- Associated Press - Monday, October 16, 2017

HARTFORD, Conn. (AP) - A frustrated Gov. Dannel P. Malloy on Monday released a fourth version of his state budget proposal, hoping it will motivate the General Assembly to finally come up with a tax-and-spending plan he can sign into law after a months-long impasse.

But his latest two-year, $41.25 billion plan received lukewarm responses from legislators as they continued their closed-door, bipartisan talks in hopes of reaching a draft deal they can present to the Democratic governor.

“I welcome any and all ideas to the conversation and I appreciate the fact that Governor Malloy has shared this proposal,” Senate Republican Leader Len Fasano said in a written statement. “That being said, it is obvious that the governor’s proposal … would not pass the legislature in its current form.”

House Republican Leader Themis Klarides called Malloy’s revised budget “a distraction” from the progress the top Republicans and Democrats have made in recent days without the governor in the room. Lawmakers hope to have a budget vote sometime next week, but it’s unclear if that will happen.

Malloy said his latest proposal, which he noted comes 249 days after he proposed his first budget for the legislature to consider, is “bare bones,” reducing spending by $144 million. It also eliminates some unpopular tax increases included in an earlier compromise budget he reached with fellow Democrats, such as a proposed state property tax on seasonal homes, a 25-cent fee on ride-hailing services and a cellphone surcharge.

“This is a lean, no-frills, no-nonsense budget,” Malloy said in a written statement. “Our goals were simple in putting this plan together: eliminate unpopular tax increases, incorporate ideas from both parties, and shrink the budget and its accompanying legislation down to their essential parts.”

The governor’s plan also includes an updated formula for distributing state education funding to Connecticut schools.

Democratic and Republican legislative leaders have been meeting privately this month in hopes of finally reaching a bipartisan agreement, something that’s seen as crucial given the close partisan makeup in the state legislature. Connecticut has been without a budget since the fiscal year ended June 30. While lawmakers contend they’ve been making strides, Malloy, who has been running the state government using his limited executive spending authority, is frustrated by their slow pace.

“I cannot stress enough, time is of the essence,” Malloy said, noting how Connecticut’s bond rating has suffered due to the impasse.

Last week, Standard & Poor’s Global Ratings downgraded its outlook for the state’s general obligation bonds to “negative,” while keeping the rating at A-plus.

On Monday, Moody’s Investor Service announced it had placed 26 Connecticut municipalities and three regional school districts under review for a possible downgrade. Another 25 cities and towns and three regional school districts were assigned negative outlooks. The rating agency cited the state’s budget impasse and the vulnerability of state aid to municipalities.

“Such action only serves to reinforce that while state legislative leaders claim to have been meeting in good faith to resolve the state budget impasse, the time for action on a state budget agreement is now,” said Joe DeLong, executive director of the Connecticut Conference of Municipalities.

He predicted Moody’s actions will have “a devastating impact” by increasing communities’ borrowing costs, potentially increasing local tax rates and limiting their ability to finance short- and long-term projects.

This month, Connecticut cities and towns are bracing for $140 million in school funding cuts - the first of $557 million in total under the governor’s executive order. Malloy’s budget director, Ben Barnes, said there will be “large influxes of cash” into municipal coffers once a new budget is passed.

But the Connecticut Conference of Small Towns is still unhappy with Malloy’s latest offering, calling it “a swing and a miss” for shifting teacher pension costs to municipalities “in a way that will overwhelm property taxpayers.”

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