Sunday, June 04, 2017

The Confessional Malloy Administration And Real Reform

From this point forward, most of the media releases from the Malloy administration will be in the form of a hidden confession, followed by an unintentionally amusing uptick.

After an announcement by Mother Aetna that the company is moving its headquarters from Connecticut to another state, possibly New York, CTMirror unfurled its headline: “Aetna CEO: HQ move to have ‘minimal impact’ on most Hartford employees." The headline over a Wall Street Journal editorial was somewhat darker: “Connecticut’s Tax Comeuppance: With the rich tapped out, the state may resort to Puerto Rico bonds.

If ever Governor Dannel Malloy thought he might be upstaged by New Jersey Governor Chris Christie – and he did – he has now been disabused of that notion. It may be Governor Andrew Cuomo, not Christy, who will be welcoming tax besieged Aetna executives to his state.

Aetna CEO Mark Bertolini let the anvil down on Malloy’s head softly. “A new headquarters location,” he said, “will consist of a few hundred associates who would be a mix of new hires and existing leadership staff who would relocate over time… I want you to know that we remain committed to the Hartford community. Several of our business units would continue to be based in Connecticut. We remain committed to supporting a vibrant and healthy Hartford as it has been our home for 164 years.”

This reassured lame duck governor Malloy: “I find it reassuring. And that’s why we’re very hopeful the vast majority of those jobs will remain in the state, one of the reasons. I mean, it’s a very helpful sign.”

So then, Aetna has not decided to fold up its tent in Connecticut and move lock, stock and barrel to New York, where the company’s chief, Bertolini, resides -- yet. It is little short of a joke to say that this is a helpful sign. It is a sign of profound discontent with political decisions the state has been making for the last two decades at least. Political promises are water off a duck’s back to CEOs and other decision makers who are, because they must be, readers of the times.

The signs of the times were apparent more than a year ago when Bertolini, following Aetna’s merger with Humana, told his stockholders that a movement of jobs to Louisville, Kentucky's largest city and home to Humana, was required by the purchase agreement it had signed with Humana. Bertolini added teasingly, “Having said that, the rest of all of our real estate is under review.” Aetna's corporate headquarters, Mr. Bertolini said, will remain in Hartford – “until further notice.”

Bertolini’s cryptic hints caused a flurry of concern within the Malloy administration at the time. Malloy confessed that neither he nor members of his administration knew how to interpret Bertolini’s apparent unwillingness to commit to Connecticut. "We're trying to read into that," said Mr. Malloy. "We're trying to get to the bottom of it and look forward to doing that." The bottom has now risen to the surface; notice has been served. And yet progressive Democrats are unable to read the plainest writing on the wall.

Every tax increase is a permission to spend. Republicans this time around are trying to hold the line on taxes, because a failure to do so insures the failure of necessary permanent spending reforms such as those offered recently by Republican leaders Len Fasano and Themis Klarides: suspend or eliminate arbitration for unionized employees’ wages; replace overtime with compensatory time; increase worker contributions toward retirement health care; require employees to work longer to qualify for retirement health care; triple all workers’ pension contributions in future years. These are minimal reforms that would, if enacted, send an “open for business” signal to businesses, both in and out of state. Such positive actions will signal that Connecticut is seriously attacking its problems.

Union leaders who much prefer increasing taxes on the rich argue that such reforms would effectively prevent Malloy from negotiating contracts with unions.

But this is precisely the problem facing the state: through contractual obligations, unions in the past have been able to etch their salaries and benefits in stone. Malloy currently is proposing a contractual, court enforced extension of union benefits and salaries far into the future. That extension, which is really an abdication of legislative powers to unions allied with chief executives, prevents future legislatures from effecting permanent cost savings. It is precisely the state-union relationship that must be reformed. Why should unions have a death grip on the throats of reform-minded legislators? Why should budgets be held hostage to union demands? Why should courts rather than the General Assembly decide how tax dollars are spent in Connecticut? The General Assembly, constitutionally authorized to appropriate and disburse tax dollars, must recover its constitutional powers and move from contractual arrangements with unions to a mode in which salaries and benefits may be changed by statute.

By enacting such reforms, the General Assembly will have nothing to lose but its chains, and a more democratic world to win.

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