Thursday, November 17, 2016

Parsing Malloy


Is there yet another tax hike in our near future?

Thinking people think so.

Republican leaders in the General Assembly hit the tax increase chord repeatedly in the recently concluded elections, and apparently voters responded to it. The Republicans picked up seats in the Senate, which is now a fifty-fifty proposition, 18 Democrats and 18 Republicans. The GOP also gained seats in the House. In a recent TV interview, Governor Dannel Malloy said he would not rule out another tax hike, more budget cuts were in the offing, and recurring deficits were the fault of his predecessors.

Parsing Mr. Malloy at this point should not be difficult. During his first campaign, Mr. Malloy said Connecticut shoulders would have to lift the weight of deficits caused by other governors, but the burden would be fairly distributed between cuts and tax increases. Two tax increases, the largest and the second largest in state history, demonstrate beyond doubt that taxpayers have shouldered the bulk of the uneven budget deficit burdens.


Now, it was true at the beginning of his administration that Mr. Malloy was not responsible for deficits he inherited. Mr. Malloy was Mayor of Stamford for fourteen years when the deficits were being baked into Connecticut’s cake by previous governors, two of whom were Republicans. However, while governors present budgets to the legislature, it is the General Assembly that is responsible for fashioning final budgets. And, nearly two years into his second term, Mr. Malloy still has not faulted the Democrat dominated legislature for having produced successive deficits. Politically, it is not in his interest to do so.

So then, Connecticut’s frequent budget deficits during the Malloy administration, as well as the state’s tax increases and improvident spending ARE the Democratic Party’s fault. Republicans last controlled both houses of the General Assembly in 1984 following President Ronald Reagan’s sweep. And Democrats have been in command of ALL the power positions in Connecticut during Mr. Malloy’s six years in office. They own the U.S Congressional Delegation, the Governor’s office and all the Constitutional offices in the state. It has been a Democratic cake for the past six years.

Thanks to CTMirror, which has been reporting accurately on state budget matters, an even larger and more imposing imposture will not pass unobserved. The manner in which deficits are forecasted has been changed under the Malloy administration, and the change is creating rumbles and election opportunities within the opposition party.

“Because of a change in format ordered last May by Malloy and the legislature,” Keith Phaneuf notes in a recent story, “these [fiscal accountability] reports no longer project cost changes in all segments of the budget, including contractually mandated pay hikes for unionized state employees.

“The new format also stops the two offices [Mr. Malloy’s budget office and the General Assembly’s non-partisan Office of Fiscal Analysis] from providing  updated deficit or surplus projections for the next three fiscal years — a move that remains controversial among some legislators. The last warning legislators received from nonpartisan analysts came in September, when they projected state finances, unless adjusted, would run $1.3 billion in deficit in 2017-18 and $1.4 billion in the red in 2018-19.”

Among Republicans and some Democrats in the General Assembly who must rely on accurate budget forecasting, the new changes in reporting projected debt and surpluses have caused a minor insurrection. Republican Minority Leader in the House Themis Klarides has questioned a “methodology that ignores reality.” How is it possible to properly plan for changing receipts and expenditures that do not appear in budget projections?

Areas of the budget omitted in Mr. Malloy’s new calculus include, according to the Mirror report, “employee wage and benefit changes, including those mandated by contract; program and municipal aid changes required by law; inflationary cost increases; projected changes in social service caseloads in non-entitlement programs.” The easiest way politically to deal with mounting deficits is to air-brush them from budget calculations.

The removal of “current services” projections from the budget accomplishes two political purposes. A dishonest reconfigured reckoning of real getting and spending from reporting sources independent of the Governor blunts criticism of overspending and creates the comforting illusion of lower deficits and balanced budgets. It also removes real debt from consideration when majority Democrats in the House are cobbling together their chronically out of balance budgets. Deficit projections neither seen nor heard may easily – too easily – be discounted by legislators interested in convincing voters that Connecticut is not “out of control,” a formulation that Bill Cibes, co-chair of a Spending Cap Commission charged with recommending definitions that would restore Connecticut’s Constitutional spending cap, considers incendiary.

Mr. Cibes is on record advising that the constitutional cap itself should be repealed, and Democrats through yet more budget tomfoolery want state pension obligations to be removed from the cap.

It is against this background of false budget projection reporting that Mr. Malloy’s post-election remark concerning additional taxes should be seen. Having assured voters repeatedly before the current elections that he was not inclined to impose further taxes, Mr. Malloy, quick to blame his predecessors for his two major tax increases, now says he and Democrats in the General Assembly want to make tax changes  to “make our state more competitive.” Asked if he would be willing to rule out another tax increase to balance a future budget that is projected to be $1.5 billion in arrears, Mr. Malloy responded that he did not wish to be trapped into answering the question “until such time as I have better data.”


The most accurate data at this point may come from CTMirror’s Keith Phaneuf, who has warned his fellow journalists not to rely on Mr. Malloy’s reconfigured data; the real deficit for next fiscal year will be much larger than the politically tolerable but incorrect data Mr. Malloy is waiting for.



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