Connecticut Lawmakers Eye Budget Deal to Close $3.5 Billion Hole

By Joseph De Avila Features Dow Jones Newswires

Connecticut lawmakers on Thursday were debating a bill that would close a two-year budget hole of $3.5 billion through a mix of increases to taxes and fees and shifting some teacher retirement costs from the state to municipalities.

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The budget plan proposed by Democratic state lawmakers, which hold a narrow majority in the Legislature, raises more than $3.7 billion in new revenue by reducing a property-tax credit, increasing taxes on cigarettes, imposing a 49-cent monthly charge on cellphone bills and other measures.

Connecticut Gov. Dannel Malloy, a Democrat, said he would sign the bill if it passed.

The budget "appears to be a balanced and responsible compromise," Mr. Malloy said.

Since July 1, state operations have been funded by an executive order signed by Mr. Malloy that has slashed funding for cities and towns across Connecticut. The budget proposal would give towns more money compared to the executive order.

Under the budget deal, cities and towns across Connecticut would be on the hook for $281.6 million in teacher pension costs over the next two years. The state and teachers currently pay the entire amount of retirement costs for teachers.

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Municipal leaders across the state have opposed shifting teacher pension costs to towns and cities.

"I think it's patently unfair," said state Sen. L. Scott Frantz, a Republican, who represents Greenwich, Conn.

Mr. Malloy has defended the proposal to shift some teacher pension costs to municipalities and has said it's unsustainable for the state to shoulder the burden of retirement costs for educators without help for cities and towns.

House Majority Leader Matt Ritter, a Democrat, said the budget would also provide enough money so that Hartford would be able to avoid filing for bankruptcy. The city will have to work with an oversight board in exchange for the financial help.

Hartford, which is facing a budget deficit approaching $50 million, said last week it could file for bankruptcy unless the state gave it assistance.

Write to Joseph De Avila at joseph.deavila@wsj.com

(END) Dow Jones Newswires

September 14, 2017 17:28 ET (21:28 GMT)