Budget approved in the early, early morning.

I am sitting in the House chamber at 5am. It looks like things are done for the night. I will write more about what was included in the budget approved tonight when I have a bit more time. But a few quick notes...

There were a lot of good things in the budget. But, of course, I was very disappointed that the Governor pressed for and got cuts in important grants to fund education and keep property taxes down. This is going to leave cities and towns having to fill a shortfall in their budgets.

And, of course, I am disappointed that the important tax reforms that I voted for and that Gov. Rell vetoed were not in the budget. The result of this is that most people in the state will pay higher taxes than they would have if the Democratic budget was approved.

I am headed home now. It's 5:05am.

NAACP event honors hopes in a new generation.

Parking was tight yesterday morning at the Bethesda Apostolic Church in New Britain, where my wife, stepson and I attended a breakfast for the New Britain Branch of the NAACP. And, as we came into the basement hall, the event organizers were busy bringing out chairs for the overflow crowd.

More than a hundred people, by my estimate, packed the hall to honor graduating high school seniors. It was a wonderful event, and everyone was excited by the large turnout.

But, what really made the event was hearing the graduates, one by one, tell the audience about their plans for the future. They told us what colleges they are going to - like Tunxis Community College, Temple University, CCSU and the Naval Academy. And they told us what they wanted to do in life - doctor, social worker, teacher.

Parents and community were all so very proud of the young people's accomplishments - and their abilities and ambitions.

When I was asked to speak I decided to say to the graduates what I felt was the optimistic spirit in the room. Someone else had said that the young people's successes and opportunities were built on the work and sacrifices of others who came before them. I expanded on this, pointing out the great hopes that family, friends and community place in the new grads, and how we all want them all to succeed.

We all want young people to have a bright future. For parents, most of all, it is an expression of their caring for their children that they want so much for them to have happy, healthy and successful lives.

But, the great possibilities that exist for young adults are also opportunities for us all. Whether as families, as communities, as a state, a nation or the world, the possibilities, as individuals, of young adults are the possibilities for a better world. Nothing goes so far to build a better world than to empower the next generation.

And so, what I hoped I had conveyed to the graduates was how much so many people had invested in their success, how much our future depends on them succeeding and how much everyone wants them to fulfill their full potential.

It was a happy and hopeful event. I was very glad to have been there.

Thanks, graduates. And good luck!

Waiting for budget negotiations to finish.

I was getting out of my car today, on my way to the groundbreaking ceremony for important renovations at New Britain's Human Resources Agency, when a man sitting in front of his house across the street, seeing my legislative license plate, said, "We need a budget."

He did not seem satisfied by my assurance that work is underway on it, so I offered a more detailed response. "We're trying to get the Governor to say 'yes'." He wished me luck and I thanked him.

But, the truth of the matter is that, right now, I am waiting for the state budget, myself.

Currently, the state budget is not in the hands of the legislature - not the whole legislature, anyway. I, and most other legislators, are waiting for the conclusion of budget negotiations between the Governor and legislative leaders. Only after that process concludes will we will be able to see the finished product. Then, we will be able to decide whether we agree or disagree with this negotiated budget.

On the surface, this is an efficient way for elected officials from two different branches of government and two different parties to work out their differences and approve a budget for the state government. But doing our state budget this way comes at a cost to the public. And that cost is a loss of their input into the final product.

The problem is the practicality of this process. When the negotiated budget comes to back to the full legislature, it appears on legislators' desks as a take-or-leave it proposition. We have to decide whether we agree or disagree with the package, as a whole - specifically, whether we think that the good in the budget outweighs the bad.

And, legislators who have decided to support the budget as a whole must vote against all amendments proposed to change the budget deal - even amendments they agree with - because if any amendment are approved, the deal with the Governor would be undone. No budget would be approved, and the public frustration would grow.

I do not think this system serves the public well.

In my mind, a far better system would be for the legislature to approve a budget through the normal legislative process. The budget committees would offer their changes to the Governor's proposed budget. Then, the House of Representatives and Senate would consider the committees' recommendations. After hearing our constituents' concerns about the committee's recommendations, legislators would be free to offer amendments, which would be debated and voted up or down on their merits. And, when the House and Senate approve the budget, with the same amendments, the finished product would be sent to the Governor.

