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Gov. Malloy Unveils Budget Proposal With Tax Increases, Labor Savings, And Shifting Burdens

Feb 8, 2017

Gov. Dannel Malloy unveiled his proposed budget to the state legislature on Wednesday. 

He called for tax increases, labor cost savings, and shifting teacher pension costs to municipalities.

The state of Connecticut faces a $1.7 billion deficit in the coming fiscal year. The tax increases include a proposed reduction of tax credits, and increasing the cigarette tax.

Malloy is also calling for $700 million in savings annually from state employees. In his speech to the legislature, he acknowledged the difficulty in these negotiations. 

"I am very hopeful we can achieve a positive conclusion and meet the labor savings target laid out in my budget," said Malloy. "It won’t be easy, and that’s fine. I think we’re up to the challenge."

The unveiling of the budget came after several weeks of individual components of the budget being announced.

Last week, the governor shared plans to require municipalities to pay for a third of the teachers' pension program. It amounts to about $407 million.

Republicans and industry groups are criticizing Malloy's budget, saying it would hurt working- and middle-class families while increasing costs for hospitals. State Republican President Pro Tempore Len Fasano said the budget plan would create "chaos."

The Connecticut Hospital Association said taxing hospitals is an "attack" on communities, and a hospital tax imposed several years ago has increased costs for patients.

The budget proposal holds mixed reviews for the environmental community. While the changes are relatively small, Malloy is proposing to eliminate the state's Council on Environmental Quality. That's the agency working independently from the Department of Energy and Environmental Protection to monitor environmental progress and state laws. Its entire budget -- less than $200,000 -- is on the chopping block.

Other parts of Malloy's proposal aren't new. The transportation "lockbox" is once again being pushed as a constitutional amendment. Despite discussions around highway tolls, budget chief Ben Barnes told reporters on Wednesday morning that those issues can't be raised until the lockbox is in place to protect the transportation revenue.

Read a transcript of Malloy's speech and his budget proposals here.

Patrick Skahill contributed to this report, which includes information from the Associated Press.