Friday, May 01, 2015

Connecticut’s Triumvirate: Malloy, Sharkey And Looney

The General Assembly, as we all know, is ultimately responsible for budgets: The executive branch proposes, the legislative branch disposes, as the saying has it.

 A few weeks ago, Governor Dannel Malloy, valiantly attempting to make good his often repeated campaign pledge that deficits during his second term would not be discharged through tax increases, sent to Connecticut’s General Assembly a budget plan he said was in balance. It was not in balance, and the draconian spending cuts Mr. Malloy offered were roundly rejected by leaders in his own party. The tax writing committee now has disposed of the Malloy budget.

With the approval of leading Democrats in the legislature, Speaker of the House Brendan Sharkey and President Pro Tempore of the Senate Martin Looney, the budget writing committee has produced a revised budget that raises taxes by $1.8 billion, a very large chunk of change, but still short of Mr. Malloy’s massive, broad-based tax increase during his first term, the largest tax hit in Connecticut history. The committee-revised budget plunges Mr. Malloy’s attempt to control taxation into the netherworld.

The committee that pumped up taxes also removed from Connecticut’s constitutionally prescribed spending cap pension obligations for state workers, a sizable chunk of change. The removal raises the roof on spending and creates a false surplus. The artful move by dominant Democrats in the General Assembly effectively repeals the spending cap and may be repeated whenever Big Spenders in the state legislature, facing a deficit, do not wish to resolve it through spending cuts.

Democrats who have increased taxes and who will increase spending have said that the spending cap distorts right action in the legislature. The cap, some of them have said, does not limit spending; it merely forces legislators to increase revenues through dubious means: See above for examples. Of course, it is not the budget cap that forces legislators to adopt by crook means they cannot employ by hook. No, the cap is discounted because for thirty years and more Democratic legislators have been unable to embrace the notion that Connecticut is not suffering from a revenue problem; it is suffering from a spending problem. Legislators simply lack the political courage and will to do what must be done to control spending – and that is the problem. The “solutions” hit upon by progressives in Connecticut’s Fun House General Assembly, full of distorting mirrors, far from solving Connecticut’s thirty year stretch of anemic business activity and shrinking revenue streams, exacerbate the problems.

The Connecticut Health Foundation is no friend of the cap. In 2001, the foundation released a study that claimed the cap had been effectively derailed “through the use of budget techniques such as lapses, carry forwards and the use of the surplus.” The study subtly suggests that the cap had caused legislators to resort to illicit means to balance budgets. However, the means used by artful legislators to escape the spending cap noose may be attributed to the presence of the cap only in the sense that the presence of banks “causes” bank robberies. If legislators had been determined to submit to the spirit and the letter of the constitutional cap, they then would have been forced to balance budgets through licit constitutionally prescribed means by cutting spending or increasing taxes. Or would they?  They almost certainly would not. Legislators push taxation on to future generations rather than raise taxes or cut spending to discharge deficits because the future has no vote in a present in which cowardly legislators are unwilling to accept the certain political consequences of their actions.

The authors of the foundation study were better number crunchers than political psychologists. According to the study, “The cap has been among the factors bringing down the overall rates of spending growth from an average rate of 10.8% a year from Fiscal Year 1987-1991 to 4.5% during FY 1995-2000.” So then, it worked. Laws work when criminals obey the laws. Constitutional provisions work when lawmakers submit to them.

Mr. Malloy has been coy on the question of a veto of progressive budget plans that violate the pledge of no new taxes implicit in his own budget proposal. Neither Republicans nor Democrats, Mr. Malloy said, has produced a budget that confronts hard choices: “You’ve got to make hard choices. That’s what leadership is.”

Quoting former Governor Lowell Weicker in a quite different context, Mr. Malloy, it is apparent, would rather reach an accommodation between pro-cut Republicans and pro-tax Democrats. “I don’t need to throw gasoline on the fire,” Mr. Malloy said.

In the meantime, finance committee Democrats, responding to steadily diminishing tax receipts, have raised taxes so much that Connecticut likely will enjoy a  $300 million in 2017 rather than a multi-billion dollar deficit.

Connecticut likely is reaching a point of diminishing returns in which high taxes produce less revenue, the result of unintended but predictable consequences. But progressive Democrats in the General Assembly are ready for this, and their solution is -- TA DA! -- higher taxes. A building is burning and, instead of quenching the fire with water, the firemen propose, in the felicitous phrase of Lowell Weicker, father of Connecticut's income tax, to douse the flames with gasoline.

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