Friday, December 09, 2011

The Surplus State

Is anyone surprised that the tax increases initiated by Governor Dannel Malloy and the Democratic dominated legislature have now produced a budget surplus of nearly a half billion dollars?

When the budget was put to bed months ago, Connecticut Commentary correctly characterized the surplus it produced as an artificial surplus:


“Mr. Malloy passed his budget through the General Assembly without being put to the inconvenience of discussing the matter with leading Republicans who, unlike union representatives, were wholly shut out of the process. The governor’s budget figures were such as to produce what I have called in the blog and in columns an artificial surplus of about a billion dollars. Real surpluses are produced when taxes are not increased but the state never-the-less realizes an increase in revenue owing mostly to increased business activity. Mr. Malloy’s artificial surplus is now flowing into a series of crony capitalist projects. Mr. Suzio is right about the UConn Health Center: It’s a budget busting black hole the state – which is broke, broke, broke -- can little afford to support. Attaching a non-profit, non-tax generating research center to the UCHC does not make the combination more profitable. This may be the first time in Connecticut’s history that a serviceable neck has been draped around an albatross.”


From its inception, Mr. Malloy’s budget -- a so called “shared sacrifice” plan -- was never intended to be revenue neutral.

Taking a page from former Governor Lowell Weicker, the father of Connecticut’s income tax, the current administration pegged taxes and putative “cost savings” in its budget in such a way as to produce a surplus. The Malloy administration already has distributed nearly a billion dollars of tax collections to the UConn Health Center, one of the state’s most absorbent tax sponges.

The latest figures leave state government with an additional half billion dollar surplus.

Mr. Weicker and succeeding governors folded their surpluses into the state’s spending program, which is why Connecticut’s budgets have increased threefold since the income tax was implemented. This governor differs from Weicker only in degree: his is the largest tax increase is state history.

Continuing surpluses will not be trimmed to assure no net increases in spending. They will be folded into future spending plans, and the surpluses will allow Mr. Malloy to continue to assert that relative to other states Connecticut is in “good shape.”

The state is unfortunate in having produced a string of governors who are incapable of making the proper distinction between the state – that is, the people of the state – and state government, their elected reopresentatives.

In all times, in all places, in all nations, the relationship between the people of the state and their government has ever been the same: The richer the government, the poorer the people.

The state of Connecticut, the surplus state, not at all well off; its government is flourishing.
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