While the Governor would have the authority to veto the entire legislatively-approved budget, it would be much more practical for her, instead, to exercise her constitutional "line-item veto" power. This lets her approve the budget, as a whole, but reject parts of it. The legislature would then have to decide either to override the Governor's veto or approve a level of funding for the vetoed items that the Governor would find acceptable.

This process would allow the state to have a budget approved in timely manner, and yet still reflect the integrity of our system of checks and balances. More important, it would give the public much great opportunity to have their voices heard while the key budgetary decisions that affect them are being made.

The gentleman who spoke to me on the street today would then, not only have a budget approved by now, but he would also havemore say about what that budget would do for the state.

Phone call from the Governor on education.

I just received a very interesting phone call from Gov. Rell, herself.

She called because she said that she wanted to correct some of the comments that I made yesterday in the Hartford Courant and the New Britain Herald, that she has been advocating for to cut in half the $8.4 million in increased state aid she proposed for New Britain in her original budget back in February.

She assured me that this was not correct, and told me that she had not abandoned her budget proposal. She explained that she was actually advocating for more money in the second year of the two year budget than the Democrats had proposed. The Democratic budget called for $1.8 billion for Educational Cost Sharing (ECS) grants to cities and towns in the 2007-08 year, and then the same $1.8 billion in the 2008-09 year. (Democratic leaders have told me that they did this because it is important to deal with this coming year's budget this year, and they would take up the next year's increase next year. I told Gov. Rell that I would like an increase for next year, as well.)

I told her that I apologized if I was wrong, but I explained to her that what I had said was what I had heard that the Governor's own negotiators had put on the table. I would add that I have repeatedly heard the same thing from other legislators at the Capitol, and almost every Democratic legislator I have spoken to about this agrees that the Governor had given up advocating for her original budget - including her education funding plan. But, if I got some of the facts wrong, I do apologize.

Her word that she is committed to her original education plan is reassuring. At least if she is committed her proposal for the coming year, it would mean that the city budget just approved would be balanced.

But, is the Governor really committed to her whole original education plan? She has made a very public point of abandoning the revenue plan that she proposed back in February as essential to fund, not just this year's proposed education increases, but the second year's education funding, as well. This is just the opposite of her claim that she supports more education funding in the 2008-09 budget year. And it would certainly mean that she has no plans to fund the third, fourth and fifth year of this five-year education plan.

So, it is clear that she has abandoned what was a very good and bold plan to increase education funding for New Britain and the state, as a whole. This is unfortunate.

The fact, in very practical terms, is that Democrats' budget plan would increase New Britain's grants for education and mill rate relief for the coming year by about $10 million, compared with the Governor's proposal for $8.4 million. The best way for Gov. Rell to support New Britain in the state budget would be to agree to sign the Democrats' budget.

I appreciated the opportunity to talk with Gov. Rell about these issues. I can tell you that even state legislators do not get a call from the Governor every day. I thank her for taking the time to contact me about this.

Update, June 23, 2007:
It turns out, the Governor was not truthful with me when she told me that she was not negotiating against her own education funding proposal. In fact, as it turns out, the following, which I had removed from this post because I began to question my understanding of what she had told me, turned out to be exactly what the Governor was doing:

But the Governor then told me something that sounded very similar to the very thing that I had based my comment on: She suggested that her negotiators may have offered to spread some of the education funding around from the first year of the budget to allow the education funding to increase for the second year.

And this comment I made not only turned out to be true, but the concern I expressed, here, turned out to be very much what happened:

If she has proposed cutting from education this coming year to spend more on it the year after that, it still means that this year's budget would decrease. And that would, as I suggested, leave a hole in the City's budget. Even if it is not a $4 million hole, a $2 million hole would still be very harmful. [Except that it turned out to be a $600k hole.]

In fact, the Governor did, as I originally said, negotiate against her own education funding plan. And, as I said...

...based on the Governor's own comments, it sounds like my understanding of things was more or less accurate.

...I was correct. The Governor, as opposed to what she told me, was negotiating against her own budget proposal.

After the regular session.

With the crush at the end of the legislation session, I have not been able to post anything these past few days. Now that it is over - at least the regular session - I will start to report on what happened, and what still needs to be done.

