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Gov. Dannel P. Malloy had it right Wednesday when he said that the fiscal crisis facing state government is not only an enormous challenge, but also a historic opportunity. Unfortunately, his proposed two-year budget proposal for fiscal years 2012 and 2013 does not fully seize that opportunity.
With the urgency of the massive deficits confronting the state and with his own Democratic Party in control of both legislative chambers, this new governor could have called for dramatic change in reorganizing government. Instead, his proposed modest agency consolidations, which don't appear to reduce government in any substantial way, "amount to rearranging the deck chairs, not turning the ship," Rep. Steven Mikutel, D-Griswold, aptly observed after the governor's budget address.
But to the governor's credit, this appears to be an honest fiscal plan. In dealing with deficits projected at $6.2 billion over the next two years, it does not borrow money to pay for operational expenses and it fully funds state pension obligations. Borrowing and delaying pension payments by past administrations and legislatures helped get Connecticut in the mess it is in.
As an honest budget it provides the proper framework for the debate that should now begin over the fair balance of taxes and spending reductions to close the fiscal gap. We endorse Gov. Malloy's stated parameters for that debate. The legislature must hold the line on spending, achieve genuine savings from state workers and not mortgage the future to solve the current problem.
What we like
The budget maintains the social safety net. Especially in difficult times, a compassionate society must provide for those in need.
It maintains municipal and education aid to towns and cities. As a former mayor, the governor knows that the easy thing, substantial cuts in municipal aid to balance the state budget, would not be the right thing because it would pass the buck in the form of higher local property taxes.
This fiscal plan would begin the transition to generally accepted accounting principles (GAAP), which should bring an end to the creative and less than forthright bookkeeping the legislature has become infamous for.
Even while trying to control spending, it does find money to invest in transportation, incentives for job growth and $15 million to promote the state tourism industry, all vital to economic expansion.
We also welcomed Gov. Malloy's tough tone when it came to seeking concessions from the state labor unions, projecting $2 billion in savings over two years. "Their current wage, health care and pension benefit levels are not sustainable," said the governor.
He is seeking concessions in health care coverage, a wage freeze, more unpaid furlough days, raising the retirement age and other changes.
"Let me be clear: We have to get to that number," said Gov. Malloy of the needed savings. "The alternative (to concessions) … would require us … to lay off thousands of workers."
What we didn't like
The governor's call for across-the-board tax increases - $1.5 billion year one, $1.3 billion year two - is too steep and weighs too heavily on the middle class. Sixty-two percent of new tax revenues would come from families making $250,000 or less, 36 percent from those making under $100,000.
Spending would actually go up 2.4 percent each fiscal year, to $19.3 billion and then to $20.2 billion. Despite the administration's efforts to spin the numbers, pointing to reductions in spending for ongoing services, the bottom line is the bottom line. The budget needs to go down.
While the governor keeps talking of shared sacrifice, spending for his own office actually goes up from $2.761 million to $2.837 million. The governor's office attributes this to Gov. Malloy's increased travel schedule and increases in dues the office pays. They actually cut five positions. Still, you can't call for large-scale tax increases and then boost your own spending. By the way, spending for the legislature goes up, too.
Finally, this is not the time to introduce a state earned income tax credit, which would put money in the pocket of the working poor, but would also add $100 million to the budget.
The proposal is a start. Now the legislature must do its work. Trim the tax increases and find more budget cuts.