She shocked the state – again. On Wednesday, Governor M. Jodi Rell gave her budget address in front of a joint session of the legislature, commissioners, and guests. Currently facing a supermajority that can override her veto, Rell took a bold – very bold - approach to the budget than the expected “fiscally conservative” route. Rell proposed a $35.79 billion spending plan in addition to an increase in the holy grail of democratic taxes – the income tax!

It is no secret that Republicans, both elected and the rank and file, all across the state were “not happy” to say the least. Often the litmus test of a Republican is being opposed to any increase in income taxes... and then their own standard bearer took a sip of the Kool Aid. The Governor’s response? It had to be done.

The night before the Governor’s speech, Senate President Don Williams held a press conference where he quoted Rell from April 2005 as saying, “There is no sign of public support for having us undermine the [spending] cap or make revisions to it – and I will not support such efforts.” Skeptical of this statement, Williams advised the press to pay attention to whether the Governor would employ “tricks” to appear as though she were staying under the spending cap when that wasn’t really the case. Was he ever surprised later in the day when tales of an income tax increase began to float across the legislative office building! And then, out of her own two lips, the Governor, in a very forthcoming manner, outlined her plans for the next two years.

Rell explained that she proposes to break the spending cap in order to fund $3.4 billion in new education spending. This would include $25 million for more scholarships for public and private colleges – a 77% increase over current spending. It would also allow for things such as an increase in funding for every school district, thousands more preschools slots in poorer cities, and more city students being allowed to attend suburban schools. Rell was clear that breaking the spending cap should be limited to just targeted education initiatives and should not be viewed as an opportunity for reckless spending in other areas.

Other proposals outlined by Rell include familiar favorites such as:

• Eliminating the car tax through a 5 year phase out
• Eliminating the property tax credit
• Phasing out the estate tax
• Increasing the cigarette tax from $1.51 to $2 per pack

However, the most talked about piece of the Governor’s budget proposal is her plan to increase the income tax by 10% over the next 2 years to help fund the various proposals. Republicans and Democrats shook their heads as they listened. Senate Minority Leader Lou DeLuca and House Minority Leader Larry Cafero both expressed their displeasure at this portion of the budget proposal and doubted that the Republicans would support it. Surprisingly, even House Speaker Jim Amann, who just last year supported a millionaires’ tax increase, expressed his disbelief over whether CT needs to collect that much revenue.

Overall, Democrats seemed please with the Governor’s proposals. Many said they are items that the Dems have supported “all along”. Some even applauded her for a smart political move, aligning more with the supermajority in order to gain more leverage over the budget.

However, not all of the Governor’s budget was roses. Senate President Williams issued a statement that while he supports the Governor’s educational proposals, her commitment to health care is “insufficient and inadequate”. He intends to move forward with his own “Health First Connecticut” plan. Rep. Andrew Fleischmann, Chair of the Education Committee, was also pleased about the education proposals, but is concerned about funding inequalities between richer towns and poorer towns. Now that Rell has “gone all in”, it’s the legislature’s turn to up the ante or call her bluff.

Pretty much everyone sitting in the House chamber during that historic joint session could agree with the Governor’s sounding call: “It is time for us to take action. No more easy promises. No more press releases. No more summits. Let's get it done." Problem is, what exactly will it be that gets done? Interesting times in Hartford.

The CT State Senate and House of Representatives worked collectively on Wednesday to pass two amendments to the campaign finance legislation after debates that lasted little over an hour for each. The amendments were introduced by the Government, Administration & Elections Co-Chairman, Senator Gayle Slossberg and Representative Chris Caruso.

These changes mark the second consecutive year that the CT General Assembly has modified the original campaign finance language that was passed in 2005. It seems as if everyone in Connecticut is somehow affected by this law. It is widely viewed outside of the LOB as unpractical and, in some cases, unconstitutional. In order to create an end product that is feasible and constitutional, there is already talk about making additional changes to the original legislation in the months to come. Everyone is awaiting the outcome of a current court case that may well prompt the legislature to take additional action.

To summarize, Wednesday’s amendments did the following:

• Expands the ban to include principals of nonpublicly traded corporations, eliminates the application to children under 18, and specifies that the ban does not apply to a candidate who contributes to or solicits for a town committee or political action committee (PAC) if this is his or her campaign's sole funding source.
• Eliminates the requirement that the State Elections Enforcement Commission (SEEC) collect and maintain a master list of principals of state and prospective state contractors.
• Expands the ban to cover contractors with state contract solicitations, not just those with contracts or engaged in bid solicitations or requests for proposals (RFPs).
• Exempts the Judicial Branch.
• Changes the notice requirements and changes several definitions.
• Raises the minimum age from 16 to 18 for making most campaign contributions over $30 Also decreases, from $100 to $50, the threshold at which individuals who make contributions to certain committees must certify that they are a not contractor, and additionally requires them to certify that they are neither a communicator lobbyist nor an immediate family member of any such lobbyist.
• Changes the definition of “solicit” by removing the prohibition on a communicator lobbyist or principal of state or prospective state contractor serving as an officer, other than a chairperson, treasurer, or deputy treasurer, of a candidate or exploratory committee, PAC, or party committee. It specifies that “solicit” does not mean serving as an officer or member of any party committee not otherwise prohibited. Under current law, “solicit” means serving as any officer of such a committee, among other things.
• No violation occurs if a committee treasurer returns an improper contribution to the principal (1) within 30 days after receiving it or (2) by the campaign finance filing date for the reporting period in which the contribution is made, whichever is later.

The amendments also alter the process for notifying contractors of the contribution and solicitation ban and penalties for violating them by:

1. requiring state agencies to use the same notice when informing contractors of the contribution and solicitation ban;
2. requiring the SEEC to draft the notice and make it available to such agencies;
3. specifying language that must appear in the notice;
4. requiring each state and quasi-public agency to distribute the notice to the chief executive officer of its contractors and prospective contractors, or an authorized signatory, and obtain written acknowledgement of receipt; and
5. removing the requirement that each prospective state contractor's chief executive officer certify in a sworn statement that none of the company's principals will make or solicit a prohibited contribution.

We expect the SEEC to provide a similar summary in the next week or so and will forward when it becomes available.