Friday, April 22, 2011

Malloy’s Pig In A Poke Tax Plan

Moments after Governor Dannel Malloy and majority Democrats in the General Assembly had more or less signed off on the governor’s tax plan, a half-budget that includes doubtful savings from state unions, minority Republicans asserted that the so called budget could not be passed in its present form by the legislature because the state constitution requires a balanced budget.

The Democrat’s tax plan might be in balance if the $2 billion the governor hopes to recover from state unions were assured. But negotiations between the governor’s office and Connecticut’s fourth branch of government -- Larry Dorman, the chief spokesman for SEBAC, the union coalition in negotiations with the governor -- have not been concluded, and no one in the Democratic dominated legislature may know at the point at which they will be asked to vote on the Democratic tax plan whether the anticipated savings have been secured.

Statements made by Mr. Dorman and Mr. Malloy suggest that a quick resolution is not in the offing. The state, said Mr. Dorman, hasn’t sufficiently squeezed millionaires and the CEOs of major corporations in Connecticut that have not yet sent jobs out of state in an attempt to lower business costs.

"We are pleased,” Mr. Dorman said, “to see that the budget has seen some improvements, such as asking the very rich to pay more of their share, as opposed to other ideas, like eliminating the property tax credit, that further hurt struggling working and middle-class families. We would still like to see much more asked from big multi-state businesses and the very rich who have so far been the only ones to share in our state's so-called economic recovery.''

Concerning negotiations with Mr. Dorman, Mr. Malloy resorted to a papal metaphor: “There’s no white smoke coming out of the chimney now, but there is no black smoke, either.'”

Meaning: Mr. Dorman has not yet capitulated to the governor’s demand that the union members he represents cough up 4$ billion in savings. It is very much an open question whether the Democrat dominated General Assembly will vote favorably on Mr. Malloy’s tax plan if the concession is not in place when the matter comes up for consideration.

The so called budget voted out of two important tax writing committees ASSUMES cost savings from union concessions in advance of the concessions; the savings have yet to be realized. Without a finalized, signed on the dotted line agreement between the governor and the heads of state unions, legislators who vote affirmative on Mr. Malloy’s tax plan will be voting for the proverbial a pig in a poke.

Though there are important differences between Mr. Malloy and Mr. Dorman, the negotiator for SEBAC has not yet pulled out of the talks. Mr. Dorman believes that the governor and “those struggling middle-class families who happen to work for the state” ultimately will find common ground – presumably after Mr. Malloy’s tax plan, which now contains a very iffy placeholder savings from union concessions, has been written into law.

On the other hand, the cost savings negotiations with unions will be much easier for Mr. Dorman after the so called budget – in the absence of the $2 billion in concessions from unions, it’s really a tax plan – has been etched in stone, because in that case the governor will have surrendered to Mr. Dorman his most valuable bargaining chip: the possibility that, absent a union agreement, the governor may either pass on the pain involved in cost savings to municipal union workers to recover savings lost through failed negotiations with Mr. Dorman or simply remove tax increases from the bargaining table until such time as Mr. Dorman is more amenable to pain sharing.

Mr. Malloy’s tax plan has been sent to the floor by two obliging committees, one of which, the tax-writing finance committee, showed Sen. Edward Meyer the door when the upstart protested that he would like to see the pig in a poke before voting upon it. Mr. Meyer, a fiscal conservative Democrat, told his colleagues on the committee that he opposed the package because legislators were “virtually ignorant” of the details concerning union concessions. And then, approaching heresy, Mr. Meyer said, “This budget history now requires our focus on responsible spending before we entertain an historical package of tax increases, particularly when we see that those tax increases are not sunsetted.”

Sunsetted tax increases? Be thou anathema Meyer!

Mr. Meyer was quickly exiled from the finance committee’s Democratic caucus by co-chairwoman Sen. Eileen Daily of Westbrook. Having asked the committee’s other chairwoman, Rep. Patricia Widlitz of Guilford – his own state representative – to intervene on his behalf, Mr. Meyer was unceremoniously booted from the caucus. Winking at the pig in the poke, the ladies and gentlemen on the referring committees, having received their marching orders from pope Malloy, were in no mood to hear fiscal conservative dissenters talk truth to power.
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