint filer earning up to $100,000 a year will pay about $20 more a month in taxes.
"It's not nothing, but it's also — given the state of the state's finances — it's not an enormous burden for them," said Occhiogrosso, who called Malloy the "most fiscally responsible governor that's been around in a long time."
Throughout the lengthy debate, the GOP accused Democrats of being too afraid to make "real cuts" like those made by counterparts in neighboring states, including New York, and too quick to embrace tax hikes. Connecticut Democrats said their budget plan reduces spending by about $3 billion over two years, but that figure includes $2 billion in labor savings that have not been finalized with the state employee unions. It also whittles 51 state agencies down to 37.
Republicans offered their own budget proposal which does not raise taxes, but it was shot down on a party-line 22-14 vote. Democrats said the plan was not balanced and savings estimates were unrealistic. Other GOP amendments that would have scaled back some of the taxes also died.
"We still have time," Sen. Joe Markley, R-Southington, pleaded with his Democratic colleagues. "We make a mistake when we rush the process so people cannot be heard from properly, and I fear we do that tonight."
The GOP also questioned the wisdom in raising enough taxes to create $1 billion in surplus over two years. Members argued that some of that money should be used to offset the tax increases. Malloy has said he believes it's fiscally prudent to begin rebuilding the state's depleted Rainy Day Fund and stabilize its finances by paying down debt.
Senate Minority Leader John McKinney, R-Fairfield, accused Democrats of taking money out of the state's economy through tax increases to feed "the monster of government." The plan spends slightly more than the current year's budget, but Democrats say that's due to increased federal funding.
The marathon Senate debate marked one of the earliest state budget votes in recent memory. Malloy, the state's first Democratic governor in two decades, has been pushing the General Assembly for a vote in early May, even though his administration has yet to reach an agreement with the state employee unions over $2 billion in labor savings over two years.
The budget proposal assumes the $2 billion in labor savings will be accomplished. If not, the governor has until May 31 to submit to lawmakers a plan on how he intends to fill the gap.
Malloy's lead negotiator, Mark Ojakian, said last week that he hoped to reach a deal with the State Employee Bargaining Agent Coalition, which represents 13 state employee unions, this week. If a deal is not reached, Malloy has said, union layoffs will be likely. Cuts in managerial jobs are also expected.
Occhiogrosso defended the move to push ahead with the budget even though the labor savings remain unsettled. He said businesses are looking for "predictability and stability" and want in place a balanced state budget that doesn't include gimmicks, such as borrowing money to balance the plan like past budgets did.