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October 28, 2015

Malloy proposes biz tax cuts, state employee layoffs; Medicaid cuts not affected

HBJ File Photo Gov. Dannel P. Malloy

With few specifics on dollar savings, Gov. Dannel P. Malloy outlined to his commissioners Wednesday a revised budget plan that includes restoring cuts to Connecticut’s research and development tax credits and reducing the state’s workforce by 500 employees through attrition.

Malloy has proposed restoring the 70 percent usage of research and development tax credits, which the Democratic governor said is used by many of Connecticut’s large employers including hospitals. What hasn’t changed is the $64 million cut in Medicaid that state hospitals have been protesting. Malloy spokesman Devon Puglia said previous recissions to the budget were not discussed at the cabinet meeting.

Meantime, Malloy continues to be opposed to early-retirement incentives for state employees. He said the state needs to control future benefit costs through collective bargaining, and especially by avoiding retirement incentives.

Senate Minority Leader Len Fasano (R-North Haven) and House Republican Leader (R-Derby) issued a joint statement in response to the governor's comments. "We are currently engaged in budget negotiations with the Democrats to determine the actual deficit in the short term that will help guide our decisions. Clearly, staying on the path Connecticut is currently on would be devastating. It’s refreshing to see the governor acknowledge there’s need for a new approach," the Republican leaders said.

The governor is also proposing changes to the net operating loss tax and unitary corporate tax that would provide some relief to Connecticut-based businesses. 

Also at the presentation, Malloy said core services, including education, would be protected. No cutbacks will be made in engineers at the Department of Transportation or social workers at the Department of Children and Families, Malloy said.

As previously announced, Malloy is delaying scheduled raises for 1,600 state managers. He said the state could save approximately $1 million in the current fiscal year.

Malloy continues to stay committed to his 30-year, $100 billion transportation plan. He wants the state constitution amended to create what he calls a “lockbox” for transportation funds. He said this protects them from being used for General Fund purposes. Malloy wants the initiative on the 2016 ballot for voter consideration.

(This story was updated to include comments from Republican legislative leadership.)

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