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Malloy stood firm on state budget fix

If the legislature adopts the proposed revisions for the coming fiscal year beginning July 1, Connecticut government will get smaller. The proposed budget eliminates a projected deficit of nearly $1 billion. It would accomplish this without more self-defeating tax increases.

Make no mistake; this could not have happened without the leadership demonstrated by Gov. Dannel P. Malloy.

This newspaper has harshly criticized the Democratic governor on budget matters in the past, and with good reason. He should have taken this tough budgetary position after his 2014 election to a second term. But after running on a promise not to hike taxes, and contending he saw no signs of a deficit steep enough to warrant them, Malloy in 2015 negotiated and signed a two-year budget deal that did raise taxes that were particularly bruising for business and industry in Connecticut.

General Electric announced its plans to leave for Boston, a move that may have happened anyway, but the higher taxes did not help. The budget quickly fell into deficit and the administration and legislature have been busy sticking fingers in the leaking deficit dike ever since.

This year, Malloy set a much different tone.

“Going forward, we need to limit our spending to available resources,” Malloy told the General Assembly in his Feb. 3 State of the State Address. “This new method will require different decisions to keep government living within its means. It won't come without sacrifice — it will require the reduction of the state workforce by more than a thousand employees through attrition and other means. I don't take that lightly, but I do think it's necessary.”

He has demonstrated he was not kidding.

Malloy would not budge when state Democratic legislative leaders, running out the clock as the session dragged on and the deficit projections grew, produced a budget that used what was effectively borrowing, one-time revenue sources, and unrealistic assumptions to paper over much of the deficit. Their eyes were on the November legislative elections.

Malloy signaled his displeasure, while praising an alternative budget pushed by the Republican minority, a proposal also applauded by this newspaper. Message sent. In the end, House Speaker Brendan Sharkey and Senate President Martin Looney moved far more in the direction of the governor than vice versa.

At $19.75 billion, the spending plan is substantially less than the $20.4 billion budget originally adopted for FY 2017. In fact, it is less than the budget initially adopted for the current fiscal year.

The budget includes about $830 million in cuts. Savings will come in large part from shrinking the state workforce. A month ago the governor said his administration would eliminate 2,600 jobs through layoffs, retirements and attrition, so far issuing about 750 layoff notices. Because of the budget deal, the job cuts will go “substantially higher,” Malloy told us, adding, “I lose sleep over it.”

The unions have resisted calls to negotiate contract concessions to reduce the job losses. They should reconsider.

Many communities will see cuts in state education aid, some big cuts. There are cuts in special education and magnet school appropriations. Towns and cities will see less state funding than in the initially adopted budget. There will be reductions in Medicaid, substance abuse services, social services, funding for the court system, and the list goes on.

Some call to tax the wealthy. New numbers show the folly of continuing down that road. The Office of Fiscal Analysis reports that the state’s 50 wealthiest residents saw a combined drop in income of $2.9 billion in 2015, a 30 percent decline from the prior year. The investor class of Fairfield County is no longer tethered to the New York City markets. Hedge-fund billionaires can run their funds from any state.

“There’s an outmigration trend, it’s real,” Tax Commissioner Kevin B. Sullivan told reporters.

Perhaps later than he should have, Malloy recognizes Connecticut has to stabilize the state’s fiscal situation to support economic growth and let that growth produce more tax revenue.

The announcement of the budget deal between Malloy and Democratic legislative leaders came late Tuesday night. It was wise for those leaders not to try to ram it through the General Assembly on the final official day of the session Wednesday. They return next week.

The best avenue is to adopt this budget without major change. Start tugging at the threads and it will quickly unravel.

Then let the Republicans make their arguments to voters for structural changes they rightly contend are necessary — among them legislative approval of all union contracts, overtime reforms, reductions in state borrowing, and a workable spending cap.

As Malloy conceded in an interview this week, “This is just the start in addressing our (budgetary) challenges.”

The Day editorial board meets regularly with political, business and community leaders and convenes weekly to formulate editorial viewpoints. It is composed of President and Publisher Tim Dwyer, Editorial Page Editor Paul Choiniere, Managing Editor Izaskun E. Larrañeta, staff writer Erica Moser and retired deputy managing editor Lisa McGinley. However, only the publisher and editorial page editor are responsible for developing the editorial opinions. The board operates independently from the Day newsroom.

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