Saturday, January 30, 2016

Malloy Says No Tax Increases… But

The headline – “No Tax Increase Expected” – was unintentionally misleading. Plenty of people in Connecticut expect tax increases – or, at the least, revenue enhancers – sometime after elections in Connecticut have been put to bed. In our fair Republic, governors propose and legislatures dispose of budgets. Recurring deficits demonstrate that neither Mr. Malloy, the first Democratic governor since the Bill O’Neill administration, nor the Democratic dominated General Assembly have been adept at writing budgets.  The lede to the story in the Hartford paper was accurate: “Governor Dannel P.  Malloy will not propose tax increases next week during his annual budget speech at the opening of the legislative session, his spokesman said Wednesday.”

A statement by gubernatorial spokesperson Devon Puglia left little wiggle room: “The governor is not proposing tax increases, nor will he support them. This is a tough budget that will require a different solution." Mr. Puglia pointedly did NOT say Mr. Malloy would veto any re-altered General Assembly bill that increased revenues, always a spur to greater spending. 

Mr. Malloy has presided over two massive tax increases, the largest and the second largest in state history. As taxes went up, Mr. Malloy’s approval rating – 32 percent, not a winsome figure for the national Democratic Governors Association’s new head honcho – dipped far below a comfortable political horizon.

The careful reader will note the qualifiers: “No tax increases,” at least for the moment, does not discount other revenue enhancers. Democratic leaders in the House and Senate have not forsworn tolls and other means of moving new money into the state’s tax coffers. The Democratic dominated general Assembly is ingenious in discovering new methods of  filling empty revenue shelves in Connecticut’s political pantry; indeed, if they were as energetic and ingenious in discovering ways to cut spending, those pantry shelves would be much fuller.

Asked earlier whether he might anticipate tax increases, Mr. Malloy’s budget guru Ben Barnes offered a highly qualified assessment: “Ruling out tax hikes is one of those things that people often do, but I think that when you're in a tough spot you don't want to." A qualifier was quickly attached: Reprising Jack Benny, Mr. Barnes said he did not "anticipate a lot of outcry or the ability to sustain a majority in the General Assembly for tax hikes this year.” Even so, qualifier three: “I understand it's going to be a tough year. We've all got to keep our options open. I'm not going to hem anybody in by making predictions before the whole thing has started.''

Mr. Malloy has now hemmed himself in – apparently. Caveat: Appearances in politics may be deceiving, particularly during election seasons.  Most reporters and commentators who have been around the block, so to speak, are, like Mr. Barnes, highly suspicious of politicians who promise no new taxes – “read my lips” – when the state is sunk in a treacherous sinkhole. And even the new Chairman of the Democratic Governors Association, if strapped to a lie detector, might freely admit that revenue enhancers might be possible in the post-election period. Pre-election assurances should be taken, to quote Mark Twain, “with a ton of salt.”

Facing an immediate deficit of $552 million built into the $20.4 billion budget adopted last June for 2016-17, and much larger deficits succeeding years that are partly the result of fraudulent economic growth predictions,  the Democratic dominated General Assembly’s disinclination to offer structural changes in spending, and a prospective bill of $100 billion for Mr. Malloy’s legacy 30 year infrastructure repair program, most rationalists in Connecticut would expect the Governor and his Democratic cohort in the legislature to revert to their default position – more and higher taxes and fees.

The near certainty of dead-end solutions and higher taxes was much on the mind of State House Minority Leader Themis Klarites when, out of patience with Democrats who have consistently rebuffed Republicans, she fumed, “The Senate President and the Speaker of the House are just as bad as the Governor in regards to these fiscal policies in the state. They brought [Republican legislators] into the room to debate and negotiate, not because they really thought we should be in there but because they wanted our fingerprints on the murder weapon. I know that seems very extreme but it’s the truth. I look at this as a crime perpetrated on the state of Connecticut.”


A week before the presentation of his budget to the General Assembly, Mr. Malloy warned that his getting and spending plan would be “very austere,” with no tax hikes, a fairy tale that has been told many times before. No long-term budget stability will be possible without permanent, long-term cuts in spending, and such reductions will not be possible unless Mr. Malloy is disposed to adopt some Republican ideas at the risk of alienating the affections and the votes of his enablers – state employee unions, progressives with knives in the brains and an indifferent media.
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