Two weeks ago, I wrote a post highlighting the most important issues of the session and the possibilities that progress would be made on them. I cannot say that things went as well as I had hoped:

Property Tax Reform, fairer taxes and education funding:
Democrats proposed a very good budget that would relieve people's property tax burdens, make the state's taxes fairer and fund health care, education and community services. But the Governor's main priority in ongoing budget negotiations is keeping the present unfair system that benefits the wealthy at everyone else's expense.

While the Governor, back in February, proposed a bold, five-year education plan that would have greatly increased aid to New Britain, she has since abandoned this plan. Her priority to keep the wealthiest people's taxes low has trumped what had been a bold proposal that could have made a real difference if she had stuck with it.

The budget is still being negotiated right now, however. And, if the Governor is willing to agree to the Democratic budget, there would be even more funding for property tax relief and education than even her original proposal. The legislature will be coming back into special session when there is an agreement on the budget.

Health care:
Legislation was approved to expand access to the state's HUSKY health care system to more children and parents and to increase the number providers serving people with HUSKY coverage by raising their rates. This is good legislation, and I wish that the Governor would sign it. This is also, now, a part of the budget negotiations.

But this legislation would not come close to providing good quality health care coverage to everyone. And it does not help lower health insurance costs for businesses and workers. This is what really needs to be done.

Energy costs:
The people of the state have been asking for action to bring electric rates down, and I have been working hard to win legislation to do this. Unfortunately, however, the legislation that was approved on electric rates will not only not bring electric rates down, but will actually raise rates. This was very disappointing, and I voted against the bill that was ultimately signed by the Governor.

Also, to address rising gasoline prices, I voted to approve a $.25 per gallon cut in the gasoline tax. But the Governor vetoed this legislation, so this is another issue that is a part of the ongoing budget negotiations.

Not everything I hoped for.
Some of the important things that I had hoped to achieve are still, at least in part, possible, since how the budget negotiations will turn out is still in question.

But with other issues, the regular legislative session has ended without the progress I had hoped for.

With electric rates, I fear that the momentum that led to the public demand for action has been spent, and that we may end up stuck with a deregulated electric system that will cost consumers a lot for a long time. I will continue to work on this issue, though.

Health care is a different story. There is no question that what we were trying to achieve would be a major change for the better. But any major change is hard to achieve. So, I plan to begin working right away to build up for another major push for quality, affordable health care for everyone in the next regular session.

Politics rewards persistence rather than patience. So, the best thing to do with setbacks are to pick yourself up, look at what went wrong and try again.

More information about the electricity legislation I opposed.

This evening, I received a summary from Rep. Vickie Nardello about the problems with the electricity legislation approved today in the State Senate.

Here is Rep. Nardello's summary analysis:

Problems in the Energy Bill

Efficiency Partnerships

-$60 million per year without accountability provisions like a limit on how much each partner can receive, an RFP process to choose which proposals to fund, a requirement that the person receiving the technology pay a portion of the cost and a licensure requirement instead of the more lax certification requirement

Metering

-“just voluntary” still costs $170 million b/c the system to support the meters is expensive

-customers can currently get on a voluntary basis time-of-use meters that are capable of doing on peak and off peak pricing, but the meters in the program are the “Cadillac” meters, which are capable of doing real-time pricing

-this moves customers toward real time pricing, which forces people to pay spot market prices, which are high and volatile – their costs will increase

Towns and Municipalities

-In 2005, EIA forced towns and school systems into expensive (mandatory time of use rates) and volatile (pricing changes monthly) standard of last resort service

-Towns and schools cannot shift their load because of the hours they operate

-the bill does not exempt towns and municipalities from supplier of last resort service or time of use rates

Rates

-the bill does not address the problems with the underlying wholesale market that are causing the standard service benchmark to be high

-the electric heat rate language only maintains the rate for 5 years and only applies to those already on this rate (i.e. no one new can get it)

Procurement

-bilateral contracting language doesn’t work because it doesn’t create a framework for the DPUC to do this outside the RFP process

-doesn’t remove the full service generation requirement (means that we can’t buy baseload, intermediate and peaking separately, making bilateral contracts directly with generators impossible)

Cost of Service

-does not allow the DPUC to consider a variety of ownership options in its integrated resources plan

