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Malloy Takes Budget On Road; Will It Impact Special Elections?

by Christine Stuart | Feb 21, 2011 1:51am
(7) Comments | Commenting has expired
Posted to: Election 2011, Labor, State Budget

Christine Stuart photo

Republican Senators applaud part of Gov. Dannel P. Malloy’s budget speech

Today will be the first time Gov. Dannel P. Malloy will have to stand before a room full of taxpayers to really sell his budget.

And it may be tough sell, since his proposal includes $1.5 billion in tax increases and $1.76 billion in spending cuts, most of which hinge on $1 billion in unspecified labor concessions.

“Really, I’ve spent a lot of time preparing for this moment,“ Malloy told WFSB’s Dennis House during an interview on “Face the State,” which aired Sunday morning. 

But no matter how much Malloy has prepared and no matter how angry he is that the previous governor and legislature failed to address some of the structural deficits, taxpayers are still going to be upset. Malloy has proposed increasing the income, sales, gas, and cigarette taxes, as well as the elimination of some tax exemptions.

“I think people understand that this is a difficult time and I think if you even look at the tenor of the discussion, for the most part, it’s not about whether we need to raise taxes,” Malloy said. “This discussion has turned on, ‘How much do we need to raise taxes?’ and that makes Connecticut very different from the other states.”

He said few people are suggesting the budget he was handed on Nov. 15 by former Gov. M. Jodi Rell was something from which he can cut $3.5 billion and have “Connecticut remain the state it is.”

Republican lawmakers have criticized Malloy’s budget and suggested it doesn’t strike the right balance between spending cuts and tax increases. Democrats didn’t receive everything they wanted in the budget proposal, but they have taken a more measured approach to criticizing some of the cuts. And the labor unions, who were asked to sacrifice $1 billion a year in concessions and other savings, have argued that the state isn’t raising taxes enough on the wealthy.

Malloy admitted to House that he is taking some partisan hits on the budget, but he countered that he isn’t the one who negotiated a 20-year contract with the state employee unions.

“What governor in their right mind would have agreed to a 20 year guaranteed benefit package for employees?” Malloy said of the state employee benefit and pension package put in place by former Gov. John G. Rowland. The deal expires in 2017.

He said the deal was constructed so that the state’s pension payments would start low and increase toward the end of the contract.

“The people who made these very bad decisions a long time ago didn’t pay for any of it or didn’t have to tax for any of it,” Malloy said. “Somebody’s got to be the adult in the room and someone has to say it’s time to downsize our obligations, but also fund our obligations.”

Last year, Rell and the Democrat-controlled General Assembly agreed to postpone a $300 million pension payment to the state employee fund in order to help balance the budget. Malloy has refused to postpone or delay anymore payments to the fund, which has a $42 billion in unfunded liability.

Over the past two years, Rell and the Democrats also agreed to borrow $650 million in Economic Recovery Notes to pay for operating expenses and depleted the $1.4 billion Rainy Day fund. That was on top of spending close to $1.6 billion in federal stimulus funds.

Republican Party Chairman Chris Healy hoped to use Malloy’s budget speech last week to help get Republicans elected during Tuesday’s nine special elections. None of the elections will give Republicans a majority in either the House or the Senate, but some have said the races will be a referendum on Malloy’s budget proposal.

In an email to supporters, Healy said the special elections, most of which are related to administrative appointments Malloy made in December, will be “our first chance to show Governor Malloy that the people of Connecticut won’t be bullied.”

The first stop on Malloy’s budget tour will be Bridgeport, where on Tuesday there will be a special election for former state Rep. Chris Caruso’s seat.

Asked if he feels his budget address will impact the special elections, Malloy responded: “I think we’ll lose some seats. We’ll probably win some seats. I think everyone will make their interpretation, but I can’t worry about that. The good of the whole of Connecticut is more important than any one special election.”

Malloy also noted that his good friend Rep. Carlo Leone is running for former Sen. Andrew McDonald’s seat in his hometown of Stamford. 

Democrats hold a 94 to 51 majority over Republicans in the House and a 20-13 majority over Republicans in the Senate. With three Senate seats up for grabs in the special election, Republicans would still be four votes short of the majority if they win all three. But if they pull off three victories, it will be the closest they have been to a majority in years.

Six House seats will be up for grabs as well, but Republicans were unable to find a candidate to run against Robert Sanchez in the 25th House District in New Britain, so they only have a shot at five and a chance to bring its membership in that chamber to 56 members.

“While we don’t have a chance to pick up any seats I’m confident we’ll keep the ones we have,” House Speaker Chris Donovan said recently, adding that he didn’t believe Malloy’s budget address will impact the special elections one way or another.

Click here to read more about the special elections on Tuesday.

Today’s first town hall meeting will begin 7 p.m. at the City Hall Annex in Bridgeport.

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(7) Comments

posted by: JAM | February 21, 2011  10:55am

It seems that despite all the talk, the budget prosal is non-GAAP, and there’s a projected surplus of $120 Million that will be put against the GAAP deficit of $1Billion.
I thought the non-GAAP surplus was not a surplus, and at a rate of $100 Million a year, Malloy will be long gone before they ever actually get on GAAP.

posted by: hawkeye | February 21, 2011  12:10pm

Gov. Dannel P. Malloy should address our massive state budget, similar to the State of Wisconsin deficit of $3.6 billion dollars, as their Governor, Scott Walker, by not being friendly, with collective bargaining, in his state.  However, Malloy is an Obama Democrat, in which Pres.Barack Obama is leading a $30. million dollar Democratic National Committee unions-backing- effort , “Organizing for America,” to stop anti-labor measures in Wisconsin, and 10 other states.

