[Greenwich Time] Op-Ed: The road we can’t afford to travel

May 23, 2011

The details of the agreement between Governor Malloy and state employee unions are in, and they are not encouraging. After passing the largest tax increase in state history, the Governor asked the legislature and the public to wait for weeks while he completed negotiations with union leaders to determine their contribution to resolving the deficit. The Governor promised the budget would be balanced through “shared sacrifice,” but this part of the solution only further shifts the burden to taxpayers, making companies and families more afraid than ever of remaining in a state that cannot keep its fiscal house in order, in part because it is beholden to the professional management of state employee unions.

The agreement calls for no layoffs for four years and no furlough days for two years, a concession on the Governor’s part that was perhaps his largest strategic setback in negotiations. If our tax revenues do not recover, he has now limited our options to balance future budgets and prevent insolvency. The agreement also calls for a guaranteed three percent annual wage increase from 2014 through 2016, which is irresponsible given the fragility our economy and tax revenues. The agreement also extends longevity pay, which are unearned bonuses paid to employees merely for showing up. Although a two year wage freeze will go into effect, there is no mention of any wage savings. While the agreement goes on to modestly adjust numerous benefits that are the envy of private sector employees, I am still at a loss in trying to understand where the real cost savings are. In the end, I am disappointed that the Governor approved a plan that increases our cost structure to unaffordable levels.

We all want the Governor to succeed. We applauded him when he said he was going to work to bring everyone to the table to contribute to the state’s fiscal remedies and to make Connecticut “open for business.” These days in the Capitol, there is a sense of betrayal. The Governor promised shared sacrifice to balance the budget, but ended up signing a bill that punishes the middle class, harms industry, raises the cost of doing business, sends out the wrong message to the marketplace, and cements the ever increasing cost structure of state government.

Every two years, you, the taxpayer, is led to believe that the state budget must go up by a certain percentage to support current services. There is no regard for the efficiency level in the delivery of these services and “savings” are falsely calculated against line-items that have already been inflated over last year’s spending levels. Our state has seen an increase in the overall budget for decades, and the 2012 and 2013 biennial budget is no different with planned increases for each year going forward. What is different this time around is that taxpayers are required to support disproportionately this government growth with an additional $3.7 billion in taxes versus just $1.6 billion in savings from state employees – the latter of which is an overly optimistic estimate.

An additional perspective is that the real world unemployment rate is 9.1% while it remains virtually zero in state government. And don’t forget, we will someday have to pay for $100 billion in unfunded pension liabilities. Considering all this, one would conclude we are about to kick the can down the road yet again. This time it’s the size of a garbage can and quickly filling with cement.

I receive hundreds of well-intentioned letters and phone calls expressing concerns about planned cutbacks in programs and services. My response to these concerns is that when government becomes as expensive as it is in Connecticut, it is inevitable that we will see the crowding-out of funding for many vital programs. If we are going to be in a position of supporting these programs, taking care of the neediest, and maintaining an affordable state workforce, we need to increase the size of the tax base as much and as quickly as we can. Otherwise, the math just doesn’t work. Not only will programs suffer, but we will face great financial uncertainty.

The Governor has referred to his strategy in dealing with the fiscal crisis as “the road less travelled.” Based on what we have seen to date, I do not believe that this is what Robert Frost had in mind when he wrote these timeless words referring to the concepts of boldness, creative thinking, introspection and optimism. I suspect that it is not what the taxpayers and citizens expected either.