Tuesday, March 03, 2015

Down And Out In Hartford

Shortly after Governor Dannel Malloy presented his budget to the Democratic dominated General Assembly, a cataract of critical comments washed over his administration.

Noting the governor had passed along to the legislature a highly problematic budget, one commentator sniffed, “If the state budget is a football game, rather than a tragi-comic version of naked beer pong, then Gov. Dan Malloy admitted the other day to punting on third down at the bank robbery.” No compliment was intended.

When Mr. Malloy’s budget guru Ben Barnes presented himself for flack-catching before the Legislature’s Finance Committee and was asked why Mr. Malloy was raising revenue from Connecticut’s beleaguered hospitals to plug one of the administration's frequent budget holes, he replied, echoing bank robber Willy Sutton, “Because that’s where the money is.”

Weeks earlier, a for-profit company had proposed to take over a handful of foundering hospitals in Connecticut with a view to making them economically whole, but the bid was torpedoed by the state’s union-friendly Office of Health Care Access, and the hospitals were “hung out to dry,” as Willy Sutton might have said.  

His budget, Mr. Malloy boasted, was true to his often repeated campaign promise of no new taxes, Connecticut’s depressed economy was on the mend, and sunny blue skies were hoving into view just around the corner.

None of this, at it happened, was true. Tax revenues were increased, some say by nearly a billion dollars. No doubt pecksniffs will quarrel over the term “tax increase,” but the total amount of revenue pouring into the state’s already swollen tax coffers will increase, which means that the total amount of revenue available to businesses and the middle class in Connecticut will decrease by a proportionate amount.

During the past twenty-four years, citizens and businesses in the state have suffered two major tax increases: an income tax, Governor Lowell Weicker’s legacy to his state, and Governor Malloy’s broad based tax increase of 2011, the largest tax increase in state history. Sounding a warning bell at the time, the  indispensable Yankee Institute made a meticulous record of Mr. Malloy TWENTY-ONE TAX INCREASES, to little avail. Since the preceding Democratic governor left office, the state budget has increased threefold, a measure of the state’s alarming propensity to spend its way to a prosperity that never arrives. Budget deficits have continued to increase in tandem with spending increases – very likely because gargantuan tax increases, strangling regulations and Mr. Malloy penchant for crony capitalism has produced entrepreneurial flight and anemic growth. Mr. Malloy’s budgets always have been wobbly, and repeated rescissions have not made them less so.

There is no appetite within Connecticut’s progressive one party state for spending decreases that are not cosmetic and temporary. Increasing the retirement age for state workers would reduce salary and benefit spending in the long term for future generations of taxpayers who will be expected to shoulder Mr. Malloy’s exorbitant $100 billion, thirty year infrastructure repair program. That program alone will narrow the scope of spending reductions for future governors. Privatizing appropriate state functions, however disappointing to unions, would relieve tax pressure on future taxpayers and at the same time send a clear signal to out of state businesses looking through Connecticut's windows that the high tide of state spending will slowly recede; changing the state’s benefits programs from defined benefit plans, operative for most state workers, to defined contribution plans, available to unclassified employees at any units of the Connecticut State System of Higher Education, would have the same beneficial effect. Many people do not recall that Mr. Malloy, recently elected as governor, proposed a measure that would have allowed him to privatize certain state functions early in his first term in office; naturally, he was rebuffed by a Democratic dominated General Assembly tied to the apron strings of state unions. Mr. Malloy has long since -- and willingly -- been ensnared in the same trap.

With the exception of eleven seats won in the last election by Republicans, Mr. Malloy has now tossed his out-of-balance budget to the same tax prone big spenders:  "We got it off my desk," he said. "It's now into the Legislature. I had no expectations two weeks ago that they would adopt my budget as I presented it. There are always lots of changes. They're required to set a balanced budget that's under the spending cap."

To which one might ask – What spending cap? The spending cap was a feature added to then Governor Weicker’s proposed income tax measure as bait to attract support in the General Assembly from what we here might call Ella Grasso income tax opponents, most of them moderate Democrats. Implementation legislation was never enacted. In the absence of implementation legislation, hedonist spenders have been able for twenty-five years to avoid the sharp claws of the ever adjustable spending cap.


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