OP-ED | The End of Shared Sacrifice?
by Susan Bigelow | Nov 30, 2012 12:26pm
(8) Comments | Commenting has expired
Posted to: Economics, Opinion, State Budget
We may have hit the limit of shared sacrifice. This week Gov. Dannel P. Malloy, facing yet another budget shortfall, announced a list of “recessions,” or cuts, that fell heavily on social services and higher education.
Republicans grumbled that the $365 million shortfall was the direct result of an increase in spending during the last budget cycle, while Democrats countered by attributing the gap to issues beyond their control. The upshot: there’s less money out there for things like the Department of Labor’s “Jobs First” employment services, the Department of Health’s community health programs, and the Connecticut State University System. It could be much worse; it doesn’t look like anyone’s losing their jobs, yet, and none of the vocational-technical schools, DMV branches, or prisons are closing like the governor threatened to do during 2011’s budget fight. Unfortunately for Democrats the regular session, and a fresh budget gap in the billions of dollars, looms ominously.
Complicating matters is the sudden onset of the 2014 campaign, which likely will see a wide field of Republicans gunning for a vulnerable Malloy’s job. One of these hopefuls, House Minority Leader Larry Cafero, is in a prime position to bash any budget moves Malloy may make. Another early entrant into the 2014 race is 2010’s loser, former ambassador Thomas C. Foley, who announced his intentions this week. Foley ran on his economic and business record and nearly managed to defeat Malloy, coming within 6,000 votes of victory.
Foley’s biggest strength also is his biggest weakness: on paper he looks an awful lot like Mitt Romney. In fact, the day that news of Foley’s intent to run broke, Malloy’s 2010 campaign manager Roy Occhiogrosso took to Twitter to link his followers to an ad from that year portraying Foley as a ruthless corporate tyrant. Still, Foley may be better positioned than anyone to hit Malloy on finance and economics.
Malloy’s position is not an easy one. The elephant in the room is employee benefits and pension obligations, which are huge and ever-increasing percentages of state spending. It wouldn’t be surprising to see these on the table next year. If the governor somehow leaves pensions and benefits alone, his potential Republican opponents will accuse him of being unwilling to tackle real solutions. Foley’s Connecticut Policy Institute already has come out with a detailed policy paper on how to reduce pension costs. If Malloy does find a way to renegotiate benefits and pensions, already restive state employee unions will howl. No matter which direction the administration steps, there’s a land mine waiting.
Therefore, Malloy’s administration has started with relatively uncontroversial cuts to social services and higher education among others, and hopes things aren’t quite as dire as the forecasts predict. I expect we’ll see more cuts like this during the session, meaning the cost of college will go up, vocational-technical schools will offer less, and services benefiting the neediest and most vulnerable populations in our state will wither away.
Does the new budget crisis mean Malloy’s progressive gamble, which bucked last year’s conventional wisdom that budgets were only there for cutting, state employees for laying off, and unions for busting, hasn’t paid off? Malloy came into office promising that “shared sacrifice” would put Connecticut’s fiscal house in order, but while the abyss we’re looking into is shallower than it was two years ago, it’s still deep and dark. Malloy and his administration are now speaking the language of austerity, promising no tax hikes and looking for savings in existing programs. “State government,” said OPM secretary Ben Barnes, “must live within its means.” The public is not in the mood for anything else.
It may be too early to tell if Malloy’s more progressive 2011 budget will pay off in the long term. Connecticut tends to lag behind the rest of the nation when it comes to economic recovery, and the full effect of the governor’s reforms may not be felt until the economy picks back up. By the time that happens, though, Malloy may be back in Stamford. Then again, pundits and observers were pretty sure that a bad economy would drag down another embattled leader running against a wealthy businessman in this year’s presidential election, so there’s no telling what might happen. In the meantime, we should brace for more cuts and fewer services as we head into yet another tough year.
Susan Bigelow is an award-winning columnist and the founder of CTLocalPolitics. She lives in Enfield with her wife and their cats.
Tags: budget, Dannel P. Malloy, Tom Foley, shared sacrifice, austerity, Susan Bigelow, dh
(8) Comments
posted by: Lawrence | December 2, 2012 11:42am
“Republicans grumbled that the $365 million shortfall was the direct result of an increase in spending during the last budget cycle.”
