Lawmakers see Malloy tax increases as a 'hard sell'

Hartford - While certain constituencies were pleased with Gov. Dannel P. Malloy's budget message Wednesday, others, on both sides of the aisle, questioned whether the taxpayers would buy what the governor was selling.

"Look, I thought as far as speeches go it was a very good speech. He laid out the basic principles upon which he derived his decisions, and I don't think I would disagree with any of those principles," said state Senate Minority Leader John McKinney, R-Southport. "I still think that at the end of the day, Gov. Malloy relies too much on tax increases and not enough on spending cuts."

Speaking from the other side of the aisle, state Rep. Diana S. Urban, D-North Stonington, said she thought the tax increases would be a hard sell.

"First of all, I'm getting hammered with e-mails already about increases in taxes," she said. "And one of the most important things is to try to give people a broader perspective: We've lost 100,000 jobs in Connecticut in a recession that we haven't seen the likes of in years.

"That being said, I think the governor's made a herculean effort here to try to care and not impact the most needy and still make this budget work," Urban said.

She applauded the progressive tax, but was not as enthusiastic about the sales tax, which is regressive, but, she said, "I haven't done the numbers, but I think it will equal out in the end. A lot of that money (from the sales tax) will be coming from people that can afford luxuries."

Urban was also pleased with Malloy's proposal to give an earned income tax credit to the working poor.

"That was Ronald Reagan's signature. It gives them an incentive to work, and as the lowest-income consumers, they spend nearly everything," which puts money back into the economy.

As to the concessions the governor is seeking from state employees, she was cautiously optimistic.

"We're talking a billion dollars. Divide that by the state employees, and you're looking at a big hit. I think he's showing an enormous amount of courage," Urban said. "I would think this is a negotiating position to let the unions know where he stands.

"The budget depends on it, and he sounded pretty firm," she said. "We need a leader with steely resolve, and I think he's got it."

Getting his budget through the state legislature, though, may be another matter, Urban said, referring to it as "the proverbial herding kittens, trying to get us all to go in the same direction."

McKinney indicated, however, that it's Malloy's failure to propose more spending cuts is what stands out for him.

Pointing out that while spending in the general fund may be slightly lower, overall spending will be 2.5 percent higher in the coming fiscal year than this year, McKinney said, "We're still spending more in the first year of Gov. Malloy's budget to run our state than we did under the last year of Gov. (M. Jodi) Rell's budget, and I think that's not going to resonate well with people when they look at … the higher taxes they're being asked to pay.

"I think when you look at it in total…. And it's the largest tax increase that's ever been proposed, that's a starting point to say it's too much. When you look at $1.5 billion in tax increases versus $800 million in operational budget cuts, to me the ratio is out of balance."

The success of the governor's proposed budget hinges not only on those tax hikes but on concessions from state employees. With respect to the latter, McKinney was a little more optimistic.

"With respect to concessions, I think the governor was very strong. His target of $2 billion over two years is aggressive but reachable. And he was very clear that we don't have any other choice, we have to do this. And he's right," McKinney said.

"We as Republicans have talked about the fact that our state employee wages, benefits and health care are simply unaffordable and unsustainable for the state of Connecticut," he said. "When you compare job for job what the state pays in wages. When you compare benefit for benefit and health care for health care what the state provides, on any measure we're above the private sector in benefits and health care, and now for many jobs we're also equal to or higher than wages in the private sector. That's not sustainable."

But, McKinney said, he thinks state employees might be persuaded if they understand where they stand.

"If I said we're going to change a state employee benefit plan to save $300 million, you'd say, 'Wow, that's a lot of money. How are you going to do that?' But when you say we're going to give you exactly what the federal government gives its employees, that's still better than most if not all private plans… So it's a matter of how you look at it."

State Rep. Betsy Ritter, D-Waterford, said she was impressed by the governor's "heroic job of presenting a budget that's balanced, and he clearly made a huge amount of effort to share that pain as widely and broadly as he felt he could.

But mention the tax hikes, and Ritter groans.

"I would say no stone was left unturned for better or for worse," she said. "I think there will be a lot of discussion about those tax hikes and if indeed they are falling as fairly as possible. It's extremely discouraging, but I'd be lying if I told you differently.

"I was relieved that the numbers worked out that we have a chance to get the state on a reasonable financial footing. It's hard to keep that thought in mind. I think the budget including those taxes helps us to get there. Do I like them? Of course not."

Did Ritter think Democrats would support Malloy's budget?

"I think there's a lot of feelings of encouragement that the administration will be willing to sit down and go through this information in a timely manner," she said. "I do think that we've been able to start off from the same starting line.

"That tells you that we're standing at the bottom of Mount Everest looking up at the top."


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