Sen. Kane to Gov. Malloy’s budget chief: “Are you going on record as saying no tax increases?”

November 28, 2012

Budget chief won’t be nailed down on taxes
Article as it appeared in the Connecticut Mirror

Gov. Dannel P. Malloy’s budget chief spent the better part of three-and-a-half hours Tuesday playing verbal dodge ball with state legislators about his boss’ feelings about tax increases as a possible solution to the growing gap in state finances.

But Office of Policy and Management Secretary Benjamin Barnes would only go so far as to reinforce Malloy’s already stated intention not to raise taxes — stopping well short of offering any pledge or guarantee.

Barnes also declined to commit on a myriad of other revenue-raising scenarios that some might argue are equal to a tax increase, while others might not.

“I have no intention” of raising taxes, Barnes told members of the Appropriations and Finance, Revenue & Bonding committees as fiscal analysts outlined their projections for the current fiscal year and the next two. “I will not, I shall not, I do not wish to.”

“I feel like I am in ‘Green Eggs and Ham,'” Barnes said. He was referring to the 1960 Dr. Seuss tale in which an unnamed character is pestered by Sam I Am to try the bizarre entree identified in the title. “We do not like taxes, Sam I Am.”

However, Dr. Seuss’ book ends with the resistant character ultimately trying and liking green eggs and ham, while on Tuesday, Republican lawmakers were trying to test just how resistant the Democratic governor’s administration is to a tax increase.

Malloy has been very specific in his opposition to raising taxes to close the $365 million deficit his administration projected for the current budget, a shortfall of about 2 percent.

But the governor has been far less definitive when it comes to a deficit of as much as $1.2 billion projected for the coming fiscal year — a shortfall of 6 percent — saying only that he has “no intention of raising taxes.”

Sen. Robert Kane of Watertown, the ranking GOP senator on Appropriations, said he was confused when Barnes’ Powerpoint presentation followed several panels citing the deficit projections with a statement of principles:

“Despite these challenges, Governor Malloy is committed to:

  • Ensuring the state lives within its means.
  • Hard spending cuts.
  • NO tax increases.”

Kane quickly jumped on that statement, asking Barnes, “Are you going on record as saying no tax increases?”

“I’m not going to make an absolute promise,” the budget chief said, noting that the governor’s proposal for the next two fiscal years isn’t due to legislators until February, and “circumstances can and often do change.”

Rep. Vincent Candelora, R-North Branford, sought assurances that Malloy had no loopholes built into his “NO tax increases” statement.

What about temporary tax hikes that are set to expire next fiscal year, like a surcharge on corporation taxes and a levy on electricity generators? Would the governor consider extending those burdens — but not increasing them — to be acceptable?

And what about canceling certain tax credits that businesses and individuals currently enjoy?

“I haven’t spoken to the governor about that,” Barnes said, “so I’m not in a position to answer.”

But the budget director added that tax credits and exemptions “are real” expenses that drain resources from government, just as various service programs do.

Rep. Arthur O’Neill, R-Southbury, took a slightly different approach, trying to press Barnes on the state spending cap.

Malloy has said he intends to submit a budget plan that adheres to the cap. But his own budget office is projecting the cost of maintaining current services would burst the cap by more than $1.2 billion next fiscal year.

Lawmakers and Malloy tried to cut that much from current services two fiscal years ago on the way to closing a historic budget deficit of $3.6 billion. But more than half of the cuts two years ago were the result of a labor concessions agreement that won’t be available to the administration this time around.

“Are you committing that the budget for 2014 … is not going to go any higher than the cap allows?” O’Neill asked Barnes.

“We’ve done our level best to project what the allowable spending would be,” Barnes replied, adding that while it remains the administration’s plan to live within the cap, it can’t predict where the economy is going. “We may have more economic information.”

And though Barnes was cautious not to close the door on many budget-balancing options Tuesday, he wasn’t the only one.

Sen. Toni Harp, D-New Haven, co-chairwoman of the Appropriations Committee, said later that she thinks raising new revenues, both by prolonging temporary tax hikes and by limiting tax credits for businesses, should be considered.

“I don’t think that they are off the table” for the legislature’s Democratic majority, Harp said. “Things do have to expire. Continuing them is not a new tax.”

Harp warned this summer that she and many other Democratic legislators, particularly from Connecticut’s urban centers, are concerned that the state’s social services safety net already has absorbed difficult cutbacks over the past two fiscal years, and can’t take much more.