Connecticut lawmakers will reassemble this month to debate Gov. Dannel Malloy's proposed business tax rollbacks, which he announced after pushback from major corporations.
Malloy, in Europe on Monday and Tuesday, has yet to sign the $40.3 billion biennial spending lawmakers approved on June 4. The General Assembly had already planned to return for a special session to close up loose ends on the budget.
Legislative leaders have yet to set a date to reconvene. The fiscal year ends midnight June 30.
After major corporations such as Aetna Inc. and General Electric Co. threatened to move out of state, Malloy on Friday proposed delaying the state's so-called unitary tax, or combined reporting on corporate income, to Jan. 1, 2016. The legislative budget called to changing the tax retroactive to Jan. 1, 2015.
Malloy now also wants to keep the state data processing tax at 1% rather than raising it to 3%, and eliminate the proposed state sales tax on parking and car washes. He said the two-year tax reductions would lower revenue by about $224 million.
He also said he would ask the legislature for authority to cut up to 1.5% of spending across the board.
Republican leaders urged Malloy not to sign the budget. "The governor is now in a full retreat," Senate Minority Leader Len Fasano, R-North Haven, and Minority Leader Pro Tempore Kevin Witkos, R-Canton, said in a joint statement.
Moody's Investors Service rates Connecticut's general obligation bonds Aa3. Fitch Ratings, Standard & Poor's and Kroll Bond Rating Agency rate them AA. S&P in March revised its outlook on state GO debt to negative from stable. Fitch also has a negative outlook, while Kroll and Moody's assign stable outlooks.
Hartford, Conn., asset management firm Conning ranked Connecticut 45th overall in aggregate credit quality in its semiannual state of the states report. It also rated the state fourth-highest in economic debt level - 29.6% per personal income. Conning defines economic debt as direct debt, unfunded pension liabilities, unfunded other post-retirement benefits and federal borrowings for state unemployment benefit obligations.
No bills to address the state's unfunded liability are before the General Assembly. Two bills submitted this year by Sen. Scott Frantz, R-Greenwich, died in committee. Among other changes, they would have forced the state to lower its assumed rate of return and require new employees to participate in a defined-contribution, 401(k)-style plan.
According to an actuarial report by Cavanaugh Macdonald Consulting LLC, the funding level for the Connecticut State Employees Retirement System stood at 41.5% as of June 30, 2014.