Connecticut’s Better Budget
In comparison to New York’s $88 billion budget or New Jersey’s of $29 billion, Gov. Dannel Malloy’s budget in Connecticut is a mere $19.7 billion. Yet Governor Malloy has managed to create a better, fairer budget than both of his colleagues. And he is doing it without bombast, without YouTube, without making hard enemies or playing favorites.
All three governors face big deficits — Connecticut’s is $3.2 billion in the next fiscal year and $3 billion the year after. Governor Malloy’s budget proposal spreads the pain more evenly. Like Gov. Chris Christie of New Jersey and Gov. Andrew Cuomo of New York, Mr. Malloy wants to cut government spending: $1 billion from state employees and $758 million in state services. Unlike his neighbors, he recognizes that budgets cannot be balanced fairly in the short term, or at all in the long term, without having new money coming in. Instead of taking $800 million out of the education budget, Mr. Malloy proposes an array of tax increases, including some on those making more than $50,000 a year.
REVENUES Mr. Malloy, a Democrat, was the rare candidate last year who did not promise to cut taxes. He is proposing an increase in the personal income tax to 5.5 percent from 5 percent for residents making more than $50,000 a year and to 6.7 percent from 6.5 percent for individuals making more than $500,000 a year. Governor Christie, a Republican, predicted a stampede of rich people fleeing Connecticut for New Jersey. It could be a long wait. The tax rate for residents making more than $500,000 is 8.97 percent in New Jersey and New York.
The $1.5 billion package in Connecticut has other taxes aimed at those with plenty of money — on cosmetic surgery, yoga studios and pet grooming; airplane repairs; cars costing more than $50,000; jewelry more than $5,000 and boats more than $100,000.
Unfortunately, it also raises general sales taxes from 6 percent to 6.35 percent — even for clothing and shoes under $50. This tilts the burden to the less fortunate. Still, Mr. Malloy would give 0.10 percent of sales revenues back to local communities, and he is proposing an earned income tax credit reform that he says would help about 190,000 lower-income residents in his state.
STATE WORKER GIVEBACKS Mr. Malloy is negotiating on a proposal to cut $1 billion a year for two years from state workers’ salaries and benefits. Like his fellow governors, he has threatened layoffs if employee costs are not controlled. He wants to move workers to benefits like the federal health care package, saving $100 million in two years. He wants a wage freeze and a larger co-pay for pensions. But he is not thundering around the country threatening to end bargaining or kill off unions.
All three governors face big deficits — Connecticut’s is $3.2 billion in the next fiscal year and $3 billion the year after. Governor Malloy’s budget proposal spreads the pain more evenly. Like Gov. Chris Christie of New Jersey and Gov. Andrew Cuomo of New York, Mr. Malloy wants to cut government spending: $1 billion from state employees and $758 million in state services. Unlike his neighbors, he recognizes that budgets cannot be balanced fairly in the short term, or at all in the long term, without having new money coming in. Instead of taking $800 million out of the education budget, Mr. Malloy proposes an array of tax increases, including some on those making more than $50,000 a year.
REVENUES Mr. Malloy, a Democrat, was the rare candidate last year who did not promise to cut taxes. He is proposing an increase in the personal income tax to 5.5 percent from 5 percent for residents making more than $50,000 a year and to 6.7 percent from 6.5 percent for individuals making more than $500,000 a year. Governor Christie, a Republican, predicted a stampede of rich people fleeing Connecticut for New Jersey. It could be a long wait. The tax rate for residents making more than $500,000 is 8.97 percent in New Jersey and New York.
The $1.5 billion package in Connecticut has other taxes aimed at those with plenty of money — on cosmetic surgery, yoga studios and pet grooming; airplane repairs; cars costing more than $50,000; jewelry more than $5,000 and boats more than $100,000.
Unfortunately, it also raises general sales taxes from 6 percent to 6.35 percent — even for clothing and shoes under $50. This tilts the burden to the less fortunate. Still, Mr. Malloy would give 0.10 percent of sales revenues back to local communities, and he is proposing an earned income tax credit reform that he says would help about 190,000 lower-income residents in his state.
STATE WORKER GIVEBACKS Mr. Malloy is negotiating on a proposal to cut $1 billion a year for two years from state workers’ salaries and benefits. Like his fellow governors, he has threatened layoffs if employee costs are not controlled. He wants to move workers to benefits like the federal health care package, saving $100 million in two years. He wants a wage freeze and a larger co-pay for pensions. But he is not thundering around the country threatening to end bargaining or kill off unions.
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Beyond his balance of cuts and taxes, and unlike New York and many other states, Mr. Malloy has proposed adopting generally accepted accounting principles, or GAAP. This is a particularly daring thing for a governor to do. GAAP does not allow the usual budget antics — like pushing expenses forward to next year and pulling revenues back into this year to make the budget appear to be balanced. Mr. Malloy has acknowledged that this kind of open accounting would add $73 million to the deficit in the upcoming budget and $48 million the year after. It is too bad that his colleagues in most other states aren’t brave enough to do that. 
