Wednesday, February 16, 2011

Gov. Malloy’s First Budget Plan

Gov. Danell Malloy, as everyone knows, was mayor of Stamford for many years. Those who were paying attention to his gubernatorial campaign will recall the claim, often made by Mr. Malloy during some rough and tumble debates with his Republican challenger, former ambassador Tom Foley, that Mr. Malloy’s governing approach as mayor of Stamford brought jobs to his city, some from contiguous states in which the business climate may have been less friendly than Connecticut’s.

On Feb 15, one day before the governor’s budget address to the state legislature, the Stamford Advocate carried a column written by Angela Carella titled “Higher The Taxes, Deeper The Hole” that compared Mr. Malloy’s budget strategy with those of two governors facing the same debt problems, Andrew Cuomo of New York and Chris Christie of New Jersey:

“Andrew Cuomo and Chris Christie say they won't raise taxes, but Malloy this week proposed one of the biggest hikes in Connecticut history.

“Malloy made it clear that tax rates still will be lower in Connecticut , which competes with New York and New Jersey for jobs and residents.

“But it's little consolation to taxpayers in Connecticut , which ranks near the top of nearly every list that measures tax rates in the United States .”
Ms. Carella included in her report some depressing statistics taken from the non-partisan Tax Foundation in Washington D.C.

Every year the foundation rates states according to the burden of state and local taxes. Connecticut now ranks third in the nation, its residents paying 11.1 percent of their incomes in state and local taxes; New Jersey has the distinction of being first at 11.8 percent, followed by New York at 11.7 percent. The national average is 9.7 percent. Connecticut ranks 7th in the nation in the amount of property taxes the state draws from its residents measured as a percentage of median home value.

Massachusetts, derisively called Taxachussetts in Connecticut ’s halcyon pre-income tax days, has improved its tax ranking. After the Massachusetts legislature set statutory limits on property and personal income taxes, the state’s tax burden ranking dropped from 10 to 26, while Connecticut ’s ranking rose at the same time from 24 to 3.

Connecticut ’s rocket ride upwards in these depressing rankings is what one would expect of a state that had increased spending more than 200 percent at a time when the state legislature in Massachusetts had decided to put a statutory bridle on taxes. In Connecticut, the spending steed, unsaddled and unbridled, continues to run wild in a pasture in which there are no state statutory or constitutional fences, and it will not be long before businesses, in and out of state, begin to notice that, in respect of its contiguous states, Connecticut has fallen far behind in a competition to both attract businesses and fend off poachers from other states that rank higher than Connecticut in the statistics provided by the Tax Foundation. Indeed, the poaching, which began after the Lowell P. Weicker Jr. income tax was written into law, will continue more earnestly after the legislature has written its present budget in stone.

Mr. Malloy’s plan increases spending about 2.4 percent a year, and while it consolidates 81 state agencies down to 57, the reduction in the state workforce of 46,585 next fiscal year is minimal, a slender 159 workers, less than one half of one percent.

“The biggest cut in the Malloy budget [about $2 billion] technically involves a ‘lapse’ or relatively undefined savings still to be achieved,” according to a report in CTMirror. “The governor announced this week that it would come from state employee wage and benefit concessions as well as other savings tied to rank-and-file labor and management.”

The business writer for the Hartford Courant thinks the imagined state worker concessions are a pipe dream, and at least one former governor, John Rowland, is convinced that the proposed budget is what he calls “a set up.” Mr. Rowland has said the Malloy-Donovan-William team will be back, after the first budget crashes on the rocks of reality following the governor’s scheduled Town Meetings, with a revised budget sharply boosting the state’s progressive income tax


Anonymous said...

Every time I read or hear the code words for the massive tax increase “shared sacrifice, I throw up in my mouth.

John Schmidt said...

Unions are what got us into this mess. They're constant demands for more, more, more without increasing productivity and the inability of rewarding people who work hard have created the debt we are in. Combined with the Democrats the unions love to bribe and you have the mess. No one can justify including overtime in a pension calculation. It doesn't happen except in state and city government. If private companies allowed what public employee unions do to the workforce, all the companies would be either overseas or out of business. This is a competitive world a lot of which are because of the incessant American desire to get a bargain. Companies are now forced to be competitive to make a profit which is their job. Unions have driven costs too high and taxes too high for companies to be competitive in this state. And don't tell me the rich or the dead owe more. At each step, the rich and the dead paid their taxes. The government taxes, salary, earnings, profits, and when a rich person dies it gets taxed again. That is the crime. The public labor force is too big partly because the government does too much. The only people exempt from budget cuts should be police, corrections and fire crews. We have too many agencies.

dmoelling said...

It appears that the real winners here are the teachers unions. Gov. Malloy (D-Bridgeport)has gone out of his way to preserve grants to cities for education. At least he could pretend to ask them for sacrifice and give up binding arbritration.