The state’s economy has not responded to the shock therapy administered by Gov. Dannel P. Malloy. In fact, it’s flatlining.
As the end of the fiscal year draws near, the results are in and they aren’t pretty. Instead of a projected surplus that would allow political benefits to flow for Malloy’s reelection, the first-term governor who promised everything would be different has few options.
But he did ask the Democrats to remove the arrival of Keno to the state’s gambling menu.
Keno, placed anonymously in the budget a year ago, would have raised $18 million. And while Malloy will tout a $43 million surplus this year, it dropped from an anticipated $500 million surplus. That makes next year’s $1.4 billion deficit even more troubling.
And while it will not be a fact of everyday life, Keno was an apt metaphor on how Connecticut’s budget process has evolved into a chess game with rules that change based on the challenge at hand.
Pieces are introduced to move the game along and when they are blocked by the traditional guidelines, new pieces appear and are moved wherever the player pleases.
The reality of Connecticut’s economy has changed that. Malloy’s own tax collector reported last week that Connecticut’s taxpayers are simply not responding to higher taxes and record spending as effective methods for economic development
How did we get here?
For a generation, Democrat-controlled state spending, and the grudging acceptance of Republican governors, perfected Three-card Monte accounting to build a ruinous level of unfunded liabilities.
Since the imposition of the state income tax in 1991, Connecticut’s economy struggled with energy costs, public sector labor requirements, global competition, taxes and regulation.
The state government, meanwhile, continued to grow and broaden its command of the private sector.
Malloy said he was a different Democrat when he took office in 2011 and the irresponsible budgeting of the past would change. It didn’t. It got worse – much worse.
After claiming he would reduce government, Malloy deferred, borrowed, leveraged and taxed. He and the Democrats imposed $1.8 billion in new taxes, at least $700 million in borrowing and other accounting tricks, and doled out hundreds of millions in corporate assistance to hold onto big business.
Early this year, Malloy claimed he had a modest budget surplus. But this windfall was simply a result of higher taxes from static revenue sources, not a reflection of a robust economy throwing off cash while creating opportunity – like jobs.
According to the state Labor Department, there are now 22,000 fewer people working in the labor force today than in 2011. Earning power for Connecticut workers has also declined during this period, according to a survey by the Kaiser Foundation.
The voting public pays little attention to most of this drama because the media has little opportunity to closely examine the bottom line and doesn’t have the column space to adequately explain the contradictions about “command economy” policies and the state’s bottom line.
But what is real is that most Connecticut families are holding on for dear life – to their jobs, homes, health care and a faint hope that the economy will eventually turn around because it always has.
The new reality is that the weight of debt, spending and flight of capital have brought predictable results – no growth, few opportunities and little chance of events getting better.
No wonder a new Gallup poll showed that almost half of Connecticut’s residents would move to another state if they had a chance. That is the most telling and depressing reality of all.
Christopher Healy is the former chairman of the Connecticut state Republican Party. He is the director of business development for Summit Financial in Simsbury.
