Tuesday, May 24, 2011

The Dannel Malloy State Employees Bargaining Agent Coalition Complex

There is no termination date on the tax increase contract between taxpayers and the Malloy administration – because there is no written contract.

Some of the items in the contract to be signed by the State Employees Bargaining Agent Coalition (SEBAC), the state union coalition negotiating contracts with Governor Malloy, do have a termination date. For instance, the salaries of state union members, frozen for two years, will unfreeze thereafter and increase by 3% during the following three years.

In such precarious times, it must be liberating for state workers to know that the “shared sacrifice” of salary givebacks has a termination date affixed to it. Actuaries hired by the Malloy administration tell us that the temporary salary freeze will save the state $ 448,402,275, according to a budget fact sheet given out to the state’s media. Because the freeze terminates after two years, the savings to the state is itself temporary, while the salary increase of 9% over three years will be permanent. Other actuarial figures supplied by the Malloy administration may be soft because the times in which we live are a’ changing -- almost daily.

Not so with the tax increase portion of Mr. Malloy’s “shared sacrifice.” The $1.8 billion tax increase, the largest in Connecticut’s history, will permanently dredge dollars from taxpayer’s increasingly depleted resources. There is no such thing within the living memory of any member of the General Assembly, including the long memory of the 86 year old Sen. Edith Prague, as a temporary tax or a temporary tax increase, and it certainly is cold comfort to reflect that the federal income tax at its inception was a two percent levy on millionaires – real millionaires. The income tax now is paid by proletarian waitresses at the local diner.

And, of course, other taxes have gone up. Connecticut’s new budget reduces the threshold on estate and gift taxes; raises the income tax retroactively to January 1, 2011 on individuals with taxable income over $50,000 and joint filers whose income exceeds $100,000; slaps an Amazon tax on internet sales, increases the number of tax brackets from 3 to 6 and imposes a 20% surcharge on corporations for 2012 and 2013.

While Mr. Malloy has suggested that unions accept his budget and blame him for the sacrifices he is asking unions members to make, not all the members of unions presently negotiating contracts with the Malloy administration are sanguine, according to a recent Associated Press report:

“Despite the promise of no layoffs for four years, three years of wage increases following a two-year freeze and the continuation of coveted benefits such as pensions, retiree health care and longevity bonuses, there's skepticism and leeriness about the deal among many of the state's 45,000 unionized workers. Some want promises that big businesses and wealthy taxpayers will be asked to pay more if they agree to givebacks. Some simply want to see the details.”

An attempt by the Malloy administration to unveil the details of the Malloy-SEBAC deal to Connecticut’s media at Rentschler Field in East Hartford met with mixed success. Noting that the budget falls about $400 million short of projected expenditures, editorial departments of some newspapers wanted to see the actual rabbit drawn from the hat at the conclusion of union negotiations before they bestowed their blessing upon a tax increase even larger than that imposed in the 1991 Weicker budget, which featured Connecticut’s new state income tax.

Almost no one but committed leftists and boilerplate union demagogues are encouraging Mr. Malloy to conduct further raids on the profits of Connecticut businesses, some of which already have picked up stakes and moved all or part of their operations to more business friendly environments elsewhere. It turns out that “elsewhere” – at least in the case of Precision Camera And Video, Pfizer and Yardley Technical Products http://donpesci.blogspot.com/2011/05/dannel-in-wonderland.html is across the border into nearby states. As an additional bump out the door, Connecticut has slapped a corporation surcharge on homegrown businesses that have not yet explored alternative sites in, say, New Hampshire, a state that – lacking a Weicker or a Bill Cibes to jam an income tax proposal through its legislature – maintains its low tax, low regulatory status. Of the nine states without income taxes, all but one, Alaska, saw more people migrating in than out from 2000 to 2008. Connecticut has been losing population to other states ever since it adopted its income tax.

Any lesson that may be gleaned from such data is certain to be lost on a Democratic controlled General Assembly and governor poised to push through the legislature a bill fervently supported by the redundant Connecticut Working Party, little more than an annex of the Democratic Party,
that would require companies with more than 50 workers to provide up to five sick days a year for employees and new hires who had put in 520 hours on the job.

Nice work -- if you can get it.
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