Don’t ignore your tax pledge, Gov. Malloy

March 27, 2015

The Day

The contrast in the governor’s approach to addressing the large projected spending gap he confronted in his first term and the stance he has taken at the start of his second term could not be starker.

Four years ago, Gov. Dannel P. Malloy was fully engaged in the budget process. He presented a budget to the legislature and fought for it. In calling for shared sacrifice, Gov. Malloy demanded and received concessions from the state labor unions and pushed through a major increase in taxes to close the projected $3.6 billion shortfall.

The Democratic governor took his case directly to the people at a series of town meetings held across the state, including in New London and Norwich.

He has shown no such investment in his plan to address the $1.2 billion shortfall forecast for the next fiscal year that begins July 1, or the roughly equal gap the year following. Gov. Malloy handed the legislature a budget plan with deep cuts to social services that he knew his fellow Democrats in the legislature, and some Republicans, would not find acceptable.

There was little creative or bold in this budget, no elimination of redundant agencies, moves to force regional approaches at the local level or to shift services to the private sector.

And the budget didn’t even add up.

Soon after the administration released its spending plan, it conceded the proposal was $55 million over the constitutionally mandated spending cap, a situation it attributed to a calculation error.

Having handed this mess to the General Assembly, the governor walked away.

“We’ve gotten it off my desk. It’s now up to the legislature,” he said.

The Democratic speaker of the House suggested, in somewhat diplomatic terms, that the governor’s biennial spending plan was a sham.

“What we will be producing will be a new budget, basically an entirely new budget,” said Speaker J. Brendan Sharkey, D-Hamden.

It appears the major difference is that unlike four years ago, when Gov. Malloy was elected despite an admission that tax increases would likely be on the table, he got re-elected promising not to increase taxes. It is evident he is not invested in keeping that promise, content instead to let the legislature do the dirty work and blame them.

Yet it is a pledge the governor repeatedly made, perhaps stating it most clearly in his second debate with Republican challenger Tom Foley.

“I don’t believe there will be a budget deficit and I pledge that there won’t be one. I also pledge that there will not be a tax increase,” said Gov. Malloy.

Well, there is a budget deficit projected for the current fiscal year, pegged at $191 million by the Office of Fiscal Analysis. True, “there won’t be one” by the end of the fiscal year, because the governor and legislature are constitutionally required to balance the budget.

It is the “there will not be a tax increase” part of the proclamation that the governor is finding most inconvenient. The budget Gov. Malloy proposed arguably already broke the pledge. It calls for canceling tax cuts he previously signed into law and limiting business tax credits, moves that if enacted will feel like a tax hike for businesses and hospitals.

The governor, however, notes he proposed no increase in tax rates.

The Democratic majority in the legislature appears ready to do so. Reportedly under discussion is a hike in the income tax rate for the wealthy and restoration of the capital gains levy that was eliminated when the legislature imposed the income tax in 1991. These moves would make the state more susceptible to future deficit crises during economic downturns, to say nothing of hurting the business climate.

Also kicking around is the idea of extending the sales tax to raw materials. The $1 billion it would raise would pass through to consumers.

Having run for re-election pledging not to raise taxes, Gov. Malloy needs to act like he means it.

This region in particular sent the message that it wanted a fiscally conservative approach until the economic recovery gains greater traction. Voters elected several Republicans who ran on fiscal austerity platforms — Sen. Paul Formica in the 20th District and Reps. Derin R. Carney, 23rd District; Kathleen M. McCarty, 38th; John F. Scott, 40th; Aundre Bumgardner, 41st; and Mike France, 42nd District.

They need to seek out alliances with moderate Democrats to stand against tax increases and any effort to circumvent the spending cap.

Voters did not provide a mandate for tax increases, in fact quite the contrary.

The governor and legislature need to figure this out.