Malloy calls for shared sacrifice in state spending plan
HARTFORD -- No one could have been surprised.
The final details of a budget plan that Gov. Dannel P. Malloy laid out Wednesday at the state Capitol represented his own belief in the power of government. Connecticut's new boss stayed true to his urban liberal roots, protecting cities and towns and schools, even as he told unions, businesses and taxpayers it was time to fork over more money.
Other governors and legislatures seem to be choosing either massive budget cuts or huge hikes in taxes. Malloy wants some of both. It's a plan he said spreads the pain around but still invests in key priorities that make Connecticut what it is.
He would raise spending about 2.3 percent a year; boost sales and income taxes at least 20 percent, just enough to remain competitive with neighboring states; and spread out nearly $760 million in health and human services cuts that he says trim, but don't eliminate, programs in the social safety net.
The centerpiece of the proposal to solve the state's $3.2 billion deficit is the not-so veiled threat that if state unions don't agree to $2 billion in savings and concessions, layoffs would occur.
And compared to some states, Malloy's vision of "shared sacrifice" is relatively tame as it now goes into the months-long review before the Democratic-dominated General Assembly.
Texas is contemplating a nearly 17 percent budget cut as it tries to avoid tax increases.
Illinois has proposed a 66 percent increase in the income tax, raising it from the current 3 percent to 5 percent.
Wisconsin is proposing the elimination of collective bargaining rights for state employees.
New York Gov. Andrew Cuomo is holding the line against higher taxes, but he has proposed a budget that sharply cuts spending levels, including a $100 million reduction to the state university system.
Malloy's budget would keep college tuition within the cost of inflation; has graduated increases in the income tax; and raises retail sales taxes from 6 percent to 6.35 percent, giving $24 million a year back to the cities and towns.
Todd Haggerty, policy analyst for the Denver-based National Conference of State Legislatures, said Wednesday that states around the country have been coping with the same problems -- exhausted savings, stress on safety-net programs, declining or flat revenues and the end of their federal stimulus cash.
He said that in 2009, the year Connecticut borrowed $900 million for operating expenses and spent its $1.4 billion emergency reserves, states raised taxes by $28 billion to tackle shortfalls of $174 billion. Last year, there were only $4 billion in tax hikes for gaps totaling $117 billion nationwide.
"Taxes were less palatable across the country last year compared to 2009," Haggerty said in a phone interview. "What we hear from the states this year is anything and everything is on the table. It's another year of difficult decisions. With the federal stimulus gone, there's a cliff effect here."
Mayors and selectmen from throughout the state thanked the first-term Democrat, the former 14-year mayor of Stamford, for remembering his municipal roots and actually increasing municipal aid in the proposal that the General Assembly has until June 8 to revise and vote upon.
What Malloy needs, however, and what is the wild card in his attempt to face the state's structural deficit, is cooperation from the state unions and the coalition of 13 bargaining units that represent about 45,000 workers.
During a 37-minute budget address that was punctuated by nearly 30 instances of applause, Malloy Wednesday asked employees to accept reduced benefits similar to federal workers to save $100 million. A wage freeze would save another $300 million. Three additional unpaid furlough days would save $80 million.
"These are only some of the ways we can get to that $2 billion figure," Malloy said to a joint gathering of the House and Senate. "But let me be clear: We have to get to that number. The alternative to the $2 billion figure would require us to completely shred the safety net and lay off thousands of state workers. Which is to say there's no alternative. We have to get it done. And I'm confident we will get it done."
Larry Dorman, spokesman for Council 4 of the American Federation of State, County and Municipal Employees, said that unions and the Malloy administration are already engaging in "constructive dialogue."
Dorman said that compared to other states, such as New Jersey, Ohio and Wisconsin, Connecticut is seeking a moderate course with employees.
"Across the country, Republican governors are declaring war on public service workers, on middle-class workers, so I think what's positive about Connecticut is that we do have a governor who wants to work with front-line workers to get the economy moving, to create jobs and that's certainly a marked contrast to what's happening say in New Jersey, or Ohio or Wisconsin or any number of states," Dorman said in an interview. "We ultimately think that Connecticut's problems are better solved by looking globally at the revenue problem, and we hope and intend to be part of that discussion."
John R. Rathgeber, president and CEO of the Connecticut Business and Industry Association, said he's pleased that Malloy has been talking to employers, but his budget falls short of what's actually needed to create jobs.
Rathgeber said Malloy should look at New York's and Massachusetts' aggressive spending reductions as better models.
"Find other additional cuts that are being done in those kinds of states, or which have been recommended otherwise here in studies and the like, to reduce the size of the budget so you can reduce the size of the tax package," he said.
But liberal Speaker of the House Christopher G. Donovan, D-Meriden, said Malloy has struck a good balance.
"It reflects, I believe, the values of our state, which is education; looking after vulnerable populations significantly; and maintaining those needed services that the state provides. It may be a lean budget, but it doesn't seem to be a mean budget."
New Haven Mayor John DeStefano Jr. said in an interview in the hall of the House that compared to Illinois' revenue tactics, Malloy's tax hikes would be lower key.
"Fairfield County has the third-largest (number of) hedge-fund managers outside New York City and London," he said. "I think the goal is to keep them in Fairfield County, paying taxes to Connecticut. I think in point of fact, the governor is proposing to do in Connecticut what a lot of states have already done, like New York and others. But I do think the other component part of this is, aside from just getting the books in order, he's doing some things in education and economic development that make a lot of sense. Because at the end of the day we've got to grow. I do think this is mostly all about jobs."
Senate Minority Leader John McKinney, R-Fairfield, said Malloy should push for further spending reductions.
"The marketing has been that our situation is so dire there's no way to get out of it without raising taxes, yet Andrew Cuomo, a Democrat governor in New York, is proposing to do just that," McKinney said. "Chris Christie, a Republican governor in New Jersey, has done just that. So that shatters the myth that we have to raise taxes. Then the question is: Do we have the willingness and strength to look at further reductions to our spending?"
But Bridgeport Mayor Bill Finch, speaking during a news conference in support of Malloy's budget proposal sponsored by the Connecticut Conference of Municipalities, said he couldn't remember a state spending package that didn't make life harder for cities.
"We've never had a governor present a budget like this that doesn't balance the budget on the backs of local towns and cities," said Finch, who sat on the House podium during the governor's budget address. "We are very thankful for a budget that holds the local property taxpayers harmless in the most difficult financial environment that anyone can imagine. That's quite a feat. Isn't it great that we have a mayor as a governor, because he still thinks like a mayor, and it's evident in this budget."