“Unlike Gov. Walker, Malloy wants to tax the state taxpayers blind, rather than antagonize the state unions, that got him elected, even though unions are greatly responsible for our massive $3.4 billion dollar state budget deficit!” 

With Malloy, it’s business as usual, with state unions, “while he wants to tax the pants, off of Connecticut middle-clas taxpayers!’

Where is the TEA PARTY in Connecticut, to protest this political, tax injustice being enacted in Connecticut?

posted by: City Hall Watch | February 21, 2011  1:19pm

Dan the Tax Man is coming to a town near you pitching a snake oil plan that says “give me another $1.5 billion on top of the billion state government took from you two years ago, and all our fiscal problems will be over.” I don’t believe it. It’s not true.

1. Budget is higher than the current year. It spends more money.

2. It launches new programs for which we do not have the money, programs which once instituted will be re-curring forever, and given the state’s history, business unfriendly practices, the rolls of the poor will likely increase as will EITC.

3. Creates an opportunity so that some of the working poor will have no skin in the game and be able to live in CT scott free - at absolutely no cost whatsoever.

4. This tax increase is a bailout of excessive government expense. Period. We are all going to pay more for government services, most of which we never see, didn’t want nor do we care about.

5. It continues the practice of robbing the transportation fund, the lottery fund and the tobacco settlement money.

6. It does nothing to shrink the size of state government by any appreciable measure. This tax increase may get the state through the next two years. And then what? There have been no structural changes. Then we’ll be subjected to another road show and yet another $1.5 billion in new taxes to fund the shortfall then?

7. Malloy says he wants to be competitive with neighboring states - MA sales tax is 6.25% - ours will be 6.35%. MA gas tax is significantly below ours - a gallon of gas there costs 20 - 25 cents less per gallon. Another falsehood.

8. www.CTmirror.org has an excellent analysis of Dan the Tax Man’s plan. It will raise the income tax by about 10.5% for most middle to lower income people and when added to all the sales taxes, expect your tax bite to take at least another 15 to 20% out of your family budget.

The tax man has some good budget points - funding the pensions, no borrowing for operating needs. But these slim accomplishments, which are common sense and take no genius whatsoever, are hardly the defining qualifications for being the “adult in the room.” This budget is no more sustainable than the current one. A real adult with balls the size of their tax increase, would significantly and robustly shrink expenditures instead of laying such a heavy burden on people who are barely holding on to their jobs or their homes while he wrings his hands and publicly worries about his safety net.

posted by: JAM | February 21, 2011  3:53pm

While he funds the pensions, there is still the $26+Billion unfunded liabilty for Retiement Health Care. I didn’t hear anything in the Budget address on that topic. Since it’s not part of the Budget,I also assume that there’s nothing in the $Billion package he’s seeking from the unions that will significantly reduce this liability.
It remains the big gorilla in the room that nobody wants to discuss, and without some serious reforms, it will sink the State further into the Black Hole it finds itself in.

posted by: Christine Stuart | February 21, 2011  4:12pm

Christine Stuart

JAM, Any change to the pension will have to be negotiated, so you’re not likely to hear about any of those savings of benefit changes until later this year after negotiations are completed. BTW the unfunded liability is $42 billion.

posted by: JAM | February 22, 2011  8:22am

Christine,
I am talking about Retirement Health Care, NOT pensions. There is no fund (albeit a small amount of money was put aside a few years ago) for Retirement Health Care, and no money appropriated for payments into a reserve fund for future costs as with pensions. The state pays the current costs to retirees out of the budget.
Other than cutting benefits to current retirees, there would be no impact on the budget. Agreeing to fund a RHC Trust with employee contibutions would be a wash, and having the state make a contribution would be an extra budgetary cost not currently proposed in Malloy’s budget.
BTW, the $26 Billion refers to the unfunded liability for RHC alone. It does not include pensions. The number was determined several years ago by Wyman’s office per GASB requirements. It has never been updated or re-calculated so the “official” number remains at $26Billion.
If you include the SERS and teachers’ liability, the total “reported” unfunded liabilities of those THREE is about $44Billion.

posted by: hawkeye | February 22, 2011  2:22pm

It’s too bad that we do not have a governor, who is looking out for his taxpayers, like Gov. Scott Walker, who is fighting for big time union concessions in the State of Wisconsin, although being fought with $30. million dollars of Pres. Barack Obama led Democratic National Party money.  In Connecticut, Gov. Dannel P. Malloy “sleeps with the State unions,” and is not fighting them to give $1. billion dollar in tax give-backs.  In Bridgeport, he told he Town Hall meeting
participants, that plans for the 45,000 unionized state workers to find savings and givebacks totalling $1. billion a year, is crucial in his two-year budget agenda.

Malloy says the other options are raising taxes two and a half billion dollars, or cut another billion dollars, out of the safety net.

Th Democratic National Committee is funding “Organizing for America” to encourage states fight union give-backs,” and unfortunately, unlike Gov. Scott Walker, Gov. Malloy, is an Obama man, and won’t fight the state unions for concessions.

Why isn’t Obama fighting to tame runaway spending on the Federal level, rather than making it difficult for state’s to control their spending?