"The decline in revenue projections is not surprising. The economy and state government finances are extremely difficult to project in these unusual times, particularly given the significant shifts in income tax revenue that occur surrounding the dates of major tax changes. We will continue to closely monitor state revenues in order to maintain balance in the state budget this year and through the coming biennium."
Sunday, January 20, 2013
The Spending Sink Hole and the Fat Lady’s Song
Governor Dannel Malloy’s budget staff and the General Assembly’s non-partisan Office of Fiscal Analysis are now on the same budget gap page. All the green eyeshade folk have agreed in a consensus report that Connecticut has entered the sinkhole.
Only a few weeks ago during a special session of the General Assembly, Mr. Malloy and Republican legislative leaders came together – in the spirit of Sandy Hook, as one of them put it – to wrestle to the ground a budget deficit of nearly a half billion dollars.
This bi-partisan cooperation was unusual for Mr. Malloy and Democratic operatives in the state’s legislature. Shortly after being elected the first Democratic governor in more than 20 years, Mr. Malloy shooed Republicans out of the room and in cooperation with a General Assembly dominated by Democrats hammered out a budget suitable to the state’s unions. Republicans were understandably miffed at the cold shouldering, but not so put off as to refuse this year to co-operate with Mr. Malloy in a special session to liquidate – by means of an across the board spending cut – what Mr. Malloy was pleased to call a “budget shortfall,” pointedly NOT a budget deficit.
The gap between spending and revenue collection in Connecticut has hovered around 6 percent for some time. And so, to no one’s surprise, the billion dollar budget deficit is back and showing its fangs to a governor and the General Assembly that authored Mr. Malloy’s first budget, which included the largest tax increase in state history.
In a statement following the consensus report, Mr. Malloy’s budget guru, Office of Policy and Management Secretary Benjamin Barnes, wrote:
That statement is, for the most part, green eye shade Gobbledygook. A continuing six percent gap between spending and revenue receipts, along with a plunging economy, makes budget projections effortless for anyone but eternally optimistic legislators who believe that there is no connection between increases in spending, necessitating commensurate increases in taxes, and stagnant economies.
After more than two decades of massive tax increases, beginning with former governor Lowell Weicker’s income tax and cresting with Mr. Malloy’s massive tax increase, the Democratic dominated General Assembly has at last hit a tax wall it can no longer ignore, though, Heaven knows, it has tried. The cow’s utters are empty; taxpayers have flat-lined; the cupboard is bare; ain’t nothing in there but a peanut butter stain and a cobweb.
Ordinarily, given such dire circumstances, politicians would begin to slash spending, and it is instructive to ask: Why are members of Connecticut’s General Assembly and the governor of the state of Connecticut so dense and deaf that they cannot hear the fat lady singing her dirge?
This is what the fat lady is singing: You cannot hope to stimulate the economy by removing from it in the form of higher taxes the entrepreneurial capital necessary for growth and dumping the capital you have acquired into special trickle down projects you approve of, such as busways and UConn Health Centers and grants for prosperous multi-billion dollar companies, ad infinitum. Bribing large companies through tax credits to remain in a high-tax, over-regulated state is particularly offensive to whatever members of Occupy Wall Street remain in Connecticut, because the monies lavished upon tax absorbent companies are taken from struggling 99 percenters who are trying desperately to balance their own shrinking budgets.
The governmental stimulus fraud is beginning to wear thin. If a political Elmer Gantry were to tell us that he has raised the net level of water in our pools by taking a bucket of water from the deep end and dumping it into the shallow end, we should immediately detect the fraud. But here comes Governor or President Elmer Gantry and the gang; and they want you to know that by taking a dollar from the private marketplace and dumping it into the public marketplace, they have increased the wealth of the state or nation, when in fact, clever sleight of hand artists, they only have moved the pea from one walnut to another.
Bottom line, sings the fat lady: Get out of the tax bribery-corporate welfare business, lower business taxes, lower energy costs by increasing the energy product, pare back ruinous regulations, shake yourself free of the preposterous notion that you can allocate scarce dollar resources better than Adam Smith’s invisible hand, and cut spending.
Do it now. We are fast approaching the "too late" mark.
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