Monday, April 18, 2011

Foley On Malloy’s Current Services Budget Chicanery

After Tom Foley lost the gubernatorial race to then former Mayor of Stamford Dan Malloy, he did not slink away into that good night in which many losing politicians find their ultimate repose.

Mr. Foley, a former ambassador and business owner, started a research organization that develops public policy proposals, and a recent op-ed piece Mr. Foley wrote for a Hartford paper represents part of the fruit of his post campaign labors.

Mr. Foley’s column vigorously attacks “current services budgets” as a means used by shiftily, non-transparent politicians to foolall of the people some of the time, in Abraham Lincoln’s piercing phrase.

The method of reckoning getting and spending in Connecticut’s current services budget is little more than a partially successful sleight of hand used by professional politicians to “pitch their causes and confuse their constituents to suit their purposes,” according to Mr. Foley.

Governor Malloy’s current services budget first implausibly assumes that tax policy and state services will not change in the new budget year and then uses this dubious assumption to project future revenues. In planning expenses for the new budget, Mr. Foley writes, current services budget writers factor in “anticipated wage and benefit increases for the same number of state workers and inflationary increases in the cost of things the government buys.”

Under the states current services budget in the fiscal year ending in June 2012, spending will increase 9.8 percent, $1.75 billion higher than spending for this year, a figure Mr. Foley characterizes as “ridiculous.”

Using the current services budget as the base year, Mr. Malloy claims in his budget proposal to have cut spending by $1.76 billion. His proposal shows personal income taxes increasing by $879.8 million, while total taxes increase by $1,840 million. The anticipated give backs Mr. Malloy hopes to recover from unions appear in his proposal as Labor Management Savings and are presented as an expense reduction.

Most people suppose that current year budgets serve as the baseline for future budget projections. But using the current year budget as a staring point, spending in the new fiscal year will increase rather than decrease by $263 million; personal income taxes will increase by $1,443 million; and total taxes will increase by$2,466 million.

And spending for the benefit of state workers will according to Mr. Foley remain “approximately even with this year, i.e., no givebacks… On this basis, the budget deficit is being funded entirely with new taxes and no spending reductions. That is a very different story from the shared sacrifice story being used to sell the budget.”

“Sell” is the operative word. To sell his proposed budget both to the general public and union workers from whom Mr. Malloy hopes to realize a “shared sacrifice,” it helps to peddle the notion that union givebacks – i.e. spending reductions -- are a fait accompli in the new budget; they are not. And anyone who believes that real time spending in the new budget has been slashed or that personal income taxes have been increased $879.8 million rather than by $1,443 million or that inflation will not drive up the costs of various state agencies in the new fiscal year has been successfully deluded by number crunches who rely on current services budget persiflage.

“Using the current services budget,” Mr. Foley asserts, “degrades the clarity and quality of debate on the budget. It enables bureaucrats to pad budgets and move the goal line in the hope of achieving ever higher funding. It enables politicians to obscure bad news and fabricate good news. It enables advocates of government spending to demagogue anyone who questions the ever-increasing funding for their causes. It confuses the concerned citizen who is trying to understand what is going on.”

Early in his campaign with Mr. Foley, Mr. Malloy announced that he would move the state towards a new budget accounting process, Generally Accepted Accounting Principles (GAAP), so as to assure transparency and forestall the budget gimmickry that had allowed prior governors and legislatures to present a false picture of budgets though the manipulation and abuse of sound accounting procedures. According to Office of Policy Management Secretary Ben Barnes, GAAP should be operational by July 1 2013 and begin in fiscal year 2014.

Current service budgeting does for political campaigning what dishonest budget accounting does for politicians who survive budget red ink by fooling some of the people all of the time. Democratic governor of New York Mario Cuomo has honestly addressed budget issues by using immediate prior budgets rather than current service budget chicanery in measuring the progress he has made in stemming the flow of red ink.

With a gentle poke in Mr. Malloy’s easily bruised ribs, Mr. Foley asserts that Mr. Malloy’s dark angel in New York got it right and suggests, “It isn't too late for our leaders in Hartford to follow Gov. Cuomo's lead and begin making things clearer for us as they debate next year's very important budget.”
Post a Comment