Connecticut’s top state senator said Wednesday he believes moderate Democrats are “growing increasingly comfortable” with a sales tax increase that could ease pressure to slash municipal aid and help break an impasse that has left the state without a budget.
“They’re growing increasingly comfortable recognizing it as an inevitability, I think,” Senate President Pro Tem Martin M. Looney, D-New Haven, said of an increase in the 6.35 percent sales tax.
Gov. Dannel P. Malloy reacted cautiously to the prospect of a sales tax increase, which would be only one element of a budget solution. He indicated he was more interested in hearing what combination of other revenue and spending cuts legislators intend to pursue.
“This should not be a discussion led on revenue,” Malloy said. “This is a discussion about making hard choices, and if people are ready to make hard choices — if and when they’re ready — we’re going to get a budget. And if not, it s going to be more difficult.”
He said he would veto any budget that leaned too heavily on new revenue.
Despite Looney’s view of the inevitability of a sales tax increase, three of those moderates, Sens. Joan Hartley, D-Waterbury; Paul Doyle, D-Wethersfield; and Gayle Slossberg, D-Milford, warned there was not yet a consensus that could deliver a budget for the fiscal year that began July 1. With huge municipal grant payments hanging in political limbo, House Democrats announced plans this week to hold a budget vote between Sept. 11 and 14.
House Speaker Joe Aresimowicz, D-Berlin, said he believes there is sufficient support to pass his caucus’s proposal for a new two-year budget. That plan relies on boosting the sales tax rate, though Aresimowicz said probably not as high as the 6.99 percent previously discussed, and on surcharges on restaurant and hotel transactions — to avert deep cuts and other burdens Malloy proposed for cities and towns.
The governor wants communities to pay $400 million per year to the state to help cover contributions to the teachers’ pension fund, though his administration has expressed a willingness to compromise. He also would subject nonprofit hospitals to municipal taxation, which would generate $210 million annually. But that revenue gain to towns largely would be offset by reductions Malloy proposed in various municipal grant programs.
House Democrats proposed the sales tax hike and surcharges largely to mitigate these measures.
Looney and Aresimowicz hedged on the question of how high a sales tax might be accepted by moderate Democrats in the Senate. Without offering examples, Looney said legislators were exploring expanding the base of products and services subject to the tax.
“That’s a question that remains to be answered,” he said. “We’re continuing to talk. We’re going to have another caucus next week. I think at the end of the process it will have to be part of the final budget in some way in order for us to get a budget.”
But Hartley said, “I am not growing more comfortable with the sales tax.”
Hartley, Slossberg and Doyle joined last month in proposing a series of long-range fiscal reforms centered on the state’s huge bonded debt and massive unfunded retirement benefit obligations.
The three senators agreed to support a union concessions plan that also extended the state employee unions’ benefits program from 2022 to 2027 in exchange for a pledge to make a best effort to include those reforms in the new state budget.
“The first and foremost question is the adoption of the reform plan that was put out there,” Hartley said. “Before we get to anything (else), that is pivotal.”
Some of the reforms sought by the trio would restrict in statute benefits the state could offer in future contracts. Others would end automatic cost-of-living adjustments to pensions, remove overtime earnings from pensions calculations, and restrict future benefits contracts with state employee unions to no more than four years in duration.
The moderates also would peg contract arbitration awards to the state’s ability to pay increased wages and benefits and create a commission to develop a sustainability plan for the pension fund for municipal teachers.
“We have to address the legacy issues, the long-term problems and systemic issues that have plagued us and will continue to plague us in the future unless we begin this work immediately,” Hartley added.
“I was surprised by that comment (from Looney) because we are still in caucus discussions regarding the overall budget,” Doyle said. “I still have overall concerns with any broad-based increase in the sales tax. I am hearing much opposition from my constituents to that.”
