Gov. Dannel P. Malloy won nearly universal praise for honesty and courage Wednesday in proposing to restore the state’s fiscal health with a bracing prescription of steep tax increases, labor concessions, agency consolidations and cuts to higher education and social services.
“Lot of guts. Lot of guts,” said House Minority Leader Lawrence F. Cafero Jr., R-Norwalk. “I was very impressed with the overall message, his tone, his delivery. It was very well done. He’s laid out a very realistic framework, and you have to give credit where it’s due.”
But…
Nearly every compliment of Malloy’s 37-minute address came with a qualifier that foreshadows the pressures and concerns the governor must counter as he begins the task of defending his budget from close scrutiny by interest groups and legislators.
On the right, Republicans expressed disappointment with Malloy for not cutting more deeply. On the left, some Democrats questioned the high price the Democratic governor is demanding of labor and the middle class, while a few advocates complained of social-service cuts.
But the praise for delivering an honest budget is not insignificant. Legislators in both parties deeply resented Gov. M. Jodi Rell’s last biennial budget, which was out of balance by more than $2 billion on the day she proposed it.
Some of the criticism directed at Malloy was muted by an appreciation he gave them a document without gimmicks or accounting tricks. The debate, at least, is beginning with numbers accepted by all parties, with one unanswered question: Can he deliver promised labor savings?
Malloy’s first budget relies on $1 billion in undefined labor savings and $1.5 billion in new taxes to help balance more than $19.7 billion in spending next fiscal year while sparing municipal aid from major reductions.
The sales tax would rise from 6 percent to 6.25 percent, with retail purchases taxed at 6.35 percent.
Income tax rates, now at 5 percent for most taxpayers, would jump to 5.5 percent for couples earning between $100,000 and $200,000 and increase a quarter-point for each additional $200,000 of income, up to a top rate of 6.7 percent for joint filers with incomes of more than $1 million.
The plan also relies on $750 million in cuts to social services, higher education and other programs, agency consolidations, and new health care provider fees to leverage more federal aid. In all, it aims to close a projected $3.2 billion deficit in the fiscal year that begins July 1.
In some quarters, there was relief.
“We are very pleased that this budget avoided major across the board cuts,” said Terry Edelstein, president of the Community Providers Association. “This budget reflects the desire to protect that safety net and save money through the cost-effective community provider system.”
Legislators, even ones who praised the speech, declined to say how the budget proposal wil fare once lawmakers assess how well Malloy has spread the pain of spending cuts and taxes.
“I wouldn’t make any predictions at this point,” said Senate President Pro Tem Donald E. Williams Jr., D-Brooklyn. “But I think he should be given credit for dealing honestly with the budget. He’s asking everyone to step up and sacrifice.”
Malloy also was praised for casting his budget solutions in the larger context of the state’s economic climate, its long-term fiscal stability and its implicit partnership with municipal governments that rely so heaving on state finances.
“I am so proud of Gov. Malloy and his leadership,” said Sen. Edith Prague, D-Columbia, pronouncing the governor’s proposals for tax hikes, spending cuts and labor concessions as reasonable. “This is a mess we’re dealing with, and I haven’t heard this kind of leadership in a long time. It’s refreshing.”
As one of labor’s staunchest allies in the legislature, Prague’s praise of a budget that calls for $1 billion in labor savings was unexpected.
The State Employees Bargaining Agent Coalition, which negotiates benefits for all state government unions, pledged to work with Malloy, but disagreed with his assessment of problems facing state finances. Their reaction was one repeatedly expressed over the past two years.
“We’ve said before, Connecticut has a revenue problem, not a spending problem,” said Larry Dorman, the coalition spokesman.
And though the coalition will remain a “constructive force working with the administration,” state government needs a “fair revenue solution” that recognizes the “tremendous shift in wealth” toward the upper classes over the past decade, he said.
“I refuse to blame any workers for the problems we have in this nation,” said John W. Olsen, the president of the Connecticut AFL-CIO, adding the sluggish economy is the product of corporate greed and irresponsible government. “We didn’t create this mess.”
Olsen is holding a press conference Thursday with House Speaker Christopher G. Donovan, D-Meriden, who has been publicly circumspect about Malloy’s calls for $1 billion in concessions in each of the next two years, but is described as privately doubtful.
“I wouldn’t know if it’s too high,” Donovan said tersely of the $1 billion demand. “I’m not at that negotiating table.”
Re-phrasing one of Malloy’s principles for tackling the deficit, Donovan did note that some in his caucus might be concerned with several higher income tax rates and related hikes the governor has aimed at middle-income families.
“We’ll be looking at it to make sure it’s a fair shared sacrifice,” said Donovan, a former community organizer and labor union employee.
An ally, Rep. Peter C. Tercyak, D-Britain, said, “Personally, I think the middle class is getting killed.”
Tercyak added one unqualified compliment: Malloy’s proposal of an earned income tax credit, if passed, would be a lasting and significant measure to ease the lot of the working poor.
“If a meteor were to land on his head tonight, for that alone he would go directly to heaven,” Tercyak said.
Other Democrats declined to say if Malloy’s concession demands were realistic.
“I think it’s just way too early to say,” said Sen. Eileen Daily, D-Westbrook, but she praised his speech. “I do believe this is a terrific framework to begin our process.”
Senate Majority Leader Martin M. Looney, D-New Haven, a long-time sponsor of legislation creating an earned income tax credit, had no complaints about the substance or style of Malloy’s speech.
“I think he gave an excellent presentation, pointing out the difficulties but also doing it in an inspirational way, pointing out there is hope we can get through this dark time, and better days lay ahead,” Looney said. “I think it was exactly the right tone and exactly the right message.”
Senate Minority Leader John P. McKinney, R-Fairfield, gave Malloy low marks for proposing more than $1.5 billion in tax hikes for the coming year, but said the Democratic governor’s call for worker givebacks was tough, but fair.
“I think in that area he was very strong and right on point,” McKinney said. “The target is large but I believe it is achievable.”
Sen. Joseph Markley, R-Southington, a freshman elected with the support of Tea Party activists, praised Malloy for preserving municipal aid and attempting to restructure state labor contracts, yet faulted him for the proposed tax increase.
“The billion dollars in concessions is a remarkable figure to my mind, and if he can do it, my hat is off to him,” Markley said.
But Markley also warned Malloy that any tax increase is anathema to Republicans, whether they won with the Tea Party’s backing or not.
“I’m not going to going to vote for a tax increase, and I’m not alone in that among my caucus or among my Republican colleagues generally,” Markley said. “If they think there is going to be some kind of a triangulation, getting the Republicans on board with this, it’s not going to happen.”
Keith M. Phaneuf contributed to this story.