Organized labor made two complaints Thursday about Gov. Dannel P. Malloy’s proposal for a $1.5 billion tax increase: It’s not big enough, and the rich won’t pay enough of it.

“It has to go much higher,” said John Olsen, the president of the Connecticut AFL-CIO.

But how high? Is Olsen, a former Democratic state chairman, advising the first Democratic governor in 20 years to rely exclusively on taxes to erase a $3.2 billion deficit? Should Malloy double his proposed tax increase?

Donovan, Olsen

Speaker Chris Donovan (L), John Olsen

Olsen wouldn’t say. Neither would House Speaker Christopher G. Donovan, D-Meriden, who gave Olsen a 60-second introduction at the press conference, then tried to leave without answering questions.

Malloy and his administration insist that he will go no higher on taxes.

“We’re getting screamed at for proposing one of the biggest tax increases in Connecticut history,” said Roy Occhiogrosso, a Malloy adviser. “How much higher are we supposed to go?”

The coalition of state employee bargaining units responded to Malloy’s call this week for $1 billion in concessions and other labor savings by insisting, as they have for two years, that Connecticut has too little tax revenue, not too much spending.

It is a message unpopular with the public and flatly rejected by Malloy, who says he will cut other spending and not raise taxes further if the employees do not agree to concessions that would include a pay freeze, furlough days and higher co-pays. Malloy says current compensation levels are not sustainable.

“In our budget crisis, state employees are erroneously being defined as the problem, their wages and benefits deemed ‘unsustainable.’ These are our state employees whom we depend on for our well-being and for the safety of our families and communities,” Olsen said.

“The main cause of our budget crisis is not runaway spending, it is insufficient revenue,” Olsen said. “With the economic crisis and high employment, tax revenues are down,” Olsen said.

Malloy was asked earlier Thursday if the state employees are taking an unrealistic position when their spokesman, Larry Dorman, reacted to his budget proposal Wednesday by again saying, “Connecticut has a revenue problem, not a spending problem.’

The governor smiled.

“I’m going to meet them halfway. We have both,” Malloy replied.

Olsen, who is not involved in negotiations over Malloy’s demand for concessions,  said Malloy should hit the rich and ease off labor.

“Connecticut’s working families didn’t create this economic mess, but we are left with the tab and told to share in the sacrifice,” Olsen said. “We are willing to roll up our sleeves and be problem solvers, but let me be clear, when the economy was up, workers didn’t get their share.”

Donovan’s plans to attend a press conference with Olsen drew attention at the Capitol, given that he is expected to eventually lead a push for Malloy to agree to a higher tax rate on the wealthy. But the speaker continued to soft-pedal his differences with the governor.

“The middle-income groups seem to be bearing maybe a bit much,” Donovan said. “We’ll be addressing that.”

Olsen complained that Malloy is proposing to the raise the top income-tax rate, which now is applied only to earnings above $ 1 million, by .2 percent to 6.7 percent, while while middle-income taxpayers would face a .25 percent jump.

The long-time labor leader said the Bush-era tax cuts gave the wealthy a break that can now be offset with higher state income taxes.

“The top five percent of wage earners in this state, and I want to emphasize this, the top five percent, those making $412,000 and above, who received an exension of a tax cut that was never paid for, that they were never really entitled to, that alone translated into $3.2 billion,” Olsen said.

But Occhiogrosso said a joint filer making $60,000 annually would pay only $70 more a year in income taxes, and Malloy said wants to keep the state’s income taxes competitive with surrounding states.

Olsen’s press conference is the opening salvo in what is likely to be a labor campaign to push Malloy for a bigger tax package and a higher rate on the wealthy. One union activist said that labor will have a presence at every one of the town-hall meetings Malloys plans on the budget, beginning Monday in Bridgeport.

But Malloy’s staff is not spending much time preparing to defend his tax proposal as too low. The governor intends to arrive with Bridgeport with data on what his tax proposal would cost a typical taxpayer in the city and what the city will get in state aid.

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Mark PazniokasCapitol Bureau Chief

Mark is the Capitol Bureau Chief and a co-founder of CT Mirror. He is a frequent contributor to WNPR, a former state politics writer for The Hartford Courant and Journal Inquirer, and contributor for The New York Times.

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