-does not require all plants going forward (that ratepayers pay to build) to agree to sell their power at cost of service plus a reasonable profit, not the highest cost possible they can charge in the market

-utilities are only allowed to generate if they are outside a regulated rate of return and bear all risk for cost overruns, which turns them into independent power producers and negates the entire purpose of utility owned generation

Retail Competition

-ratepayers subsidize retail competitive marketers

-aggressive retail referral program encourages people to move to competitive suppliers, which increases the migration risk in standard service and therefore raises the standard service price

-state is encouraged to pursue competitive suppliers

-consumer protections were not included

Accountability

-does not include a cost effectiveness review for generation going forward to make sure the winning bids are in the best interest of ratepayers

-includes a number of programs with technology that is already funded elsewhere and is not cost effective ($30 million for renewables and combined heat and power in state buildings, $50 million for DG ($25 million earmarked for fuel cells) for businesses and state facilities)

-encourages use of a standard service portfolio manager, which creates a huge potential for market manipulation

Rep. Nardello also shared the following table summarizing the costs to consumers of the energy legislation.

The first two columns are pretty straightforward. They are the name for each part of the bill and the cost of each to consumers. The third column is the section number of the bill where is of these costs is created. The fourth column, labeled "7098" tells whether the cost was also in the House energy bill, HB7098.

Energy Bill Additional Costs
Program	Cost	Sec.	7098
Energy Efficiency Partnerships	$60 million per year	94	no
Energy Excellence Plan	unknown cost of the study	97	no
Advanced Metering System	$170 million plus up to $125 million of stranded costs	98	no
Energy Efficiency Marketing Campaign	$5 million	87, 111,127	no
Retail Competition Marketing Subsidy	unknown cost of the referral program	92	no
	Increased migration risk raises standard service price for all	92	no
Switching on and off SOLR (removal of anti-gaming language)	Increased migration risk raises standard service price for all	49	no
SOLR - Quarterly or more often procurement	Increased volatility for large and small businesses	49	no
Encourages state facilities to choose competitive suppliers	Increased migration risk raises standard service price for all	101	no
	Many towns have lost money through similar programs	101	no
CFL Fundraiser	$125,000	61	no
Emergency Generation Pilot Program	$10 million	103	no
Standard Service Portfolio Manager Study	Increased costs through market manipulation	104	no
Mandatory option of real time pricing	Aligns costs with spot market, likely to cause increased rates	99	no
Financial incentives for utilities to cut peak demand	unknown -- study	106	no
Grants for DG and fuel cells	$50 million in bonds($25 million-fuel cells)	108, 109	no
Renewables, Combined Heat and Power in State Buildings	$30 million in bonds	121	no
Natural Gas and Fuel Oil Conservation Programs	$10 million from gross receipts tax	115, 116	no (removed by FIN)
Decoupling	would have cost $72 million last year based on revenue numbers	107	different
Municipal Renewable Energy Grants	$50 million in bonds	90-91	yes
Furnace/boiler replacement program	$5 million bonding	1,2	yes
AC replacement program	~$9.7 million from ECMB	3	yes
Sales tax exemption for ice storage, solar, geothermal	$500,000 for 2008, $700,000 for 2009	68	yes
Sales tax exemption for weatherization products, including CFL	$7.5 million in 2008, $7.5 million in 2009	69	yes
Sales tax exemption for Energy Star appliances	$13 million in 2008	70	yes
Conservation in State Buildings	$30 million in bonds	73	yes
Restores ECLM funds	$95 million in bonds	79, 126	yes
Operation Fuel	$5 million	128	yes
Low income energy assistance			yes
CHIF low-interest loans			yes
CHEFA grants for efficiency projects			yes
CHIF low-interest loans			yes

So the items marked "no" in the "7098" columns are charges that consumers will have to pay because the Senate version of the energy legislation, rather than that House version, was approved.

More details on the fairness of the Democrats' budget.

The budget that Democrats are working to win approval of would make the state's taxes fairer by lowering taxes charged to most people. The Democratic budget lowers income tax rates for most people, doubled the Property Tax Credit to $1000 and adds more funding for aid to cities and towns that would help to lower local property tax rates.

Below, are some of the details. The tables, below, show the changes that the Democratic budget would provide in state taxes.

