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According
to Jonathan Pelto, who ran
out of money in his short-lived gubernatorial bid before he could seriously
challenge Governor Dannel Malloy, Governor Dannel Malloy’s promise of a tax
reduction was “a hoax.” It’s difficult to disagree with him.
Three days prior to Mr.
Malloy’s budget address before the General Assembly, the governor appeared on
WFSB’s "Face the State” and told
moderator Dennis House he would be cutting the sales tax rate from 6.35 percent
to 6.20 percent on Nov. 1, and to 5.95 percent more than two years from now, in
April of 2017. The governor who had imposed on Connecticut the largest tax
increase in its history had become, in the twinkling of an eye, a tax cutter, a
miraculous transformation.
Two days before Mr.
Malloy’s budget address, Keith Phaneuf of CTMirror explained why Mr. Malloy’s proposed tax cut was, in fact, a net tax
increase.
Mr. Malloy’s
proposed reduction in the state’s sales tax rate would “save consumers $70
million next fiscal year and $155 million in 2016-17, the administration said.”
However, Mr. Malloy will also eliminate as yet unspecified tax exemptions,
which of course will increase revenues and amount to a net tax increase.
CTMirror calculates that “the other sales tax changes Malloy wants would save
the state $146 million per year. Chief among them is cancellation of the sales
tax exemption on clothing costing less than $50, a former consumer perk that is
supposed to resume on July 1 … Those sales tax changes combined leave the state
$70 million ahead in tax receipts next year, with the government and taxpayers
essentially breaking even in 2016-17.”
Real net tax reductions spur the economy; fake net tax reductions of the kind proposed by Mr. Malloy spur tax flight in one form or another:
Two days before Mr.
Malloy was due to pull revenue enhancers out of his budget hat, it was not
known how much extra the state would reap in tax revenue owing to the
cancellation of business exemptions. The state is facing a $1.3 billion deficit
in 2015-16 and a $1.4 billion deficit in 2016-17. So then, how much net tax
revenue would the changes proposed by Mr. Malloy bring in?
Mr. Malloy promised
reporters they would have the figures in two days, after he had presented his
budget to the General Assembly. During his gubernatorial campaign, Mr. Malloy
had promised – shades of President George H. W. Bush – no new taxes. But a
biennial deficit of $2.7 billion is a tempting inducement to raise new revenue.
The state of Connecticut, unlike the Federal government, does not have the
luxury of printing new dollars to cover the current national $18 plus
trillion debt.
Sure enough, on the day of Mr. Malloy’s budget address, CTMirror reported “Gov. Dannel P. Malloy unveiled a
budget plan that raises more than $425 million in net new tax receipts, while
also canceling more than $425 million in net tax cuts that he signed last term
and promised to start after the election.”
The “Bling” item in
Mr. Malloy’s budget is a $100 billion project for transportation upgrades. Mr.
Malloy’s plan is “comprehensive.” Progressives in the state who ride their
bicycles to work will rejoice that Mr. Malloy’s comprehensive plan DOES include
bike paths. In the short term, Mr. Malloy will spend about $10 billion on design
work to be followed at some point by construction – the cost of the project to
be passed along to the unborn, about thirty years out, by which time costs will
have increased considerably. The betting is running in favor of a tripling of
costs by the time the project is completed.
There are two progressive virtues to the Malloy plan: 1) the largest part of the
costs will not be assumed immediately by current taxpayers, and 2) large scale,
multi-year projects of this kind commit future governors to an escalating
spending ramp, assuring that taxes for thirty years out CANNOT be reduced. We
all know that every tax is a permit to spend. The Malloy program prevents a
denial of future spending permits.
So blinded by the
Bling were commentators that they failed to notice the rosy revenue projections
upon which Mr. Malloy’s entire budget uneasily rests. Addressing the media in
connection with Mr. Malloy’s budget presentation to the General Assembly,
Office of Policy Management chief Ben Barnes – who has been having some
difficulty lately adding one and one and getting two – noted that revenue
growth projections for 2015 would be about 25 percent higher than at present;
the previous year, they were 20 percent lower than anticipated.
