Rep. Reed Goes Rogue

The state Democratic leadership is incensed that Branford’s longtime state Rep. Lonnie Reed and four other House Dems voted to send a Republican version of a new state budget out of the House and to the office of Gov. Dannel P. Malloy. Three breakaway Senate Democrats also enabled the Republican version of the budget.

“Despite an abundance of bullying and threats, I refused to leave the Capitol at 5 a.m. without a budget,” Reed told the Eagle. And the Republican budget, she said, was the only option available. Plus it was much better for Branford than the failed Democratic amendment, she said. As it turned out the Democrats never got their amendments called in the Senate because they did not have the votes.

Reed said in an interview she made a strategic decision to turn rogue in order to try to find away to break the budget impasse. What was needed, she said, was a game-changer to get all sides to the table. Connecticut has not had a budget for the fiscal year that began July 1, imperiling millions of dollars in state aid for communities throughout the state as of Oct. 1. On Tuesday Governor Dannel P. Malloy will hold his first meeting with all sides present. 

Her hope was that a legislatively approved budget would force the governor and the Democratic legislative leaders ​“to finally negotiate a responsible, rational consensus budget,” she said last week. Moody’s Investor Service termed Connecticut’s long-term fiscal outlook ​“stark,” citing heavy debt, pension liabilities, lower tax receipts, a structural budget imbalance, and growing fixed costs.

And while Malloy said last week that he plans to veto the Republican budget, it looks like he has agreed to sit down for the first time to consider a bipartisan two-year budget. The governor met with Senate Republican leader Len Fasano and Rep.Themis Klarides, the House minority leader, on Friday and said he would take a bipartisan approach toward the budget. The Democrats never got their amendments called in the Senate because they did not have the votes. Three Democrats voted with Republicans in the Senate to pass the Republican budget, 21 – 15. Five Democrats voted with Republicans in the House to pass the Republican budget, 77 – 73.

At the end of the Friday meeting, a second meeting was set for tomorrow, a meeting that will include both Republican and Democratic legislative leaders. This will be the first time that the major players and the governor will discuss a path toward approving the 2018 – 19 state budgets. 

A Consensus Budget?

After he met with the Republican leadership on Friday, the governor said, ​“The conversation with Republican leaders was good and I want to work with them.” In answer to another question, Malloy said, ​“I am still willing to compromise.” Klarides said it was a good meeting and ​“we expressed our interests and concerns.”

In the Republican press briefings, Fasano said he believes they should use the bipartisan budget that passed with the help of eight Democratic legislators as the basis for negotiations. However, ​“there was some push back,” Fasano added.

This is not the first time that Reed has rejected a Democratic budget. In June 2015, she was one of 11 Democrats to vote against the state budget. That 2015 budget squeaked by the House on a mostly party-line vote of 73 to 70 with 11 Democrats joining 59 Republicans in opposing the plan. Seventy-two votes were needed for passage.

Reed has represented Branford for nine years and is the House chair of the Energy and Technology Committee. She also serves on the powerful Finance, Revenue & Bonding Committee. The governor and Reed have long worked together on major energy and bio-science projects during her years in the legislature.

Reed Reports Widespread Support from Constituents

She said she spoke to the governor’s team the day after she voted with her counterparts across the aisle. Reed did so, she said because there was no other option and ​“all the choices were horrible. Rather than kill the only budget in front of us, sending the bill back to the Senate yet again for more revolving door, dysfunctional wrangling, I actually saw a way through; a way to move the process along. The only opportunity to get a budget out of the Chamber and into the Governor’s office was this one vehicle. And that is what I did.”

The response has been overwhelming. While the Democratic leadership remains enraged, she reports she has received widespread support from her constituents, including many state employees who are concerned about maintaining the solvency of their pensions and benefits. One family who voted for her in 2016 said they would not again because she had rejected collective bargaining. When she pointed out that collective bargaining was very much a part of her philosophy and was, in fact, part of the budget plan, they changed their minds. ​“Great. You’ve got our vote,” they wrote.

Reed: Republican Budget Better for Branford

Reed said the Republican budget was actually better for Branford than was the Democratic budget. The GOP contained more Education Cost Sharing (ECS) money than the Democratic amendment and did not increase the conveyance charges on real estate sales. The 2018 Republican budget gave the town the $2.2 million it received from the state in 2017. In his August state budget proposal, the governor gave Branford zero ECS funding for its public schools. This month the governor changed that, giving the town $1.639 million.

And, she noted importantly for the town, the Republican budget ​“did not dump the teacher’s retirement costs on the towns. The Democratic budget did – effective immediately.”

Reed said she was appalled by the failure to find a process that would bring the players to the table to discuss a major financial shift, giving Connecticut’s towns the responsibility of paying for teachers’ retirement costs for the first time. In the past, the state has absorbed these costs. The governor’s budget simply moved the teacher retirement costs to the state’s towns.

