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Democratic legislators called Tuesday for increasing the state sales tax to 6.85 percent, but they still did not reach an overall compromise to solve the states ongoing budget crisis.

The sales tax would increase from the current 6.35 percent, but was met with disapproval from Gov. Dannel P. Malloy who immediately told reporters that he was not in favor of the sales tax increase.

At a time when Malloy has announced deep cuts, including that 85 towns would not receive educational cost-sharing funds for public schools, the House Democratic plan would restore most of those funds. West Hartford, for example, would lose nearly $24 million under Malloys plan. But the Democratic plan calls for a loss of only $1.36 million compared to the last fiscal year.

Southington would lose about $300,000 under the Democratic plan, compared to more than $21 million under Malloys proposal. Enfield would lose $3.18 million under the Democratic plan, compared to more than $23 million under Malloys plan.

Overall, the towns would receive $2.299 billion in the 2018 fiscal year a loss of $122 million from last year, but far below Malloys proposed cuts of about $968 million.

The towns would receive the increased funding only if the legislature approves a two-year, $40 billion budget. If there is no action by the legislature, Malloys cuts under his executive order would begin to take effect Oct. 1.

Besides raising the sales tax, the House Democratic budget would make Social Security benefits no longer subject to the state income tax in the 2020 fiscal year and allow municipalities to place an additional 1 percent sales tax on food and drink at bars, restaurants and other outlets. The plan would have no new taxes on hospitals an industry that has clashed sharply with Malloy over funding.

Both Democrats and Republicans emerged with smiles on their faces Tuesday after meeting behind closed doors at the state Capitol. They said they had productive, bipartisan negotiations about potential solutions to the deficit that included structural changes to help the state in the long term. But they admitted that saving money in the current fiscal year would be difficult because the year started on July 1.

Despite the smiles, Republicans also did not drop their long-held opposition to tax increases.

Listen, I still have the same position that I had before, said House Republican leader Themis Klarides of Derby. Tax increases are not something that we are interested in at this point in time.

While the new proposed rate on the sales tax was mentioned, Democrats are not expected to release their full, detailed budget until Wednesday.

The latest budget talks came on the anniversary of the passage and creation of the state income tax, which was signed into law by then-Gov. Lowell P. Weicker Jr. in August 1991.

All sides said the latest talks were productive, and they stood together at a news conference in a show of support that has not been evident at all times during the long, frustrating process that began when Malloy unveiled his first budget proposal back in early February.

But the harsh clashes of the past were less evident on a sunny Tuesday in mid-August.

I think a lot got accomplished today, said Senate Republican leader Len Fasano of North Haven. It was very, very good the steps that happened today.

After months of behind-the-scenes talks, some conservative Democrats still have concerns about raising taxes at all.

Sen. Paul Doyle, a fiscally conservative Democratic swing voter from Wethersfield, told The Courant that he still has questions about hiking taxes to balance the deficit that is projected to reach $3.5 billion over two years. Doyle and two other moderate senators, Joan Hartley of Waterbury and Gayle Slossberg of Milford, have balked at tax hikes as the states fiscal crisis has continued in recent months. Their votes could be key as Republicans have been mostly opposed to tax increases and Democrats hold only a slim majority in the House, with a tie in the Senate.

We have broad-based, but not unanimous, support for that, Senate President Pro Tem Martin Looney said of the proposed sales tax increase.

With some lawmakers on vacation in August, no votes are expected at the state Capitol until at least the week of Sept. 11.

Legislators are now under increased pressure because Malloy released a revised executive order that includes huge cuts in aid to cities and towns, including no educational cost-sharing aid for 85 towns. While upscale towns like Greenwich and Avon would receive no aid, Malloys order also zeroes out educational cost-sharing funds to towns such as West Hartford, Southington, Canton, Cromwell, Stratford, Rocky Hill, Newtown, and North Haven.

Obviously, the governors proposal, I think, was calculated to heighten the pressure because he laid out clearly what the painful consequences for many towns will be if there is not a budget reached by mid-September, Looney said. If there are any people whose minds have not been sufficiently focused, they certainly are now.

With no budget, the state also does not have an educational cost-sharing formula because it expired. Without a formula, Malloy would be able to allocate the funds to various towns as he sees fit.

Asked if he would veto a budget that contains the sales tax increase the Democratic governor repeated his oft-stated maxim that budget discussions shouldn't start with tax increases.

"We should analyze budget proposals based on whether they are structurally in balance and how they reach that balance,'' Malloy said.

Malloy said he is "encouraged that people are doing some amount of work, that they've collectively said they're working toward a goal where that's going to end up, I have no idea.

He added, But I'm encouraged there appears to be an urgency developing, albeit 54 days into the process. I think that's appropriate, I want a budget, I don't want to do what I'm doing by executive order."

Asked if the Republicans will support a budget, Malloy said: "In a perfect world, people should put their differences aside and acknowledge that we have to do what's best for the state of Connecticut, collectively. I'm not sure any of the caucuses could pass a budget in and of themselves."

Republicans were pleased with the Democratic ideas on structural change. A summary that was sent to legislators said the budget facilitates regionalism through changes to collective bargaining statutes, consolidates local assessor offices to achieve economies of scale, and requires votes on state employee union contracts which Republicans have supported for years.

Courant staff writer Daniela Altimari contributed to this report.

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Excerpt from:
Democrats Seek 6.85 Percent Sales Tax; Malloy 'Not in Favor' - Hartford Courant