Seeking accord - Lawmakers push for budget pact; biz frets over mandates

HBJ PHOTO | matt pilon

PHOTO | Contributed Sens. Martin Looney (D-New Haven, left) and Len Fasano (R-North Haven) plan to scrutinize healthcare mergers.

Rep. Themis Klarides (R-Derby)

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By Matt Pilon

Tax increases may be off the table during the legislative session that begins this week, but the business community will remain on the defensive, lobbyists say, working to fend off proposed mandates that have gained growing support in recent years, including a publicly administered retirement plan.

Meanwhile, balancing the budget in the face of growing deficits will be the main priority for legislators, who just patched a $350-million hole in the current fiscal year's budget during a December special session.

It remains uncertain whether Democratic leaders will attempt larger structural state-budget reforms, as businesses and Republican policymakers are seeking, or simply close deficits projected for this and the next fiscal year. One important factor is that legislators face an election nine months from now.

Impact of healthcare mergers

Healthcare mergers and their potential impact are also expected to undergo continued scrutiny this session, while funding decisions on Gov. Dannel P. Malloy's transportation infrastructure plan, including the potential adoption of highway tolls, could be pushed out to 2017. It was unclear as of press time if there would be any legislation this session allowing a third casino in the state.

Brian Flaherty, senior vice president of public policy at the Connecticut Business & Industry Association (CBIA), said he hopes lawmakers begin to take a longer-term view of the budgeting process this session.

“Look at the horizon … look for long-term structural changes,” Flaherty said. “For too long the numbers have driven policy. We want the policy to drive the numbers.”

Budget and tax uncertainty was one of several reasons cited by General Electric in its decision to move its headquarters from Fairfield to Boston.

GOP seeks changes

Senate Minority Leader Len Fasano (R-North Haven) and his House counterpart, Rep. Themis Klarides (R-Derby) are pushing the Democratic majority to support bigger budget changes this year, including separating pensions from state labor contracts, enacting a plan to control rising long-term pension debt (a process the Malloy administration kicked off last year), and strengthening the state's constitutional-spending cap, which was deemed unenforceable several months ago by Attorney General George Jepsen.

“This is not just 'let's do what we have to do to get to the election,' ” Klarides said.

Fasano said he doesn't hold out much hope that Democrats will make major structural changes this year, given the looming election.

“They'll just wait,” he said. “In our view, they need to tackle it now.”

Budget hole opens

The $350 million budget hole legislators patched in December has opened up again, growing from $7 million to $72 million, according to projections from the nonpartisan Office of Fiscal Analysis (OFA).

OFA has also projected a more than $500 million deficit for the fiscal year that begins July 1, which legislators must tackle this session.

Senate President Pro Tem Martin Looney (D-New Haven) said the legislature will likely have to rely on spending cuts to close the gaps. “I don't see at this point any sort of groundswell in support of a tax increase in 2016,” Looney said.

He said ongoing negotiations with state labor unions will also be important to controlling costs.

No tax increase anticipated

Office of Policy Management (OPM) Secretary Benjamin Barnes told an audience of social-service advocates last week that he doesn't anticipate any tax-increase proposals in Malloy's budget plan to the legislature.

Malloy is expected to shed more light on his legislative priorities in his annual State-of-the-State address Wednesday to kick off the session.

Barnes did say, however, that the legislature will have its hands full managing the deficit.

CBIA proactive on biz mandates

While businesses may be spared tax increases this year, CBIA has sought to build early momentum in opposition to business mandates that are likely to be raised in some form over the next several months.

The association sent a letter to lawmakers last month signed by nearly 70 chambers of commerce and industry associations urging legislators to reject any bills seeking to establish a state-sponsored retirement plan, expand existing laws on paid family and medical leave, penalize employers who pay their workers less than $15 per hour, or that govern how far in advance employers must provide work schedules to employees.

“It is critical to Connecticut's businesses that the perpetual threat of new and expanded labor mandates ends now,” the letter reads.

CBIA said labor mandates adopted in recent sessions — including paid sick leave and minimum-wage increases — have hurt employers.

Push back by Democrats

Democrats have pushed back against criticism of sick leave, citing a 2014 study by the Center for Economic Policy Research that found nearly two-thirds of Connecticut businesses had small or no cost increases as a result of the state's recently changed law.

CBIA's Flaherty said his members want to ensure the state can continue to grow jobs, just as the private sector finally regains all the positions lost during the 2007-2009 recession.

“We're looking for the state to redouble its efforts so that they don't make it harder to maintain the jobs we have,” he said.

Flaherty also struck a positive note, saying that despite the state's low position in a number of business rankings, it has a strong workforce and high quality of life.

“That needs to be affirmed and protected,” he said.

Car tax benefit

Asked about whether legislators felt pressure to respond in some way to GE's departure, Looney pointed to a law passed last year that caps motor vehicle excise taxes at 32 mills. The impacts of that change will start to be felt later this calendar year, particularly for those in cities like Hartford.

“The car tax component will be a tremendous benefit to businesses with fleets of vehicles in high-mill communities,” Looney said. “I think we're always interested in helping businesses.”

Healthcare scrutiny

One area of bipartisan agreement this year may be continued scrutiny of healthcare mergers and consolidation.

“We're very concerned about the effect of hospital consolidation on service delivery, quality of care, the workforce of hospitals and overall cost control,” Looney said.

A law adopted last year, which had the support of both Looney and Fasano, created greater state oversight of hospital mergers, required various disclosures, and capped facility fees, among other measures.

In a similar vein, the Connecticut State Medical Society (CSMS) said it's planning to push lawmakers to probe the impacts of health insurance mergers, such as those proposed by Aetna and Cigna.

“At the very least, we'd like some sort of public forum on mergers and the insurance environment,” said Ken Ferrucci, CSMS' senior vice president of government affairs.

The Connecticut Hospital Association, fresh off a months-long fight with lawmakers over supplemental Medicaid cuts, plans to make another attempt to convince legislators to phase out a hospital tax that took effect in 2012.

The Associated Press reported in November that CHA was considering suing the state on the grounds that the tax is unconstitutional.

“We continue to move that effort forward,” Michele Sharp, CHA's vice president of communications, said last week. She said she couldn't comment further on the legal matter.

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