According to a Hartford business reporter, the deal struck between Governor Dannel Malloy and SEBAC, state employee union
representatives, is “solid” and “good for taxpayers.”
According to Red Jahncke,
President of The Townsend Group, a business consulting firm in Connecticut,
the deal is more of the same. And the same road has led Connecticut into a dead
end. Following the usual route to budget reconciliation and economic prosperity
for Connecticut, the Malloy administration has plunged the state into
continuing budget deficits and entrepreneurial flight, which has reduced state
revenues despite two massive tax increases, giving new meaning to the
expression “more is less.”
Jahncke’s beef begins with the notion that Malloy’s proposed
wage freeze will result in real cost savings. We’ve been there, done that, he
notes. Malloy’s current budget gambit – shared sacrifices on the part of
taxpayers and unions – were all the rage in 2011, when the Malloy
administration was facing a $3.1 billion deficit. Taxes were increased permanently
and spending was cut, but the promised savings from union concessions was
largely illusory. These “solutions” mired Connecticut, Jahncke writes, “in a
non-stop budget crisis, which is culminating in a whopping $5.1 billion, or 13
percent projected deficit in the $40 billion biennial 2018-19 budget.” We now
find ourselves in the eighth year of a national economic expansion, but the
rising national tide has not lifted Connecticut’s boat.
The current Malloy-union deal is “déjà vu all over again.”
Then and now, the Malloy-SEBAC tradeoff –
a two year wage freeze in exchange for guaranteed job security, followed by
guaranteed wage increases of 3.% percent in the following years -- “ just bakes in unaffordable
compensation costs.” Actually, the deal struck by lame-duck Malloy and SEBAC
makes it impossible for future governors or legislatures to adjust the terms of
extended, long-term contracts that reach well beyond Malloy’s final term in
office. The Governor will be gone, perhaps following Connecticut’s previous
governor, Jodi Rell, to a peaceful retirement in Florida, a low tax state, but
his works will live on in irrevocable, court enforced contracts. “It is simple math,” Jahncke tells us. “The
same number of employees times the same wages saves nothing, nada, nil.”
Jahncke reminds us, “Malloy doesn’t even achieve the ‘wage
freezes’ he claims. In 2011, employees gave up a three percent raise in the
first year, but got 3% raises in each of the next three years. This time
around, Malloy’s tentative five-year deal entails a three-year freeze and 3.5
percent raises in the fourth and fifth years.”
Since there are no savings in “wage concessions,” under the
current Malloy-SEBAC deal, Jahncke reasons, “savings must be achieved wholly
through benefit concessions.” That will not happen: the whole purpose of SEBAC
is to retain benefits in exchange for temporary wage concessions.
The real problem here is entirely political. Every political
problem reduces to two questions: 1) what is to be done? and 2) who shall
decide what is to be done? Political scientists will confirm that the first
question is often determined by the second. In a democratic republic such as
ours, budgets are to be formed by two agencies of government, both of which
have been elected by the people to represent the general interests of the state:
the legislature, responsible for tax collections and expenditures, and the
executive department, constitutionally charged to present a balanced budget to
Connecticut’s General Assembly. If the state of Connecticut cannot wrest
control of its budget-making powers from special interests such as powerful
state employee unions, the state will wander further and further from honest
budget making and prosperity. George Bernard Shaw used to say that every
profession is a conspiracy against the laity. This may or may not be true, but
it certainly is true that every unelected special interest permitted to control
the flow of tax dollars is a conspiracy against the public good – and, be it
noted, both the General Assembly and the governor’s office as well.
In the face of this conspiracy against the public good, the
General Assembly must reassert its constitutional powers, and this can best be
done by removing unions altogether from the budget-making process.
An administration that began promising to make straight the
crooked budget ways of prior administrations – to avoid excessive borrowing, to
present to the General Assembly honestly arrived at budget projections, to
demand “shared sacrifice” among unionized public employees and taxpayers, and
lately to refrain from increasing revenues – has ended in a ditch of its own
making. The way to Utopia has led to Distopia. There were plenty of warning
sign posts along the way, all ignored by progressives within the Democratic
Party whose dream it was to radically change the face Connecticut presents to
the world.
Perhaps the most dramatic data pointing to the dissolution
of Connecticut is this: We are one of the very few states in the union that
have not yet recovered from a national recession that ended more than eight
years ago, and we are the only state that has lost population. Young people in particular
are voting with their feet against their home state. Perhaps they see all too
clearly what for many decades politicians in the General Assembly have refused
to acknowledge: burdened with high taxes, costly and cumbersome regulations and
the near certainty that beneficial, long term change will not arrive any time
soon, Connecticut is fast becoming a hollow shell of what it once was.
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