Thursday, October 13, 2016

Faking The Budget, Again

There is nothing ambiguous in Gail Lavielle’s kickback. This is what the Republican State Representative said about the Democrat’s new attempt to smudge budget figures: “Here it is: documented evidence made available by the respected CTMirror that the governor and the administration are HIDING Connecticut's current deficit until after the election. Remember, the current majority legislature made this possible by voting just a couple of years ago to move the annual autumn pre-election revenue forecast until after the election. There will be more unconscionable tax increases, more service cuts, and more failing infrastructure if that majority remains. And it's all avoidable: the five-year plan we outlined this spring clearly showed how, starting with real state labor cost reforms, bonding reallocations, and implementing the spending cap.” Mrs. Lavielle’s statement was echoed by other distraught Republicans.

The CTMirror story noted that although budget projections filed with the State Comptroller’s office showed “that finances were in balance and that revenues for the General Fund — which covers most operating costs in the budget — were coming in as anticipated,” a memo issued two months earlier requesting agency heads to keep their budgets lean contained an estimated General Fund revenue figure issued by the Governor Malloy’s budget guru, Ben Barnes, of  $17.75 billion -- which was, CTMirror computed, “$133 million less than the amount needed to balance the current budget.”

Sadly, CTMirror’s budget calculations most often have been more reliable than those cited by Mr. Barnes. The Malloy administration has frequently overestimated budget revenue, the lazy man’s way of budget balancing, and the math here strongly suggested that the Governor’s office had supplied faulty budget projections to Comptroller Kevin Lembo, a nasty piece of budget skulduggery. 

The more things change, the more they remain the same, the French say. If Democrats in charge of both the Governor’s office and General Assembly have not learned how to balance budgets – and they haven’t – they have been expertly finessing budget figures for a long while, most damagingly before elections. If you can’t balance a budget, the least you can do for your comrades up for reelection is to pretend to have balanced the budget – usually by over-estimating the inflow of revenue.

When Governor Dannel Malloy first ran for office, he made the issue of honest budgets a priority. He wanted to change the manner in which revenue was computed from a modified cash basis accounting process that had allowed crafty politicians to fudge budget figures and disguise red ink to a Generally Accepted Accounting Principals or GAAP system, which would make it far more difficult for spending addicted legislators to fool most of the people most of the time. This accounting change – and the latent promise of honest budgets -- signaled to everyone that here at last was a honest broker who would not allow crafty politicians, even those in his own party, to escape the only two real methods of managing debt -- cutting spending and raising taxes.

Mr. Malloy and the Democrat dominated General Assembly raised taxes twice; the first was the largest and the second, following closely on its heels during the Governors’ second term, the second largest tax increase in state history. Peering from behind the curtain was former Governor Lowell Weicker, the father of Connecticut’s income tax, who offered a plenary indulgence to Mr. Malloy.  Like Mr. Weicker, Mr. Malloy was a courageous governor who did what was necessary. He raised taxes during a recession; or, as Mr. Weicker put it during his own campaign for Governor, Mr. Malloy poured gas on a smoldering fire -- with predictable results.

Had Mr. Malloy’s spending cuts been commensurate with his tax increases?  Not so much. Well into Mr. Malloy’s second term, Mr. Barnes informed everyone, including dismayed Democrats in the General Assembly who had dominated that body for twenty years and more, that the state would have to get used to permanent deficits. The revenue well was running dry because Democrats and Mr. Malloy had gone to the well far too often to purge their budgets of red ink.

In the meantime, businesses in the state had caught on to the game and were packing their bags. The invisible signage posted all around Connecticut’s borders – “Lasciate ogni speranza, voi ch'entrate" (Abandon all hope ye who enter here”) – was crippling revenue inflow. Business flight and a recession prolonged by a Governor and General Assembly averse to PERMANENT spending cuts had deepened the red ink. When you are cutting funds compassionately given to the disabled in Connecticut and at the same surrendering millions of tax dollars in crony capitalist tax write-offs and credits to the largest hedge fund in the world, you have entered the last circle of damnation. 

In deep despair, Mr. Malloy now is slashing his budget across the board. But of course there is little reason to hope these budget cuts – and very painful ones they are – will not be reversed after the upcoming election when, Republicans suppose, taxes once again will be raised. All the signs point to another massive tax increase once Democratic Big-Spenders have been returned to office. In the absence of a massive revolt by voters in the next election, political demographics in the state – Democrats outnumber Republicans by a two to one margin – virtually assure further tax increases.

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