“The future ain’t what it used to be” – Yogi Berra
This year, as in other fiscal years, Governor Dannel Malloy’s Budget guru Ben Barnes has overestimated tax receipts. “Malloy Calls For Hiring Freeze As Income Tax Collections Nose-Dive $450 Million” a recent story screams.
Such repeated miscalculations are odd, issuing from a man who not so long ago had been hit by a lightning bolt coming out of the blue. Following a painful Damascus Road unhorsing sometime back, Mr. Barnes told us that Connecticut would in the future have to get used to repetitive deficits – because the state’s economy was under-performing. After the fourth murder, even an amateur detective might begin to suspect a pattern had begun to develop and rule out happenstance.
Precisely WHY Connecticut’s economy repeatedly had been under-performing is a question, Democrats have calculated, best left to administration astrologers. The fault, dear Barnes, is in the stars – not us. Big shrug, who knows? These things happen.
Connecticut has a deficit because the state is – and has been for many years – spending more money than it is taking in. Early realizing that his administration, and by extension the Democratic Party, could not boost taxes after having authored both the largest and the second largest tax increases in state history, Mr. Malloy, prior to the most recent elections, assured all potential voters in the state that further tax increases were not an option. Read his lips: no new taxes! You can only go to the utter so many times before the cow, drained of milk, boots you off the stool. However, increasing state revenue by employing certain political devices -- for instance, compelling municipalities to absorb a third of pension fund payments – are a distinct possibility.
These devices, as well as politically useful over-estimations of projected tax receipts, were shrewd Malloy campaign tactics, and they may have saved the Democratic Party’s majority status in both houses of the General Assembly, although – danger ahead! -- Republicans have made astonishing gains during the Malloy administration; Connecticut’s GOP, not your daddy’s Republican Party, has drawn even in the State Senate and is about four shots shy of a tie in the House.
Administration astrologers have told state Democrats that their usual party tactics – massive tax increases, pre-campaign over-estimations of future tax revenues, filching from dedicated funds and so called “lockboxes,” excessive borrowing to cover ordinary expenses, moving debt to the future, scapegoating past Republican governors for the Democrat Party’s instinctive disinclination to disappoint its usual interests – are no longer convincing. The stars are misaligned.
However, the stars can only be realigned by grievously disappointing Connecticut’s fourth branch of government, state employee unions; public unions in Connecticut are to the Democratic Party what the nobility, the Second Estate, was to Britain in the golden age of empire and glittering monarchical authority. Connecticut’s middle class, upon which the whole political edifice rests, is the Third Estate – commoners, tax cows. But you do not unnecessarily want to enrage the cow while milking it.
State Representative Gail Lavielle reminds us that revenue projections ain’t what they used to be: “This massive [$450 million] shortfall affected projections for 2018-19, increasing the deficit for the coming biennium from $3.6 billion to $4.7 BILLION. The sheer magnitude of the revenue shortfalls made one message abundantly clear: despite two historic tax increases since 2011, taxing more has not produced more tax revenue. Policies based on unfettered spending and taxing and borrowing more and more to pay for it must be dramatically changed.”
Hope has just mounted its horse. There is, Mr. Malloy has said, “a clear and growing consensus between our administration, and legislative Democrats and Republicans that this year's eventual budget should not and will not be driven by new revenue." This represents a significant change in Mr. Malloy’s lingo: the new budget will not and should not be driven by “new revenue,” not, as previously stated, "new taxes."
Here is a pledge by Mr. Malloy to support a revenue neutral budget. Even lame duck governor Malloy could easily shape budget discussions by vowing, before the legislature begins deliberations, to veto any budget that is not revenue neutral -- a serious and effective intervention. But Mr. Malloy has not publicly unsheathed a threatened veto. Having closed the door to Republican budget input during his entire administration, Mr. Malloy kicked open the closed and bolted door shortly after the state GOP unveiled its own alternative budget: “I’m ready, willing and able to speak with the leaders. The leaders are going to have to play a leadership role. Republicans are probably going to have to vote for a budget for the first time in 10 years. So, there’s a lot of work to be done.”
Indeed, owing to Republican gains in the General Assembly, necessary long-term budget savings cannot be passed this time without Republican assent. Whether or not Mr. Malloy’s invitation to conduct budget discussions with the state GOP leads to a secret trapdoor remains to be seen.