Gov. Dannel P. Malloy’s budget is being picked apart, in hearing rooms at the state Capitol, on talk radio and the web, and in town hall meetings across Connecticut. But the real debate is about the essence of the man, not the details of his budget.
Is the first Democratic governor in 20 years really intent on demanding $1 billion in labor savings — a 20-percent giveback? His tax package is a political disaster, seemingly calculated to mobilize as many opponents as possible, raising income and sales taxes and whacking a popular property tax credit.
Conservatives are aghast at his endorsement of an earned income tax credit, money that would go to the working poor. Liberals are furious he won’t hit the rich harder, digging dollars from the only demographic that gained in the past decade.
He can’t be serious, can he?
Malloy loves the question. He is sitting at his desk on a Thursday afternoon, hours after jousting with reporters, a diversion he enjoys. Ahead is another town-hall meeting in Torrington, then a trip to Washington D.C., for a governors’ meeting–and a little more face time on cable news, this time on CNN. He was on MSNBC the previous day, defending unions.
“I think everyone is a position now that they’re trying to figure out where the other person is, and I’m the new quantity here, right? People don’t know me,” Malloy said. Then he leaned forward and smiled. “They are having a hard time wrapping their mind around, ‘Does he really mean what he says?’ But they’re starting to come to the conclusion that ‘He really means what he says.’”
A threshold question for legislators, labor and interest groups–nearly all of whom, the governor concedes, have legitimate beefs about what’s in his budget–is what is negotiable and what is off limits. The governor’s core values and his resolve are being measured daily.
In 1991, it took the political establishment nearly nine months to conclude that Lowell P. Weicker Jr. was unmovable on his belief in the need for Connecticut’s first broad-based tax on wages. He made that point by vetoing three budgets and being willing to shut down state government.
Malloy arrived in Hartford as an unknown quantity, at least for a politician who twice ran for governor, unsuccessfully in 2006 and then wining by half a percentage point last fall. As mayor of Stamford for 14 years, he worked far from the Capitol and outside the state’s dominant Hartford-New Haven television market.
“If this was my second budget as opposed to my first budget, you know, people would have a frame of reference,” Malloy said. “But unless you are from lower Fairfield County, you don’t know me. You haven’t seen how I operate.”
He inherited a $3.2 billion deficit, a big hole in a $19 billion budget, one of the worst faced by any governor. His Republican opponent, Tom Foley, had insisted it could be erased without new taxes. Malloy’s proposed solution: $1.5 billion in tax increases and $1.8 billion in spending cuts, including $1 billion in labor savings.
The biggest question about his budget is the demand for labor concessions. No one doubts his commitment to restructuring wages and other compensation for 46,000 state employees, but there is widespread disbelief at the scale of his demands. So far, the numbers simply don’t add up.
With negotiations to begin next week with state employee unions, whose leaders have watched public-sector organized labor come under political attack in Wisconsin and around the country, Malloy stuck to the big picture on his hopes for the talks.
He reiterated he is not looking for a quick fix, a gimmick to get through the year. He is demanding systemic change, reforms that will make the state’s total compensation structure sustainable.
“These are extraordinary times, and I think that everyone has to look at what we are doing as a preservation of a future. And understand that we need to think in the long term, as opposed to the short term,” Malloy said. “And people are having a hard time with that because no one, neither of my prior administrations thought in the long term.”
On some questions, he insists he is resolute–and then speaks at length and with some passion to underscore the point. He knows that labor and some liberal Democrats expect he will bend on his top income tax rate, which Malloy has proposed raising to 6.7 percent. He suggests they will be disappointed if they test him.
Questioned about how high earners benefited from the Bush tax cuts, Malloy interrupted.
“Let’s just stop for a second. They’ve benefited the same way in every state. When is somebody going to say that?” Malloy said. “A person with $5 million in the bank benefited the same way in Iowa as they do in Connecticut, but more importantly they benefit the same way in Massachusetts, Rhode Island, New York and New Jersey as they do here.”
Malloy, whose political career was spent in sight of the New York border, doesn’t dispute–or more accurately, he doesn’t engage–questions of whether the rich can afford to pay more. This governor says Connecticut cannot afford a soak-the-rich image, period.
“It is vitally important that Connecticut continue to have tax advantages, because we have some disadvantages. Very. Glaring. Disadvantages,” Malloy said, punching out the last three words. “Highest electric costs. Failing cities. Transportation system that s been under-invested in and an educational system that has been slow to reform itself. So we have all those disadvantages.
“Should we then give away the one real advantage we have and that is that we have a better tax system? I’m not wiling to give it away. And I feel very strongly about that. You know, Switzerland isn’t successful because it has more natural advantages than other states in Europe. They’ve carved out what their advantages are. I know what out advantages are. We’re not going to give them away.”
Other than John Olsen, the president of the Connecticut AFL-CIO, Malloy said he is unaware of anyone who has publicly called for him to raise taxes beyond the $1.5 billion already proposed.
“I don’t see anyone making that argument at the moment,” Malloy said. “It would have to come out from the shadows, because neither you or I have seen them and it’s your job to find them. It’s my job to expect that they are there.”
Malloy frequently dismisses questions he deems speculative, saying he has no crystal ball. But he embraced a question about how budget debates can be influenced by the minority party.
In 1991, the income tax ultimately was shaped by the willingness of a Republican state senator, William Nickerson of Greenwich, to break the budget deadlock in late August.
John Larson of East Hartford, then the Senate Democratic leader, now a congressman, refused to consider voting for an income tax, so the final tax rates were drawn to please a Greenwich Republican, not an East Hartford Democrat. The tax structure was relatively flat, with a huge cut in the taxes on investment income.
How’s this for a budget scenario? Liberal Democrats hold out for higher taxes on the rich. Conservative Republicans offer to break a deadlock with votes for deeper budget cuts. Would the new governor wheel and deal?
“I am going to answer that question,” Malloy said. “Right now, I have given Democrats and Republicans a budget that they both can be happy about and unhappy about, straight down the middle.”
When he continued his answer, he spoke slowly, deliberately.
“I think each party has to be careful of which direction they push me in,” Malloy said. “Or should be mindful of the dangers of that.”