“Shift and Shaft”

“It was a disaster for the towns and it is unfair. If we are going to transition the teachers’ retirement costs to the town, that is a process. And everybody has to be at the table for that. That is a huge change and to just dump it like that. You know what we call this: ​‘shift and shaft.’ That is what the Democratic budget was doing.”

Despite the governor’s promise to veto the budget, she said, ​“I really feel there is an opportunity to have a real bi-partisan consensus approach. And by teeing up this bill, it enhances the opportunity for a coalition of Democrats and Republicans, who want to be grown-ups, to begin talking seriously with the governor’s office. Seriously, what can we do here?” She said everyone needs ​‘to share some of the pain’ because responsible people need tee up ​“a plan going forward to solve the huge structural deficit that is awaiting us.”

In recent months Reed has spoken with a number of top financial experts in the metropolitan area, some of who live in Connecticut. They have helped cities facing bankruptcy. (Hartford expects that reality may well hit home soon.) Reed believes their expertise is crucial to Connecticut lawmakers at this moment in the state’s budget crisis.

“I want to bring in an outside expert, a big financial brain with a track record of helping to solve these problems.” She said they are only going to get worse.

“Our state debt will be $11.6 billion in three or four years. We are going to be having deficits for the next 30 years, if we don’t do something drastic. This is serious. We need to look at the big picture. We are only in the foothills. We have not even begun to climb the mountain.” At this point in the negotiating rocess, the state faces a $3.5 billion deficit. 

Reed said she has investigated how other states dealt with massive deficits.

“There is no way we can do this without a bipartisan approach. No way. And I know this because I have talked to Virginia. I have talked to California. I have talked to Washington State. I have talked to legislators and budget people in those states who had deficits and the only way that got out of it was to have a genuine bipartisan approach. They had to overcome a lot of immature behaviors and come together and really get serious about a bipartisan consensus budget. That is the only way we are going to get out of this.

“To try to cram a budget, quite frankly, down people’s throats with a tiny little majority, that is irresponsible and absolutely does not begin to solve the problem because it will begin unraveling immediately. But if we all get together and take a big look, that is going to go a long way.”

Reed said there were 10 items the Democrats had agreed to in the Republican budget. One is that ​“we want to limit bonding per year to $2 billion. We want to cap bonding. We put that in. We also want to bring in an outside expert with a real track record expertise to help us restructure all of our pensions, benefits, teachers’ benefit costs, to figure up how we can solidify those going forward.”

She raised the role of Felix Rohatyn, an investment banker, who in 1975 played a central role in preventing the bankruptcy of New York City as chairman of the Municipal Assistance Corp. He served as chief negotiator between the city, its labor unions and its creditors. He is now 89.

“What Rohatyn did was to segregate liability. He was able to put the legacy debt – the exploding pensions and retirement benefits for workers – into a fund that separated it from freed up essential investments and expenditures. Connecticut has to deal with 52 percent of our budget with these exploding fixed costs. There has got to be a way. This is not an accountant’s job. This is where you need the kind of financial brain power that Barnard Baruch brought to FDR or Rohatyn brought to New York City.”

So far Gov. Malloy has not brought in anyone. ​“No one,” she said. ​“We are all trying to do it by ourselves.”

Reed reflected on the scope of the state’s financial crisis. ​“One of the things in life that I have found to be most important is to know what you don’t know. To pretend we can handle this with the tools we are using is absolutely ridiculous. I want to bring in some people who have the capacity for innovative solutions. And also we have top people in Fairfield County that we should be able to harness. They live in Connecticut so it is their problem, too. If we fix the eco system to be able to make it a much better economy for everybody, they benefit. They can’t do it with those we have now. They need people with some serious intellectual brain power before they will even come to the table.”

A New Way

Noting the historic shift from a Democratic to a Republican voting legislature last week, Reed said, ​“It is a new day, so let’s figure out a new way.”

Reed said the state was at the point where it was incumbent upon the Democratic caucus to seek new ideas, to find a new approach. But in the days leading up to the Democratic vote on its own budget, the caucus was on fire as it conducted ​“business-as usual,” Reed said. What that meant, she said, was more taxes, or raising the sales tax. ​“They don’t want to cut spending to any of these programs. They want to continue to increase spending.” In the end, it didn’t work.

Behind the scenes, it soon became clear that leaders and legislators were again using the time-honored pay-to-play approach.

“What do we want, what do we need for our towns, what can we get you in order to secure your vote? It’s a tradition. We’ve all asked for things for our districts in the past – myself included – but we can no longer afford to play ​‘Let’s Make a Deal,’ Reed said.

“The Democratic amendment became more rat invested than a London sewer,” Reed said. ​“More rats make our bottom line redder. I decided I was going to do the right thing. I found it very liberating. And come what may, I know I have done the right thing.”

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