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Connecticut’s Delicate Legislative Balance: Deadlock or Breakthrough?
Connecticut in Transition
Connecticut’s Delicate Legislative Balance: Deadlock or Breakthrough?
Republicans Control U.S. SenateDemocrats Control U.S. House
Democrat Chris Murphy re-elected to Senate
Democrats Larson, DeLauro, Courtney, and Himes re-elected to Congress
Democrat Jahana Hayes elected to Congress
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Connecticut’s Delicate Legislative Balance: Deadlock or Breakthrough?
Office of Fiscal Analysis projects budget deficits amounting to
$1.969 billion in FY 2019-2020
$2.449 billion in FY 2020-2021
Projected State Budget Deficit
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Connecticut’s Delicate Legislative Balance: Deadlock or Breakthrough?
Democrats Win Control of State Government
Edward Miner “Ned” Lamont, Jr. elected Governor
Democrats seize control of the State Senate
Democrats increase their majority in the State House
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Connecticut’s Delicate Legislative Balance: Deadlock or Breakthrough?
Vote Tally For Governor
Ned Lamont (Democrat) 49.11%
Bob Stefanowski (Republican) 46.45%
Oz Griebel (Petitioning) 3.91%
Rodney Hanscomb (Libertarian) 0.44%
Mark Greenstein (AMIGO) 0.09%
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Connecticut’s Delicate Legislative Balance: Deadlock or Breakthrough?
Priorities: $15 minimum wage, tolls, legal marijuana, paid family medical leave, property tax credit
Governor-Elect Ned Lamont
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Connecticut’s Delicate Legislative Balance: Deadlock or Breakthrough?
CHA and Governor’s Office Begin Discussions to Resolve Ongoing Disputes
Outstanding litigation includes:
Declaratory ruling appeal
Hospital tax refund requests
Medicaid rate appeals
Other pending appeals
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Connecticut’s Delicate Legislative Balance: Deadlock or Breakthrough?HOUSE CONTROL
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
D 100 93 99 106 114 100 99 87 79 92
R 51 57 52 45 37 51 52 64 72 59
0
20
40
60
80
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D
R
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Connecticut’s Delicate Legislative Balance: Deadlock or Breakthrough?SENATE CONTROL
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
D 21 21 24 24 24 23 22 21 18 23
R 15 15 12 12 12 13 14 15 18 13
0
5
10
15
20
25
30
35
40
D
R
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Connecticut’s Delicate Legislative Balance: Deadlock or Breakthrough?
January 9, 2019: Regular Session Convenes
Governor Lamont’s Goals:
Reinvent Connecticut – to think big, act boldly
Craft an honestly balanced budget that does not borrow from the future, but invests in the future
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Connecticut’s Delicate Legislative Balance: Deadlock or Breakthrough?
February 20, 2019: Governor Releases 2020-2021 Budget
$43 billion biennial budget:
Increases spending by 1.7% and 3.4%
Purports to address the biennial budget deficit, now projected at $3.7 billion
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Connecticut’s Delicate Legislative Balance: Deadlock or Breakthrough?
Budget Details
Includes tolls
Increases taxes on various goods and services
Eliminates sales and use tax exemptions
Lowers gift and estate taxes
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Connecticut’s Delicate Legislative Balance: Deadlock or Breakthrough?
Budget Details (continued)
Implements paid family and medical leave
Restores $200 property tax credit
Increases the minimum wage to $15 over 4 years
Rejects the hospital tax agreement
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Connecticut’s Delicate Legislative Balance: Deadlock or Breakthrough?
March 8, 2019: Hospitals Testify in Opposition to Governor’s Budget
Increases the hospital tax from $384 million to $900 million per year
Abandons a 2017 agreement between hospitals and the state
Increases the cost of healthcare services in Connecticut
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Connecticut’s Delicate Legislative Balance: Deadlock or Breakthrough?
March 27, 2019: Hospital Day at the State Capitol
Implore legislators to reject the Governor’s proposal to raise the hospital tax
Emphasize the role of hospitals
- $27 billion contribution to state’s economy
- Over 100,000 employees
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Connecticut’s Delicate Legislative Balance: Deadlock or Breakthrough?
April 12, 2019: Legislature Proposes More Taxes on Hospitals…
Services in Lieu of Tax (SILOT) payments
Allows towns to collect annual fees from not-for-profit organizations, including hospitals
- Increases cost of healthcare
- Inhibits access to healthcare
A thinly disguised effort to impose a local property tax on hospitals
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Connecticut’s Delicate Legislative Balance: Deadlock or Breakthrough?
April 26, 2019: …and More Taxes on Hospitals
Deposits in Lieu of Taxes (DILOT) fees for community restoration activities
State Treasurer collects an annual fee equal to 25% of what not-for-profit hospitals would pay in local property taxes
- Increases cost of healthcare
- Inhibits access to healthcare
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Connecticut’s Delicate Legislative Balance: Deadlock or Breakthrough?
April 30, 2019: Appropriations Committee Passes Spending Plan
$200 million more spending than Governor’s –increases by 1.9% and 3.6%
Rejects the hospital tax agreement
- Legislators acknowledge settlement discussions
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Connecticut’s Delicate Legislative Balance: Deadlock or Breakthrough?
