Will recovery mask budget gimmicks?

With the budget largely set for the next two years, the fate of Gov. Dannel P. Malloy's first term rests largely with the economy.

On the positive side, Gov. Malloy, working with large majorities of fellow Democrats in the state House and Senate, remained true to the education reforms approved a year ago. He can trumpet decisions not to shift the state's fiscal problems to the towns and cities. The budget largely preserves human services' programming. And the governor remained true to his campaign promises to make the state an aggressive partner and investor in promoting economic growth.

But he is also the governor of the $1.5 billion tax increase, largest in state history, and a labor concession deal that fell well shy of savings expectations, at least in the short term. In his call for "shared sacrifice" after his November 2010 election, Gov. Malloy vowed not only to close the $3.7 billion spending gap he inherited, but more permanently address the structural problems that led to persistent fiscal problems.

"This is our time to do what we were elected to do, to fix what's broken once and for all," Gov. Malloy told the legislature to loud applause just a few weeks after his election.

But the past session showed the problems are not fixed once and for all. The economy has not improved as predicted; tax revenues and projected savings have fallen short. And when the legislature convened at the beginning of 2013, it faced projected deficits of $1.2 billion and $1.3 billion over the next two fiscal years.

In working with lawmakers on a budget that backs continued education reform, sustains municipal aid, while avoiding another tax increase on personal income, Gov. Malloy is preparing to sign a spending plan that uses the type of one-time revenue sources and borrowing - if not at the same scale - for which he criticized his predecessor. It has to be humbling.

Rather than being set aside as a fiscal cushion, the $221 million projected budget surplus for this fiscal year will be used to fund the budget that begins July 1. The new budget also raids clean energy, transportation and other special funds to pay general operating expenses. All told it employs $365 million in one-time revenues and rerouted funds.

Gov. Malloy noted, however, the scale of the fiscal slight of hand is far smaller than seen during the final two years of the administration of Gov. M. Jodi Rell. This ambitious governor appeared to recognize in a conference call with editors Monday the limits of his earlier ambitions.

"Have I been able to slay every dragon overnight? The answer is no," he said.

Most outrageously was the 11th hour push to legalize keno to raise more revenues, without a hearing process or even negotiations with the Mohegan and Mashantucket tribes, who contend their compact with the state gives them exclusive rights to what they consider a casino game. The bill sets aside 12.5 percent of keno revenues, assuming that will be enough to buy tribal approval. This is no way to bargain.

To be fair, keno was not the governor's idea. To raise those revenues he wanted to auction off the rights to blocks of state electric customers. The administration promised customer savings, but consumer advocates said the strategy would have meant higher prices long term, and the legislature balked.

A future Republican opponent will have plenty of ammunition to attack the incumbent. Gov. Malloy will, in turn, be able to point to education reform, sustaining municipal aid, his handling of crises and tougher firearms' regulations, all popular with the majority of citizens.

The political fulcrum will be the economy. Sustained economic growth would produce revenues sufficient to mask the budget gimmickry. It would also underpin the Malloy administration economic strategy - Jackson Laboratories, the First Five program, grants and loans to small business and the controversial New Britain-Hartford busway project.

We are convinced the governor's economic approach will in time bolster job growth. The question still remains whether it will come in time to save his.

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