After managing expectations, Malloy now turns to managing the deficit

Gov.-elect Dan Malloy has spent the better part of the last year trying to navigate between a political rock and a fiscal hard place.

On one side there’s a general public wary of the next major state tax hike, state employee unions still smarting from 2009 concessions, and a host of other special interests fearful of more spending cuts.

And on the other is what effectively amounts to the largest budget deficit in state history.

As a candidate, Malloy tried to preserve his options to make painful budget choices without unnecessarily reminding voters about them. Now, with his administration set to begin Wednesday, Malloy is working to prepare people for what’s going to emerge from that tight spot.

“I’ve spent a lot of time preparing people for how desperately bad things are,” the governor-elect told Capitol reporters last week, fielding questions after announcing one of his administration’s new commissioners. “The state’s in terrible, terrible, terrible trouble.”

That’s not to say Malloy was hesitant to discuss Connecticut’s troubled finances while he was a candidate. He frequently referred to the budget he will inherit from Republican Gov. M. Jodi Rell and the Democrat-controlled legislature as a “bipartisan, fiscal train wreck.”

But on the route to Wednesday’s inauguration — a trip that included a Democratic primary, a fiercely contested general election, and a transition that saw an already mammoth deficit worsen — Malloy’s messages went through some subtle and not-so-subtle evolutions.

In Round One, engaged in primary battle with Ned Lamont for the Democratic nomination, Malloy was a little more comfortable talking about the state’s need for more revenue.

In a late June interview with The Mirror, Malloy conceded that the deficit, projected at $3.3 billion at the time, likely couldn’t be closed without tax hikes, and called on all candidates to have a “grown-up” discussion about the budget.

“I’ll say what every other politician is saying, that taxes need to be a last resort,” Malloy said. “But I think somebody’s got to be the big guy in the room, the big boy in the room, and say: ‘You know, this is a pretty desperate situation.'”

By mid-October, Malloy had won the primary and was engaged in a tight contest with Republican Tom Foley, who repeatedly insisted on two points: that he could solve the deficit without raising taxes, and that Malloy was secretly planning to impose the largest tax increase in state history.

At first Malloy tried to counter with simple, non-specific rebuttals, such as “of course I don’t want to raise taxes,” or “I hope not,” but the race only tightened further.

Malloy said last week that “There was a lot of pressure on me, even within my own campaign,” make a promise such as Foley’s, adding that his refusal to do so “came close to costing me the election.”

During the last televised debate, an Oct. 26 forum on WVIT-TV30 in West Hartford, Malloy came close to making a no-tax-hike pledge when attacked by Foley yet again.

“I want to be very clear: We’re not going to raise taxes. That is the last thing we will do,” Malloy said before pausing briefly and awkwardly adding a qualifier: “If we have to, and only then to protect the safety net.”

And while Malloy said last week that he made “no promises that I believed I couldn’t keep,” Republican state legislative leaders said the governor-elect may have created more expectations than he realized.

“I will not let him forget those lines,” House Minority Leader Lawrence F. Cafero, R-Norwalk, said.”I listened very carefully to every utterance in that campaign.”

Cafero said he found more recent Malloy statements about the need for tax hikes to help close the  the deficit — which has since swelled to $3.7 billion, or nearly one-fifth of current spending — to be “a mixed message” when compared with his campaign statements.

“For the vast majority of the public, the expectation is that tax increases will be a last resort, only after all efforts to cut spending have been exhausted,” Senate Minority Leader John McKinney, R-Fairfield, said. “I would be personally surprised and disappointed if this budget were business as usual.”

Roy Occhiogrosso, Malloy’s senior campaign adviser who is staying on with the new administration as chief communications strategist, said last week that “I don’t think anybody believed (Foley’s pledge) during the campaign. I don’t think they believe it now.”

Occhiogrosso added that while he believes some legislators understand the depth of the problem facing Connecticut and others do not, they are confident Malloy is prepared to make the hard decisions necessary to solve the crisis. “I think there’s a general sense of goodwill and respect that will help the process along,” he said.

Malloy was similarly cautious during the campaign when it came to the topic of state employee wage and benefit concessions.

Though he conceded on a couple of occasions that they likely would be needed to balance the budget, Malloy, who enjoyed strong labor support, understandably didn’t drive that point home during the campaign.

The Democratic nominee preferred to focus on his commitment to hear state employee union proposals to streamline government.   “I can’t get to the next level of discussions with them until I get through those,” Malloy said during an Oct. 24 interview.

Foley also hammered Malloy for indicating on a union questionnaire that he would not use layoffs to close the deficit, arguing that by Malloy was forfeiting the leverage he would need to secure wage and benefit concessions.

And though Malloy still insists he will listen to the union’s cost-saving ideas, he has a budget proposal due to the General Assembly on Feb. 16. And if that plan also is going to include any savings target tied to concessions, the governor-elect likely would notify unions soon.

“Everyone understands the magnitude of what lies ahead,” State Employees Bargaining Agent Coalition spokesman Larry Dorman said Friday.

But are state employees, who accepted a wage freeze, seven furlough days and higher health care costs in a 2009 deal, expecting to be asked to give again?

Dorman was as cautious as Malloy was during the campaign, though he made it clear workers already feel they have made a significant sacrifice.

“We’ve made it clear that reaching into the pockets of middle-class taxpayers and asking them to sacrifice again is neither productive nor helpful toward getting our economy back on track,” he said. “We still feel that the coming year offers a new opportunity for partnership with the new administration to implement our ideas to produce savings and provide better services. That’s where we need to focus.”