Malloy budget: nothing has been fixed

Connecticut has seen worse state government budgets and might have expected one worse than what Governor Malloy proposed this Legislative session. At least this one was topped off by a lovely pipe dream. A few preliminary conclusions may be drawn.

The governor’s budget signifies that nothing about state government’s finances has been fixed by his administration and that the state is not becoming more prosperous, despite the great reviews by the Connecticut Center for Economic Analysis at the University of Connecticut, whose comic cheerleading may be one reason the governor lets the university get away with every outrage. Even after the governor’s record tax increases, the state is still running big deficits and increasing spending — the governor proposes 3 percent — and with the economy stagnating, tax receipts still can’t support it all.

Despite that 3 percent increase in spending, there will be cuts in services provided by certain agencies. That’s because more than half the budget covers labor contracts and statutory entitlements that can’t be undone at the governor’s discretion, because the General Assembly lacks the courage to change the rules and because the ranks of the needy are growing, overtaking funding and exploding the delusion about the return of prosperity.

While the governor pledged in last year’s election campaign that he would not raise taxes again, his budget proposes maybe a billion dollars in tax increases, whacking at business and hospitals particularly and canceling tax cuts that were promised. As state reimbursements to hospitals for care of indigent patients are reduced again, hospitals will raise prices to patients with private insurance, and, in turn, medical insurers will raise prices to their policyholders, suffering blame that will belong to state government.

The governor’s proposal to trade some sales tax exemptions for a slight general reduction in the sales tax rate may be good policy, but it is embarrassing for him to claim this as tax relief. At best it will be a wash, at worst a tax increase. 

Social-service groups quickly issued statements of alarm about the budget, but there were no complaints from the government employee unions, as the budget fully insulates the government class. Neither state nor municipal employees will be asked for concessions but instead, unlike most taxpayers, they will keep getting raises; restraining municipal property taxes comes only at the expense of higher state taxes; and concessions are reserved for taxpayers and those among the neediest who lack political influence. 

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The governor devoted most of his budget speech not to the budget itself but to his grand ideas for transforming Connecticut’s rather clunky transportation system. These ideas were fun, but the state might settle for construction of the long-overdue second parking garage at the New Haven railroad station. 

To pay for the transportation transformation — tolls, increasing the gas tax, raising fees for auto registrations and driver’s licenses? — the governor could propose no more than appointing a study commission to figure it all out. 

At least dreaming isn’t taxed yet, but stay tuned.

Chris Powell is managing editor of the Journal Inquirer in Manchester.