On June 25th, the State Senate voted 33 to 1, giving final legislative approval to a new two-year state budget for Connecticut totaling some $36 billion. Earlier the House approved the same package by a whopping vote of 134 to 5. The nearly unanimous tallies in both chambers run counter to the nightmare of trying to craft this budget.

In this year when the current budget may produce a surplus approaching one billion dollars, many figured it would be easy to approve a new budget to run the state. As one state senator put it: "We've got money gushing out of the vault!" Yet it took the entire six-month regular legislative session and the nearly all of June in a special session to finalize this budget.

As usual at the State Capitol blame the mess on politics. Some key lawmakers admit it may be harder to reach a budget compromise when money is flowing than when revenues are weak. When there's mucho money for politicians and interest groups to play with, competing priorities clash.

Despite the big surplus Democrats wanted to alter the state income tax formula making it more "progressive", offering tax cuts to some while hiking taxes on the rich. Republicans said it was outrageous to raise anyone's taxes with revenues so strong.

Republican Gov. Jodi Rell began the year by pitching a big increase in state aid to education supported by an across-the-board income tax hike. Democrats said the main new spending initiative should be progress toward universal healthcare.

When everybody has "big ideas" expect some head-butting, bickering, fingerpointing, and political gameplaying to result and that is exactly what happened. For example, House and Senate Democrats pushed through their "progressive" tax bill to make a point. They knew Gov. Rell would veto it and she did. Only after that exercise did true budget negotiations begin.

The regular session ended June 6th with no deal in place. All parties were in a sour "blame the other guy" mood, but vowed to continue negotiations. The new deadline? July l--the start of the fiscal year. Rell stirred the pot by ordering department heads to prioritize services and expenses in case the state had to start the fiscal year without a budget in place.

But now that "crisis" has been averted. Following crucial talks at the governor's mansion, Democrats, Republicans, and the governor agreed to a budget plan. After some predictable delays over writing up "the deal" into legal form, the House struggled to pass it in the wee hours of June 23, so some key leaders could make their vacation getaway flights on time. The Senate followed a few days later.

As for the substance in the package, the new two-year state budget contains an 8.6% spending hike in the first year, and a 4% increase in the second year. That level exceeds the state spending cap, but Rell has agreed to sign off on allowing the overage as required by law.

The only tax hike is a boost in the state cigarette tax from $1.51 a pack up to $2 per pack. The much-debated proposal for a state gasoline "tax holiday" for the summer did not make it into the budget deal.

The new budget also includes a hefty increase of $441 million in state aid to schools--the largest hike in state history, paying homage to Rell's push for education aid.

The package also provides $214 million over the next two years in new healthcare funding by boosting reimbursement rates for doctors, hospitals, clinics, and dentists that serve poor patients on Medicaid. These providers have not seen a meaningful rate increase in 18 years. Democrats say this funding will improve healthcare for the needy who have had trouble getting medical appointments despite participation in state health programs.

New money is also in the budget for nursing homes and the teacher's retirement fund--with enough left over to place $136 million of surplus into the state's already burgeoning "rainy day" reserve fund.

So let's say hallelujah, and say amen--Connecticut has a new budget. Let the summer commence!

Posted 6/26/07

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