NEW LONDON–A predominantly blue-collar audience urged Gov. Dannel P. Malloy Wednesday night to spare them from his proposed tax hikes–among the largest in state history–and pressed the governor instead to seek more revenue from the rich and major concessions from state employees.

The crowd of more than 300 that packed the Jennings Middle School gymnasium also included advocates for the SustiNet health care plan, and offered several appeals to preserve Connecticut’s social services safety net.

Malloy, who was holding the third of 17 planned, town hall-style meetings to present his plan to close a $3 billion-plus deficit in state finances, maintained his insistence that Connecticut must impose tough sacrifices on all income groups, and keep its tax rates competitive with those in neighboring states, to revive its economy.

The governor’s plan to add five new income tax rates, including several focused on middle-income households, drew sharp criticism from John Fearns of Norwich, an engineer with Faria Inc., a tachometer manufacturer in Montville.

“I’m asking you to tell me how you can say that’s fair for me?” Fearns said, urging the governor to consider both layoffs and concessions that would save more than the $1 billion annual target Malloy has set, adding that workers at his plant have sacrificed far more in recent years. “We’ve had furlough days that are expressed in months, not days.”

“I think (the budget) relies too much on taxing the middle class,” Daniel Jackson, a state correction officer said, urging the governor to consider a top income tax rate above the 6.7 percent level he proposed–provided it is aimed at millionaires. “I don’t think their taxes are going up enough.”

But Malloy struck a refrain he would return to often, countering that if Connecticut doesn’t keep its rates below those of neighboring states, its wealthiest residents and businesses will depart, and take their job-creating capital with them.

“These people are a lot more mobile than people in the middle-class like you and me,” he said, adding he has proposed a new sales tax surcharge on expensive clothing, jewelry, high-priced cars and other luxury items. “We need to maintain a competitive advantage. We don’t want to frighten, scare or have the people who create jobs leave.”

“The people that are paying the taxes in this state, we are not the issue,” said Jen Ezzell of Lisbon, who blamed the state’s fiscal woes on Malloy’s fellow Democrats who control the legislature, asking him to consult with GOP leaders to find more spending cuts. “Please, take a walk over there. Get their ideas. We don’t have any more money to give you.”

Malloy, who has insisted that Connecticut’s budget deficit must be solved through a near equal combination of spending reductions and tax hikes, laid the blame on several occasions at the feet of his Republican predecessor, M. Jodi Rell. The former governor and the Democrat-controlled legislature agreed to use billions of dollars in revenues from one-time sources to avoid tax hikes or spending cuts over the last two fiscal years.

“That’s the dilemma I’ve been handed by the previous administration,” Malloy said, adding that Rell emptied the state’s emergency reserve, expended all emergency federal stimulus, raided the pension fund and agreed to borrow nearly $650 million–all of which worsened the bill that came due on his watch. “I could play the same game, but I refuse to.”

The governor also tried to rely on his trademark sense of humor at times to lighten the mood. “I suppose I can’t complain.  I ran for this office,” he told one questioner. Another was encouraged to forward good ideas to his office “so I can take credit for them.”

Malloy’s plans to boost taxes $1.5 billion next fiscal year also calls for cancellation of a wide array of sales tax exemptions and Noah Levine of Rapid Car Wash in New London, a coin-operated automatic service, feared that removing the sales tax break his business enjoys could force him to close.

“I want to know how this is considered to be fair?” Levine said, adding that his business already pays sales tax on the soap it buys and an assessment for the water it uses.

But Levine, as did many listeners, received a tough answer from Malloy, who said the best option might be to pass that added cost along to the customers, who also would be asked to sacrifice.

“I understand it’s not easy, but what are my options?” the governor said, adding the alternative would be to dramatically reduce Connecticut’s social services safety net for its most vulnerable citizens.

But some of the more than two dozen who spoke at Wednesday’s meeting, which ran 10 minutes beyond the planned hour, charged Malloy with already cutting too deeply into services for the needy.

“I’ve already seen so many of these homes close,” Mike Schoell of Colchester, a social worker at a state-operated group home for the developmentally disabled in Mansfield that closed earlier this week. “These services are badly needed. We’ve got to resolve this.”

Steve Smith, a physician at the Family Health Center in New London, was pleased to hear the governor promise he would keep state planning to develop a universal health care plan under the Sustinet model active, but sighed when Malloy said the state deficit and other challenges likely mean a new system is years away from implementation. “We  have to have a lot more discussions about cost containment,” the governor said.

Though Malloy insisted repeatedly that difficult cost reductions had to be made, he also insisted his administration was willing to reconsider all spending priorities and add dollars in some places if they could be cut elsewhere. “I will constantly examine what is the right balance,” the governor said. “I am struggling to find the right balance. It doesn’t mean I’ve found it.”

Carol Majewski of Montville challenged Malloy to include himself in the balance, to seek more concessions from workers and to participate in furlough days himself — if that would avert the tax hikes and painful spending cuts.

The governor responded that all state employees, union, non-union, and himself, would be asked to sacrifice, but that wouldn’t forestall the other tough choices. “So work with me, work with me,” he added. “We need to save our state.”

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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