| In case you missed it, the Hartford Courant recently ran an Op-Ed I wrote about why Dan Malloy's "deal" with the unions is bad for Connecticut. Please read it. It is important that you know how the future of our state is being given away to the special interests who elected Governor Malloy.
Detrimental Deal: State Union Pact Prevents Real Spending Cuts
By TOM FOLEY The Hartford Courantt
Now alongside "shared sacrifice," for which taxpayers did all the sacrificing, we have "the deal," the collective bargaining agreement touted as the last step in solving Connecticut's fiscal woes. Despite Gov. Dannel P. Malloy's and union leaders' high-fiving and air-kissing, the "deal" will contribute to, rather than alleviate, Connecticut's problems.
Connecticut's problems are simple. Our economy has been in a steady decline for more than 20 years. We are one of only two states that have fewer jobs today than in 1990. According to the Connecticut Department of Labor, the number of employed people in Connecticut dropped another 20,000 just since Gov. Malloy took office.
This didn't happen without a lot of help from Hartford politicians. Connecticut has deliberately and methodically become one of the most expensive and annoying places on the planet to employ people. Employers who could move jobs elsewhere have left. Many others have gone out of business.
This didn't need to happen and doesn't need to continue — and yet it does. Witness Gov. Malloy's recent signing of mandatory paid sick leave and large tax increases that will hurt employers and kill jobs.
Despite Connecticut's zero job growth, our politicians have let the cost of state government grow inexorably, funded largely by ephemeral taxes on capital gains and on-again, off-again Wall Street income — and lots of borrowing. State liabilities of more than $60 billion — the highest per capita of any state — loom over our future prospects.
The growth in spending came mostly in the cost of the state workforce and newly mandated support payments and services to individuals, which together crowded out resources for maintaining roads, capital projects and other investment. That explains how you get the feeling the state is falling apart when we are spending more than ever.
With Connecticut's traditions of thrift, hard work and entrepreneurship, it's amazing our politicians could get us into this pickle. But a pickle it is and it is getting worse. Just as amazing, our math-challenged governor's office either hasn't figured this out, or doesn't care, because they aren't doing anything about it.
They talk about avoiding the collective bargaining divisiveness in other states. That may be true, but in doing so they are also avoiding real fixes for our problems.
Like our federal government, Connecticut cannot afford to keep spending at current levels. We must reduce real spending, not merely reduce the rate at which we are increasing spending, i.e., the governor's so-called "cuts," "give-backs" and "sacrifices."
The "deal" with the unions does not reduce the cost of the state workforce and limits the governor's options. Wages are held level for two years and then go up 10 percent over the next three. The cost of state workers' benefits will continue to rise. The governor cannot lay off anyone for three years, an ill-advised loss of flexibility learned the hard way during Gov. M. Jodi Rell's last two years in office.
The governor is going to need that flexibility. The "deal" already falls $200 million short of what was assumed in this year's budget. Some of its claimed savings are suspect. With recent declines in the stock market and further softening of the economy, revenue and savings shortfalls could throw the current budget out of balance by a half-billion dollars or more.
Without the option of further reducing the cost of the state workforce, the governor has few ways of responding to a shortfall. He can't raise taxes again. He has already raised them too far. Taxes on individuals are going up a whopping 20 percent this year — a $1,500 increase in the average household tax bill. Next year the increase will be $2,000. Remarkably, some of the taxes were retroactive, an extraordinary policy faux-pas. Connecticut families are only just learning what this means with their latest paychecks. That leaves education, maintenance of our already deteriorated transportation infrastructure, support payments to individuals (mostly mandated), health care and other social costs (also heavily mandated through Medicaid) and interest. The rest doesn't add up to much. Oh wait, there's always more borrowing.
High-fiving and party hats aside, the "deal" does nothing to alleviate Connecticut's unfortunate economic reality. Acting as if the deal was a victory is one more sign that Hartford is out of touch with what's happening in Connecticut and the rest of the country. Connecticut's problems will persist until voters force state leaders to implement real spending reductions, stop borrowing and start living within the state's means. They can call President Barack Obama for a preview of the movie.
Tom Foley of Greenwich was the Republican candidate for governor in 2010 and is the founder of the Connecticut Policy Institute, a not-for-profit research organization dedicated to responsible, research-driven public policy in Connecticut.
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