“I am no warmer to a major sales tax increase than I was when it was first proposed,” Slossberg said. “We need systemic reforms and a sustainable budget that will get us out of permanent fiscal crisis. And I don’t think a major sales tax increase is going to do that.”
Democrats hold a narrow 79-72 edge in the House, and the 36-member Senate is split evenly along partisan lines.
Republicans already have expressed opposition to the sales tax increase and are expected to oppose the House Democratic plan.
To have any chance of passing in the Senate, it would require support from all 18 Democratic senators and also from Democratic Lt. Gov. Nancy Wyman. As Senate president, she can cast a tie-breaking 37th vote.
WASHINGTON: A group representing small businesses is suing the Pentagon and Sikorsky for information about the defense contractor’s hiring of small and minority businesses as subcontractors.
The Sonoma, Calif.-based American Small Business League says the information it has sought from Sikorsky will show the Pentagon has for decades falsified the volume of subcontracts that have been awarded to small businesses.
The league’s lawsuit stems from it’s efforts to obtain information about Sikorsky’s participation in a Defense Department program aimed at increasing subcontracting opportunities for small businesses.
In April of 2014, the American Small Business League filed a freedom of information request for the annual report submitted by Sikorsky and about a dozen large defense contractors that participate in the Pentagon’s Comprehensive Subcontracting Plan Test Program. By law, federal agencies are obligated to award a portion – currently 23 percent – of their contracts to small businesses and those owned by women or other disadvantaged groups.
Sikorsky initially declined to provide the information, but eventually was forced to do so by a federal judge.
Despite being ordered to release an un-redacted copy of the requested documents, Sikorsky only supplied the court with a heavily redacted version and appealed the judge’s order to the California-based 9th Circuit Court of Appeals. A trial date of Dec. 11 has been set for the case.
The redacted document blacked out all names and addresses of the helicopter makers’ subcontractors. Sikorsky projected spending more than $913 million on large subcontractors and $272 million on small businesses and those owned by women, veterans and minorities.
Sikorsky, purchased by Lockheed Martin in late 2015, said it could not divulge details of its subcontractors because that would put it at a competitive disadvantage with other defense companies.
“At Lockheed Martin our suppliers are integral partners in delivering our products and services to our customers,” said Sikorsky spokesman Paul Jackson. “Sikorsky is an active participant in the Comprehensive Subcontracting Plan Test Program and has complied with all small business requirements under the Department of Defense’s guidelines.”
Jackson also said Sikorsky’s Comprehensive Small Business Plan “is competition sensitive” and was recognized as such by the appeals court.
“We will continue to work with the Department of Defense to ensure that our rights under FOIA are protected,” Jackson said.
The business league argues that Sikorsky’s contracts with the government are “sole source” contracts and Sikorsky has no competitors for their Pentagon business.
Headed by small business advocate Lloyd Chapman, the American Small Business League is skeptical that the Pentagon’s Comprehensive Subcontracting Plan Test Program actually helps small business.
In a recent op-ed, Chapman said the CSPTP “was designed to eliminate all transparency for the Pentagon’s largest prime contractors.”
Chapman said the CSPTP also eliminated all penalties that defense contractors may face for non-compliance with federal small business contracting goals.
Witnesses at December’s trial include Janice Buffler, Department of Defense associate director of subcontracting policy; Andrew Driver, Sikorsky Aircraft senior manager of market analytics; Amy Johnson, Sikorsky director of supply chain; and Martha Crawford, Sikorsky supplier diversity manager.
NEW HAVEN: at BizBuySell.com, a small business for sale website, released a summary of its business for sales. Median asking price of businesses for sale in New Haven in Q2 of 2017 was increased substantially, $290,000 compared to 200,000 Q2 of 2016.
Businesses listed in New Haven in Q2 of 2017 had a large median revenue increase as well growing to $519,826 up from $460,000 at this same time last year in Q2 of 2016.
Median cash flow however did not improve meaningfully for New Haven businesses at $105,780 vs the median cash flow of $105,000 in Q2 2016.