May 1, 2019: Finance Committee Passes Revenue Plan
Rejects the hospital tax agreement
$516 million hospital tax increase
SILOT bill dies
DILOT bill made permissive, passes committee
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Connecticut’s Delicate Legislative Balance: Deadlock or Breakthrough?
May 16, 2019: Minimum Wage Bill Sent to Governor
Increase from $10.10 to $15 over 4.5 years
Starting 2024, increases are indexed to annual changes in the Employment Cost Index
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Connecticut’s Delicate Legislative Balance: Deadlock or Breakthrough?
May 28, 2019: CHA and Governor Reach Tentative Agreement
Resolves outstanding claims
Hospitals must review and approve terms
Agreement to be submitted to the General Assembly for review and action
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Connecticut’s Delicate Legislative Balance: Deadlock or Breakthrough?
May 30, 2019: Paid Family Medical Leave Bill Sent to Governor
Workers will be paid for up to 12 weeks’ leave for medical needs or to care for a newborn or sick family member
Funded by a half-percent payroll tax on employers
Deductions start January 1, 2021; benefits may be collected starting January 1,2022
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Connecticut’s Delicate Legislative Balance: Deadlock or Breakthrough?
June 5, 2019: Biennial Budget Approved By The Legislature
Approved largely along party lines
Increases spending 1.7% and 3.4%
Increases Budget Reserve Fund to over $2 billion
Purports to address $3 billion deficit
Repeals scheduled reduction in hospital tax
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Connecticut’s Delicate Legislative Balance: Deadlock or Breakthrough?
June 6, 2019: Regular Session Adjourns
Budget done, but work remains
Special Sessions forthcoming
- Tolls
- Bond authorizations
- School construction
- Hospital settlement
- Transportation infrastructure
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Connecticut’s Delicate Legislative Balance: Deadlock or Breakthrough?
Governor’s Priorities: How Did He Fare?
Paid family medical leave - pass
Minimum wage - pass
Tolls - incomplete
Legal marijuana - fail
Property tax credit - fail
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Connecticut’s Delicate Legislative Balance: Deadlock or Breakthrough?
How Did Hospitals Fare?
Services in lieu of taxes – fail
Deposit in lieu of taxes - fail
Public option bill - fail
Opioid use - pass
Expand telehealth coverage - pass
Other restrictive proposals - fail
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Connecticut’s Delicate Legislative Balance: Deadlock or Breakthrough?
The Public: How Did We Fare?
The Good:
Paid family medical leave
Minimum wage
Stronger gun laws
Debt-free community colleges
Refinancing teacher retirement system
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Connecticut’s Delicate Legislative Balance: Deadlock or Breakthrough?
The Public: How Did We Fare? (continued)
The Bad:
No significant effort to reduce spending
Expansion of sales tax
$705 million in new taxes or fees
Increased costs to employers
Budget assumptions rosy/unrealistic?
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Connecticut’s Delicate Legislative Balance: Deadlock or Breakthrough?
New Taxes and Fees
Sales Taxes on:
Digital downloads
Parking
Dry-cleaning and laundry
Interior design
Online retail sales
Restaurant meals – 1% surcharge
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Connecticut’s Delicate Legislative Balance: Deadlock or Breakthrough?
New Taxes and Fees (continued)
Excise tax on alcohol
Partnerships and small business income
Occupancy tax on short terms rentals: Airbnb
Mansion tax
Corporate surcharge continued
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Connecticut’s Delicate Legislative Balance: Deadlock or Breakthrough?
New Taxes and Fees (continued)
10 cent surcharge on plastic bags
Ridesharing service fee
Vehicle trade-in fee
Repeal tax credit for STEM graduates
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Connecticut’s Delicate Legislative Balance: Deadlock or Breakthrough?
An Uncertain Future
Optimistic revenue estimates
Relies on $458 million in labor savings
Future budget deficits are projected
- $1 billion in FY 2022
- $1.5 billion in FY 2023
- $1.3 billion in FY 2024
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Connecticut’s Delicate Legislative Balance: Deadlock or Breakthrough?
Stabilizing Factors
$2.2 billion deposited in Budget Reserve Fund
State’s credit rating raised from “negative” to “stable”
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Connecticut’s Delicate Legislative Balance: Deadlock or Breakthrough?
Troubling Trends Remain
Lag in job creation
High employer costs
High taxes
High energy costs
Corporate relocations
Population loss
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Connecticut’s Delicate Legislative Balance: Deadlock or Breakthrough?
Government Mischief
3.5% legislative staff pay raise secretly tucked into budget
Exempted from ethics and disclosure rules a foundation to disburse $100 million in taxpayer money and $200 million in private investments to public schools
Tax projections differ from consensus revenue estimates
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Connecticut’s Delicate Legislative Balance: Deadlock or Breakthrough?
Carl Schiessl, Senior Director, Regulatory AdvocacyConnecticut Hospital AssociationSchiessl@chime.org (203) 294-7341
Questions?
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