Mr. Barnes offered the following warning to reporters in the room: “I would caution everyone
though with respect to the current year budget and our deficit projections. We
are relying on significant revenue in the month of April. We always do. But
this year I think that’s especially true. The consensus on revenue that OPM and
OFA have achieved assumes that there will be a 25% year over year growth in
income tax payments in the month of April for April 2015, April 2014 [he may
have meant 2016). For comparison purposes, you may remember that last April
[2014] was not a happy April. For the Office of Policy Management, we actually
saw a 20% decline in estimates of final payments. So we’re seeing if that will
fully rebound and then some this year. I don’t believe this is a bad estimate.
I have a lot of confidence in it.”
Apparently,
Connecticut’s economy is on the cusp of a dramatic recovery that will be
spurred on by net increases in business and other taxes or fees amounting to,
according to CTMirror, about a billion dollars.
It’s a sugar plum
fairy budget, just the thing a sugar plum fairy state needs in this the Winter
of its discontent.
Comments
"The vast majority of these cuts are choices that, under ideal circumstances, Connecticut would not have to make," Malloy said in the Capitol's historic Hall of the House. "But as our economy continues to recover, tough choices are needed.
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Some might think that AS the economy improves, especially at such a velocity, "tough choices" might NOT be needed. Surely, Malloy slightly misspoke. He meant to say that even though the economy is enjoying some technical improvement we still can't afford the government our elite thinks is best for us. Not withstanding the booming Nutmeg economy, we understand that next year prospective spending exceeds prospective revenue by $1.3. In Malloy's understanding, self-governing Nutmeggers are to appreciate that this deficit is to be addressed with both painful cuts and non-tax revenues. But, somehow, the painful cuts add up to 3.3% more spending next year, and the "revenue proposals" involve the Malloy Operation taking $560 million more from people and their businesses. Put in Malloy form, as the people of Connecticut suffer in one of the worst business climates in the nation painful tax increases have to be levied.
Dan Haar at the Courant believes raising taxes in our circumstances is a "good thing," but demands that Malloy be intellectually honest; call taxes taxes. What; is Haar a TeaParty guy? Speaking as one who believes taxes are merely necessary, inherently painful, evils, Haar's commitment to deliberative self-government is a good thing. It would be wonderful if we were also to have some honest discussion of spending at all levels of Nutmeg government.
"The vast majority of these cuts are choices that, under ideal circumstances, Connecticut would not have to make," Malloy said in the Capitol's historic Hall of the House. "But as our economy continues to recover, tough choices are needed.
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Some might think that AS the economy improves, especially at such a velocity, "tough choices" might NOT be needed. Surely, Malloy slightly misspoke. He meant to say that even though the economy is enjoying some technical improvement we still can't afford the government our elite thinks is best for us. Not withstanding the booming Nutmeg economy, we understand that next year prospective spending exceeds prospective revenue by $1.3 billion. In Malloy's understanding, self-governing Nutmeggers are to appreciate that this deficit is to be addressed with both painful cuts and non-tax revenues. But, somehow, the painful cuts add up to 3.3% more spending next year, and the "revenue proposals" involve the Malloy Operation taking $560 million more next year from people and their businesses. Put in Malloy form, as the people of Connecticut suffer in one of the worst business climates in the nation painful tax increases have to be levied.
Dan Haar at the Courant believes raising taxes in our circumstances is a "good thing," but demands that Malloy be intellectually honest; call taxes taxes. What; is Haar a TeaParty guy? Speaking as one who believes taxes are merely necessary, inherently painful, evils, Haar's commitment to deliberative self-government is a good thing. It would be a wonderful thing if we were also to have some honest discussion of SPENDING at all levels of Nutmeg government. Not only is spending going up, but, while government employees get raises, Malloy proposes cuts to private hospitals and doctors for services performed to make the pols look compassionate for the huddled masses yearning to be maintained at the level to which they've grown accustomed.