Uh, yeah. Demand for state social services in the midst of a recession tends to do that. Kinda funny that the CT GOP wanted to CUT Medicaid spending by about 20% in their “no tax increase budget,” but demand actually rose significantly. More dream-world GOP budgeting tricks…
posted by: BMS | December 2, 2012 12:07pm
I read the link on the Connecticut Policy Institute’s plan. The plan suggest that if the Governor can not negotiate the changes with SEBAC, that those changes should be put into effect by statue. A footnote refers to a Connecticut General Assembly research report that describes how to do that. When I tried to follow the link to the research report I was denied. It’s my understanding that the SEBAC agreement has a supersedence clause and a statue would not change the SEBAC agreement until that agreement expires. Any comments?
posted by: Lawrence | December 2, 2012 12:09pm
On April 19 2011, CT Republcian legislators proposed an alternative budget which funded Mediciaid at $8.26 billion, which is $847.2 million less than Gov. Malloy’s reccomended funding level. That was 9.3% LESS than the governor’s reccomendation.
According to OPM, Medicaid spending is running $191 million MORE than budgeted with seven months remaining in the fiscal year.
IF the GOP ‘no tax increase’ budget had passed, we’d be looking at a $1.038 BILLION Medicaid shortfall in CT right now, not including the federal spending that Republcans HATE SO MUCH to help pay for part of it.
So.. add that to the GOP’s lack of income tax hikes on the rich, factor in our revenue running $128 million off… and tell me again Republcians how you solve all of our budget problems with cuts alone??
posted by: Fisherman | December 2, 2012 9:18pm
...so then I guess Toni Harp was smoking something when she famously stated during the last session: “Some people don’t understand that a state budget is NOT like a household budget”? So where are we now Toni???
posted by: Andrew L | December 2, 2012 10:37pm
Lawrence you mentioned in one of your comments that there is a lack of income tax hikes on the rich. Do not forget that Malloy’s tax increases (the largest in state history) handed a tax increase for everyone who makes $50,000 per year or more. Let’s not forget the retroactive tax increases, because people in CT did not pay enough in taxes before Malloy took office. The fact of the matter is that we are spending too much money and the more debt CT accumulates the more difficult it will be to borrow money to fund all of these programs. Would you agree or disagree?
You said”More dream-world GOP budgeting tricks…” in your first post. Let’s talk about budget tricks. When Gov. Malloy was holding town hall meetings in early 2011 to promote the current state budget one woman at a town hall meeting asked why do taxes have to increase, why can’t Hartford just cut spending? Gov. Malloy responded by saying that there was nothing left to cut unless she wanted emergency services or education spending cut. What he did not mention at that meeting was that he was trying to start and later succeeded in creating a new program called the state earned income tax credit (EITC) which accounts for $220 million of state spending over these two fiscal years. (The EITC ran over budget which is one reason why the current state budget is in a deficit) I ask you Lawrence if there is nothing left to cut why did Gov. Malloy find a new way to spend over $200 million of tax payer’s money? This is a prime example of what the GOP is talking about. You cannot expect to prevent a deficit when you create new government programs and increase spending.
posted by: Raoul Duke | December 3, 2012 12:56pm
A quick note: Dan Kelly was Dan Malloy’s 2010 campaign manager, not Roy Occhiogrosso.
posted by: 17beachboy | December 3, 2012 4:36pm
Many independents and conservatives would have supported the governor’s tax increase - or at least not have been as strongly opposed to it - if he did not simultaneously increase spending. He asked for shared sacrifice by CT residents, but instead what happened was those that pay into the system ended up paying more while those receiving from the system ended up getting more.
posted by: Lawrence | December 3, 2012 6:38pm
Andrew L, a very thoughtful post.
I would argue that the tax increases on individuals making over $50,000 a year are nearly transparent and amount to a tiny fraction of the overall revenue raised.
I disagree with you that the EITC is a solid reason for why we are over budget at this point.
But I agree with you in principle that the state is implementing too many new programs in this economy, and that there ARE always places to cut spending despite some off-the-cuff protestations to the contrary.