STAMFORD–Gubernatorial candidates Tom Foley and Dan Malloy agreed Wednesday that state government’s  fiscal and business policies have weakened Connecticut’s economy, but differed over who has the right strategy to fix the problem.

In dueling appearances before private business leaders at the University of Connecticut’s Stamford branch, Foley charged his Democratic opponent with striking a secret bargain with public employee unions that would keep state government in the red – and focused on the “tax-borrow-and-spend” policies that pushed thousands of jobs out of state.

Malloy, the former mayor of Stamford, said his Republican counterpart, a Greenwich businessman, has made an unachievable pledge – to close a mammoth deficit without tax hikes – and is ignoring high energy costs, rising costs in higher education, urban poverty and the other real reasons Connecticut is unattractive to many businesses.

“Tax, borrow and spend are what have gotten us into this hole,” Foley told the crowd of nearly 100 gathered at the forum, which was sponsored by UConn, the Connecticut Business and Industry Association, and the Stamford Chamber of Commerce.

The fiscal “hole” Foley referred to involves a projected $3.37 billion deficit for the fiscal year that begins next July 1, a shortfall worth more than 18 percent of this year’s spending.

State government is plagued by policies that have “unfairly tipped the balance in favor of the unions,” Foley said, adding that if Malloy – who enjoyed strong labor support on the way to winning the Democratic primary – is elected, public-sector workers won’t be pressed to sacrifice sufficiently to help control state spending. “There has been some kind of bargain cut. I’m not sure what it is, but it probably isn’t very good.”

Malloy, who has said he will seek concessions though he has declined to qualify how much relief is needed, said he also is committed to reducing state agencies by one-third and getting rid of excessive levels of middle management. “I’m not running to be the captain of the Titanic,” he said. “I’m running to launch a new ship.”

The bigger problems facing Connecticut businesses, Malloy said, are energy costs that are roughly 75 percent higher than the national average, rapidly rising college and university tuitions, and large numbers of children – particularly in poor urban centers – who come to school unprepared to learn.

“I believe that Connecticut’s government has failed us all,” he said, adding that budget “compromises” reached in recent years by Republican governors and Democrat-controlled legislatures largely have involved ignoring problems and investing little to solve major problems.

An outdated, overcrowded transportation network, particularly in the state’s southwestern corner, is another example of an obstacle to business that Connecticut officials have failed to solve, Malloy said. The former mayor said the next governor must ensure some modest investments are made in transportation, and that state government stops raiding fuel taxes and other revenues traditionally reserved for highway upgrades to fund non-transportation programs.

Foley again insisted he can close what effectively amounts to the largest deficit in state government history without any tax hikes, arguing Connecticut’s anti-business climate already has reached “radioactive” levels, and more taxes simply would translate into more government spending.

“The attractiveness of our state, unfortunately, has gone away, he said. “We all know our state budget is out of control. … They (business leaders) do not see this government as being responsible.”

But Malloy charged it is irresponsible to pledge to close a nearly $3.4 billion deficit without employing “every option on the table,” including spending reductions and tax increases.

Foley countered by challenging Malloy to disclose details of his own budget-balancing plans. “I’m still waiting to see Dan’s plan,” Foley added, “and whose taxes he’s going to raise.”

The two gubernatorial contenders did find common ground when it comes to both the Executive and Legislative branches, and their respective poor track records at adopting pro-business regulations or laws.

Though the General Assembly is in regular session three to five months each year, “it isn’t until the last three days that the legislature gets together in a scrum,” Foley said. “Nobody knows what’s going to come out.”

Malloy said the review process for issuing environmental and other permits is frustratingly slow in the eyes of the business community. “The absence of any understanding in state government that time is money is astounding,” he said.

Keith has spent most of his 31 years as a reporter specializing in state government finances, analyzing such topics as income tax equity, waste in government and the complex funding systems behind Connecticut’s transportation and social services networks. He has been the state finances reporter at CT Mirror since it launched in 2010. Prior to joining CT Mirror Keith was State Capitol bureau chief for The Journal Inquirer of Manchester, a reporter for the Day of New London, and a former contributing writer to The New York Times. Keith is a graduate of and a former journalism instructor at the University of Connecticut.

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