That makes sense. International companies like UTC are not in the habit of adjusting their multi-year business plans to suit the whimsies of governors. Didn't know about the special exemptions mentioned by the HBJ.
I notice that Governor LePage of Maine is to speak over in Bristol, Ct. Maine doesn't have precisely the same demographic as southern New England, but its population is not overwhelmingly conservative. Yet, somehow they've managed to get a sensible CEO. Perhaps in 2017 the Republican Party may put forth a candidate for Governor who simply points to the examples of Maine, Ohio, and Wisconsin. He'll never win Hartford or Bridgeport, but he may win enough of the non-moon-bat middle. But, can we ever get a Republican legislature, or even one house of the legislature as in Maine?
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Accomplishments
Under the leadership of Governor Paul R. LePage, Mainers have benefited from fiscal responsibility and an improved business climate. The LePage Administration implemented the largest tax cut in Maine history, allowing for low-income Mainers to keep their hard-earned money; fixed the pension system; paid the massive welfare debt to Maine's hospitals; reformed welfare programs; reduced regulations on businesses; and brought accountability and transparency to government.
"I didn't mean to post the same profundity twice."
It's OK. I enjoyed the second one twice as much.
"But, can we ever get a Republican legislature, or even one house of the legislature as in Maine?"
Maybe. Miracles DO happen. People are not inclined to vote for Party 2 when there is little difference between it and the prevailing one-party tyranny. Republicans have to learn how to fight; the Connecticut GOP is not even an underdog party. You have to begin to put up bills that have little chance of passing but never-the-less will send a strong political message. Bully-pulpiting is never enough in politics. Give me a term limit bill, or a right to work bill... or... (fill in the blank).
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You would think that here in Connecticut, where the Democratic Party is so manifestly committed to ethical government, we could get term limits for the legislature and Governor. I can't understand why the Dems cry about Citizens United and bemoan Money ruining "our democracy," and yet they are silent about term limits.
All I can assume is that they must run fundamentally counter to Social Justice, that they are somehow deleterious to the interests of the oppressed clientele of our progressive-yet-professional pols. Perhaps the teachers unions, cited above by dmoelling, view term limits as harmful to the children. I'll bet there are social scientific studies galore from the Kennedy School or the Brookings Institute that demonstrate term limits exacerbate the "achievement gap"
Lord knows I neither watched on tv nor listened on radio to the Governor's budget address. He also knows I haven't yet, nor expect in the future to, consider any supporting materials that might become available. What I know of Mr. Malloy's speech is from reading in the press, such as it is, and from your video presentation, for which latter I thank you very much. Thanks generally to you for your work. Give my regards to my Senator Coleman if you see him; his telecommunication equipment doesn't seem to function.
As you note in your presentation, the Governor proposes cuts to medical providers, hospitals, ambulances, doctors even as State employees get raises. (Nor, I might add, is there any word reaching me here in the Valley about there being fewer such State employees.) This is particularly offensive. On the one hand, his Party takes credit at election time for caring for those in need, on the other it forces hospitals to eat the financial loss from actual care performed. As you say, he appears not to understand where he's going, but he has every appearance of an ideologue blind to the real world consequences of his social engineering. Those consequences, as with the Waterbury hospital outrage, affect the state's health care market broadly.
But, compounding the problem of inadequate reimbursements to medical providers is the insistence of Mr. Malloy's party that more individuals have access (at least on paper). I realize that the Federal Government is presently paying, and promises to pay to a lesser degree in the future, yet I also noticed reports to the effect that the deficit in the current fiscal year is in part explained by less Federal reimbursement than expected. So, my question is this: Given that the State cannot afford existing social service programs, and given that the State cannot afford to expand those programs, and given that it is both unfair and destructive to impose inadequate reimbursements on the private sector, can we propose that Connecticut go back on the Medicaid expansion under Obamacare?
Thanks for your work and for your consideration.