Governor Dannel Malloy has vowed several times not to raise
taxes. There is no third act in Connecticut for a governor who has raised taxes
twice in an effort to discharge repetitive deficits and failed conspicuously to
balance budgets. Mr. Malloy and his Democratic confederates in the General
Assembly have imposed on Connecticut the largest and the second largest tax
increases in its history, with little amelioratory effect. Budget analysts project a $1.42 billion deficit in 2017-18 and
a $1.60 billion shortfall in 2018-19, according to a CTMirror report,
and revenue tributaries that in the past have washed away Connecticut’s
deficits have diminished.
In the past few elections, Democrats lost seats in both the
state Senate and the House. There is little doubt that Connecticut Republicans
– shut out of budget negotiations by Mr. Malloy since his first term – have
made historic gains in the General Assembly because of the state’s flagging
economy. The Senate is now evenly split 18-18 and the House is split 79-72,” the most House seats occupied by Republicans since 1986,” the Hartford Courant reports.
It’s still the economy – stupid. Politically, both the
Malloy administration and the Democrat dominated General Assembly have cheerily
walked a progressive plank over shark infested waters. They are now confronted with repetitive deficits, more companies leaving the state, entrepreneurial flight, and
diminished revenue resources -- jagged teeth flashing in the waves.
Will they jump? Is there yet another debilitating tax
increase in Connecticut’s near future?
Apparently, there is. State Representative Toni Walker of
New Haven, co-chair of the Appropriations Committee, has hauled the
possibility of “revenue enhancements” out of the closet.
“There are some who believe we can get through all of this
with austerity,” Walker is quoted in one story,
“but they haven’t seen what an austerity budget would mean.”
By “austerity,” Ms. Walker is suggesting that further
spending cuts would be ruinous. To put it in other terms, since Governor Dannel
Malloy has multiple times pledged not to raise taxes, following the two highest
tax increases in Connecticut’s history, and since Mr. Malloy has taken an
across the board axe to current spending, any serious attempt to cut spending further
would adversely impact the most needy among us. We have already, according to
Ms. Walker’s view, cut to the bone; must we debone the deserving poor as well?
If further spending cuts are not possible, it follows that tax increases of
some form or other must be considered.
Mr. Malloy has been praised in some quarters as having cut
spending, but the nature of the cuts are temporary. When, or if, Connecticut’s
economy revives, all the cuts may easily be restored. Democrats in the General
Assembly have been waiting patiently for a restoration of the good times that
will save them from instituting permanent fixes.
In the meantime, Connecticut’s serious problems have outpaced their patience. S&P Global Ratings has once again downgraded its outlook for Connecticut. S&P’s revision
“reflects our view that projected growth in fixed costs could rise to a level
we believe could comprise a substantial proportion of the state budget and
thereby hamper Connecticut's budget flexibility as the state addresses large
out-year budget gaps."
The state’s anticipated growth in fixed costs marks the edge
of an abyss: “Connecticut projects that service debt, pension, and other
post-employment benefit costs will total 32.6 percent of fiscal 2018 general
fund revenue, a level that the agency considers high, with the potential to
increase in future years. Fixed cost growth has led to large out-year budget
gap projections that could be difficult to manage following previous biennium
tax increases and expenditure cuts."
Fixed costs are consuming a huge chuck of Connecticut’s
budget and, in the meantime, the state’s economy continues to groan under a
recession that ended in much of the country in the summer of 2009, seven years ago. Connecticut’s tax base is deteriorating, and the state has yet to
recover the full complement of jobs lost during “The Great Recession.” Connecticut Department of Labor statistics show the state has recovered only 69% of jobs lost during the recession, not
the sort of tide that, in the words of former President John Kennedy “lifts all
the boats.” Connecticut’s job recovery “is into its 80th month and the state
needs an additional 36,900 jobs to
reach an employment expansion.”
Almost everyone but Ms. Walker -- including Mr. Malloy,
author of the largest and the second largest tax increases in state history --
appreciates the now visible unintended consequences that attach to the state’s
too frequent revenue enhancements. The richer the state budget, the poorer the
people, and there is a direct causal connection between increases in revenue
and increases in spending. Connecticut’s options, like its tax base, are
diminishing as time inexorably rolls on. What Charles Dudley Warner, a friend
of Mark Twain’s and an editor of the Hartford Courant, said of the weather in
Connecticut, “While everybody talked
about the weather, nobody seemed to do anything about it,” is true also
of the state’s ruinous spending inflation.
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