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Malloy: No New Taxes, No Deficit

by Christine Stuart | Mar 5, 2014 12:00pm
(7) Comments | Commenting has expired
Posted to: Business, State Budget, Taxes, State Capitol

Christine Stuart photo

Gov. Dannel P. Malloy talks to business leaders

Gov. Dannel P. Malloy told a group of business leaders Wednesday that there’s not going to be a budget deficit in 2016 and he’s not going to raise taxes if there is. That’s assuming he runs for re-election and is elected to a second term.

The Office of Fiscal Analysis predicted last November that the state would have a deficit of more than $1 billion starting in fiscal year 2016.

“If we did have a deficit we’re not going to raise taxes. We’re done,” Malloy said. “I gave.”

He said in 2011 when he took office he faced a $3.6 billion budget deficit and there was no other way to fix that problem without taking a look at everything from tax increases to changes in the state’s relationship with its workforce.

“I think we’re entering into a phase where over the next few years revenues will rise—not cause we’re adding new taxes—but because the economy is slowly but surely getting better,” Malloy said.

He said the state is also at a point where state government isn’t growing. He promised to keep spending at 2. 8 percent. He said those two indicators combined make him feel confident there’s no need for a tax increase in the near future.

That’s not to say the current tax code doesn’t need some work. Malloy said there are places the state charges too much money and the tax structure needs to be investigated more.

Christine Stuart photo John Rathgeber, president and CEO of the Connecticut Business and Industry Association, said he thinks there should be changes in the revenue structure “but overall we shouldn’t be increasing taxes.”

“We can live within a sustainable growth rate and make the investments necessary,” he said. “Particularly, if we see a growing economy.”

Rathgeber said one of the things lawmakers tend to underestimate is the benefit of economic growth.

“If people are going back to work, if businesses are investing, revenue sources grow and not just the ones that are dependent on financial stock markets,” he said. “To me the more important thing here is the organic growth in revenues based on a stronger economy and it’s something, quite frankly, people don’t appreciate in this building as much as they should.”

Minimum wage

How many of you are paying more than 2 percent of your workers minimum wage? Malloy asked the group of more than a 100 business leaders.

Only three hands in the audience went up.

“The reality about the minimum wage in Connecticut is that on a seasonally adjusted basis somewhere between 70,000 and 90,000 employees earn the minimum wage,” Malloy said.

He said the total pool of workers in the state is about 1.7 million people.

A vast majority of those earning the minimum wage work “in the food service industry,” Malloy said. “Most of us don’t cross the border to get our food. It’s just a reality. So lifting people out of poverty is what we’re trying to do.”

Malloy will appear with President Barack Obama later today in New Britain to promote an increase in the minimum wage to $10.10 an hour by 2017.

Christine Stuart photo The Connecticut Business and Industry Association is opposed to a hike in the minimum wage.

“His question was how many people pay it, not how many people support it,” Rathgeber said responding to a question about the response in the room to the governor’s informal survey. “A lot of people don’t pay the minimum wage in Connecticut nevertheless they are concerned about the impact that it has on other cost structures.”

He said the real issue is getting people the preparation they need to take jobs that don’t pay the minimum wage.

An insurance broker, who does employee benefit plans, told Malloy the one concern he’s hearing from his clients is the difficulty they are having finding and retaining good quality employees.

“There’s a limit to how many liberal arts degrees we need without associated actual job preparation,” Malloy said. “You can do both, but we weren’t doing both well in the state of Connecticut.”

He said they’re working to use the community colleges in a way that guarantees Connecticut has a workforce that’s prepared to make 900 to 1,000 jet engines per year. Malloy said that’s the amount of business United Technologies Corporation believes it will do after it expands with the help of the state, which announced last week that it will allow the company to use $400 million in stranded tax credits to lower its tax liability.

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(7) Comments

posted by: Noteworthy | March 5, 2014  1:38pm

Malloy said there would be no new taxes last year too - and then he raised the hospital tax by hundreds of millions; raised the gas tax too; and the utility taxes. When the projection is for a billion dollar deficit - how do you say there will be no deficit and no tax increases?

posted by: GBear423 | March 5, 2014  2:04pm

GBear423

“Gov. Dannel P. Malloy told a group of business leaders Wednesday that there’s not going to be a budget deficit in 2016 and he’s not going to raise taxes if there is.” Ok, he is hedging his first lie with a second lie??  lmao, gotta admire his consistency!

posted by: jim black | March 5, 2014  2:23pm

Looks like Obama is honing Malloys lying skills. Not that anyone believes either.

posted by: JAM | March 5, 2014  3:02pm

No new ones, maybe, but the old “temporary” ones like the Corporate Surchage will remain in place.

posted by: Chien DeBerger | March 5, 2014  3:13pm

Sure, Danny, sure…..LOL

posted by: joemanc | March 5, 2014  3:21pm

Wait, he said state government isn’t growing, but spending is increasing 2.8%. If the state is increasing spending 2.8% more/year, then the state government is growing!

posted by: dano860 | March 5, 2014  5:55pm

Where the heck are they getting orders for 1000 engines per year???
They will be building that assembly floor somewhere else.
I have been to Asnuntuk and QVCC to review their shops. Asnuntuk has a decent machine shop that gives the basics but I can assure you they are not training them to be engine mechanics.
Quinebaug Valley CC has a program but no shop…yet! They use the shop at Ellis Technical School and do basic machining. Ellis Tech HAD a jet engine program but scrapped it.
The P&W assembly floor in Middletown cannot put out 900-1000 engines per year. That makes me think that the property in Pennsylvania may be the new assembly floor site, just guessing. I know that they have wanted a shop like the one G.E. has but they cannot do it in Middletown because of the union.
This comes off as a lot of smoke but no fire. We are getting hosed somehow!