Last-minute budget changes made amid corporate concerns

HARTFORD — Connecticut lawmakers made last-minute changes Monday night to a proposed two-year, $40 billion Democratic budget that had prompted several major employers to sharply criticize proposed tax increases, with two raising the possibility of leaving the state.House Speaker Brendan Sharkey said he was uncertain when the House of Representatives would vote on the package, saying rank-and-file members needed to be briefed on the changes to the bill, which was still being drafted by nonpartisan staff. The House adjourned early Tuesday and was expected to take up the budget again later in the day.Sharkey voiced optimism that he had enough votes to support the budget deal and believed the adjustments would satisfy the businesses."We tried to accommodate them," he said, without providing any details. "But I also would remind those companies that the governor produced a budget in February that they were really upset about and the budget we're producing addresses a whole lot of those concerns that they had with the governor's version."Both the House and Senate, controlled by Democrats, originally planned to vote on the budget Monday, with Wednesday's midnight adjournment deadline approaching.But during the day, there was a succession of rare, public statements released from General Electric Co., Aetna Inc. and the Travelers Companies Inc. Each took issue with the approximately $700 million in higher business taxes included in the budget bill. GE and Aetna both questioned whether they would remain in the state if the taxes were enacted."Connecticut is in danger of damaging its economic future by failing to address its budget obligation in a responsible way," read the statement from Aetna. "Such an action will result in Aetna looking to reconsider the viability of continuing major operations in the state."House Minority Leader Themis Klarides, R-Derby, said she believes the comments from the three companies are emblematic of a cumulative effect of past tax increases. Numerous taxes were raised in 2011 to help cover a massive budget deficit."This is not like this is the first time we've heard businesses say we're going to leave. We hear it year after year with these policies that we're putting forward," she said. "So, at a certain point, they're actually going to leave. And there's going to be that breaking point and I have this sad feeling that it's now."During a morning meeting of the Finance Revenue and Bonding Committee, Greenwich Sen. Scott Frantz, the committee's top Senate Republican, estimated the Democratic plan potentially increases taxes by $2 billion. Among other things, the bill require companies to pay tax based on income earned in this and other states; continues a 25 percent corporate tax surcharge; and increases taxes on data processing and digital downloads.Democrats have said the revenue is needed to replenish some of the deep cuts in social services and other programs proposed by Malloy, who had pledged during his re-election campaign that higher taxes were not needed to cover the latest projected deficit of approximately $2.5 billion over the next two fiscal years, which begin July 1.Malloy has embraced the package, calling it an historic budget.The governor focused on how the plan dedicates a half of one percent of the state's 6.35 percent sales tax to transportation needs. It also includes another $2.8 billion over five years in borrowing to help cover transportation infrastructure improvements."When I took office, we had few shovel-ready projects, and our failure to invest over the decades has artificially held back our economy," Malloy said in a statement on Sunday. "However, the smart decisions we make in this agreement now will deliver a brighter future for Connecticut in the long-run."Republicans, however, said the sales tax revenue Democrats want to dedicate for transportation needs essentially covers the money already being transferred from the state's general fund, calling it a wash. Rep. Jeffrey Berger, D-Waterbury, the revenue committee's co-chairman, said the sales tax revenue is expected to grow years down the road, providing additional money for transportation needs.