The dust-up involving Moody’s downgrading of Connecticut’s credit may turn out to be a good thing for the Malloy administration.
Look past the overwrought response by Ben Barnes, the state’s budget czar who managed to put the state’s foot in his mouth by saying a) Moody’s is wrong and b) that the widely utilized rating service has a longstanding credibility problem. Subsequent events suggest Barnes is the one with the credibility problem.
We’ll take Governor Malloy at his word that his out-of-the-blue suggestion to accelerate paying down the pension liability gap had nothing to do with Moody’s. We’ll also suspend disbelief and say the revelation that a $78 million budget cut was needed wasn’t something Moody’s knew before Team Malloy alerted Connecticut residents.
Whatever the sequence of events, the steps taken are exactly what Moody’s would have suggested. And Moody’s, which likely has a longer fuse than Barnes, will take note.
We now find ourselves heading into a legislative session with another budget problem right at the moment the spotlight is being turned to the largest black hole in any state’s budget — education.
Malloy’s resolve to keep his pledge and keep the current budget balanced is a good thing. His disproportionate whacking of social service programs may have been a mathematic necessity rather than a policy choice. But choosing to cut program costs — even if it’s only delaying tombstones for veterans until the start of the next budget cycle — is a responsible course. Again, Moody’s will take note.
The question is whether the governor can stay the prudent course when it comes to the next fiscal year. That extra payment to the pension fund is the right thing to do. In the long run, it stands to save the taxpayers almost $6 billion over the next 15 years. That’s real money.
But the extra payment, when laid next to the sagging tax collections, leaves the cupboard bare for all those legislators and special interests bringing grand new ideas to the table.
We trust Malloy will also honor his word not to seek any new taxes in this short session, not because Moody’s is watching but because it’s a promise Malloy made to Connecticut’s abused taxpayers.
Discipline in spending is hard, particularly for a liberal Democrat facing no serious Republican legislative counterbalance. It would be easy for Malloy to spend a little more here and there to address obvious problems.
But the shot fired by Moody’s may be enough to stiffen the governor’s spine and allow him the political cover to just say no.
Thank you, Moody’s, for telling it like it is.
The power calculation
In the run-up to the legislative session, one of the interesting questions is raised by Sen. John Fonfara, the Hartford Democrat who’s a key figure in the state’s energy policy.
He looks at Connecticut’s high energy bills and he looks at the hue and cry for implementing systems that assure the lights don’t go out as they did twice last year.
“I want to find out if any state is prepared to the level being recommended here,” Fonfara said. “Let’s see what the appetite of the governor, the legislature and the public is to get to this level of preparation.”
This isn’t a tax question. But like so many things in this state, it is a question of Cadillac tastes and a Yugo budget.
A lot of work needs to be done on infrastructure and the bulk of those costs will fall on ratepayers. It’s a delicate balance between reliability and price, particularly at a time when the state is trying to convince business that this is a great place to locate.
Moody’s may not be watching this melodrama as closely as it does the state’s budget situation, but residents — and businesses — should be tracking every move. We’ll certainly be watching.