To the left of the table are various income rates. Next to that are the what people at these incomes owe before the Property Tax Credit, how high their Property Tax Credit is likely to be and their final state income taxes after their Property Tax Credit.

The next three columns are what these numbers would be under the Democratic budget plan. As you can see, people whose incomes are in green would receive a tax cut under the Democratic plan. Even those whose incomes are too low to owe state income taxes would likely see a tax cut under the Democratic plan from the new state Earned Income Tax Credit, which gives people back money to compensate them for sales taxes, etc. that they pay.

The last two columns show amount of change in each income group's state income taxes, and their percentage change.

The first table are the numbers for married couples filing jointly.

JOINT FILERS									$		%
	CURRENT LAW				Legislature Proposal May 17th Plan				Change		Change
		Property Tax	Final			Property Tax	Final
CT AGI	Liability (1)	Credit (2)	Liability (1)		Liability (1)	Credit (2)	Liability (1)
$25,000	$8	$8	$0		$8	$8	$0		$0		NC
$40,000	$312	$312	$0		$312	$312	$0		$0		NC
$50,000	$850	$500	$350		$833	$833	$0		-$350		-100.00%
$60,000	$1,800	$500	$1,300		$1,737	$1,000	$737		-$563		-43.30%
$75,000	$3,015	$500	$2,515		$2,891	$1,000	$1,891		-$624		-24.80%
$100,000	$4,508	$500	$4,008		$4,268	$1,000	$3,268		-$740		-18.50%
$120,000	$5,600	$400	$5,200		$5,400	$1,000	$4,400		-$800		-15.40%
$150,000	$7,100	$250	$6,850		$6,900	$1,000	$5,900		-$950		-13.90%
$200,000	$9,600	$0	$9,600		$9,400	$500	$8,900		-$700		-7.30%
$300,000	$14,600	$0	$14,600		$14,838	$0	$14,838		$238		1.60%
$600,000	$29,600	$0	$29,600		$33,088	$0	$33,088		$3,488		11.80%
$900,000	$44,600	$0	$44,600		$52,588	$0	$52,588		$7,988		17.90%
$1,500,000	$74,600	$0	$74,600		$91,588	$0	$91,588		$16,988		22.80%
$2,500,000	$124,600	$0	$124,600		$156,588	$0	$156,588		$31,988		25.70%

This second table is for single taxpayers.

SINGLE FILERS									$		%
	CURRENT LAW				Legislature Proposal May 17th Plan				Change		Change
		Property Tax	Final			Property Tax	Final
CT AGI	Liability (1)	Credit (2)	Liability (1)		Liability (1)	Credit (2)	Liability (1)
$15,000	$15	$15	$0		$15	$15	$0		$0		NC
$20,000	$137	$137	$0		$126	$126	$0		$0		NC
$25,000	$340	$340	$0		$336	$336	$0		$0		NC
$35,000	$1,215	$500	$715		$1,168	$1,000	$168		-$547		-76.50%
$50,000	$2,070	$500	$1,570		$1,980	$1,000	$980		-$590		-37.60%
$60,000	$2,800	$450	$2,350		$2,692	$1,000	$1,692		-$658		-28.00%
$75,000	$3,550	$400	$3,150		$3,442	$1,000	$2,442		-$708		-22.50%
$100,000	$4,800	$250	$4,550		$4,692	$800	$3,892		-$658		-14.50%
$120,000	$5,800	$150	$5,650		$5,692	$600	$5,092		-$558		-9.90%
$150,000	$7,300	$0	$7,300		$7,342	$300	$7,042		-$258		-3.50%
$200,000	$9,800	$0	$9,800		$10,280	$0	$10,280		$480		4.90%
$300,000	$14,800	$0	$14,800		$16,390	$0	$16,390		$1,590		10.70%
$600,000	$29,800	$0	$29,800		$35,870	$0	$35,870		$6,070		20.40%
$900,000	$44,800	$0	$44,800		$55,370	$0	$55,370		$10,570		23.60%
$1,500,000	$74,800	$0	$74,800		$94,370	$0	$94,370		$19,570		26.20%
$2,500,000	$124,800	$0	$124,800		$159,370	$0	$159,370		$34,570		27.70%

This budget would go a long way toward making the state's overall tax system fairer. Approving this budget would be the right thing to do. I hope that is what will happen.