From Windham, Malloy takes on New York’s budget deal

WINDHAM–The residents of this struggling eastern Connecticut community were his audience, but Gov. Dannel P. Malloy opened a debate Wednesday night with another Democratic governor, Andrew Cuomo of New York.

Doffing his suit coat and rolling up his sleeves in a middle school auditorium, Malloy defended his budget for maintaining state aid to municipalities, while Cuomo’s budget would rely on $4.65 billion in reduced aid to erase nearly half that state’s $10 billion shortfall.

“Eventually somebody is going to say, why don’t you balance your budget like New York?” said Malloy, referring to the budget deal Cuomo cut over the weekend that relies on no tax increases. It set a standard some taxpayers would like Malloy to match.

But Malloy, who has proposed $1.5 billion in higher taxes, said such an approach in Connecticut would drive the state’s problems onto municipalities and the property tax, hurting homeowners and businesses.

“They call that balancing the budget. I didn’t do that. And you know what? It’s not balancing the budget,” Malloy said.

The governor mentioned New York as he fielded questions from 44-year-old Ed Bergman of Plainfield, the second speaker at Malloy’s 13^th town-hall meeting on the budget.

Sitting in the front row was Senate President Pro Tem Donald E. Williams Jr., D-Brooklyn, an important ally in selling his fiscal plan.

Bergman, who said he and his wife each make about $40,000, complained that Malloy is raising income taxes at a time when his town is cutting back on education, forcing parents to contribute for supplies.

He said he did not mind higher cigarette taxes, but the rest will be a stretch. Malloy is proposing to raise the income-tax and sales-tax rates and extend the sales tax to some goods and services that are now exempt, such as inexpensive clothes and haircuts

“I can’t afford to feed my family right now and do all the things I want to do if the taxes are just going to keep going up and up and up,” Bergman said.

To the applause of the crowd, he asked why the state can’t live within its means.

“I could do what other governors are doing right now,” Malloy said, and cut aid to towns. But he said the resulting jump in the property tax would be disastrous.

“The biggest tax that most of our largest employers pay in this state are property taxes. Why? Because we’re more reliant on property taxes than any other state in the nation,” Malloy said.

Connecticut, one of only two states that have failed to grow jobs in the past 22 years, can ill afford to do anything to harm the business climate, Malloy said.

“If you are mad at me because I am not doing it New York or New Jersey’s way, you have a right to be,” Malloy said. “But I’m explaining to you why I’m not doing that.”

Malloy said wiping out the entire $3.3 billion deficit, which represents nearly 20 percent of the state’s $19 billion budget, with spending cuts is impossible.

“You said you can live with the cigarette tax,” Malloy said. Then he smiled and glanced at Bergman’s shaved head. “I’m hoping you can live with the haircut tax, just looking at you.”

Bergman laughed.

“Thank you,” he said.

It was one of several lighter moments.

Lt. Gov. Nancy Wyman, who stood by the microphone in the audience, trying to move along those who came with question for Malloy, playfully chided the governor for his long answers.

“We have all these people standing in line,” Wyman said. “We have about a half an hour to go.”

“I’m going fast as I can,” Malloy said, appearing wounded.

The audience laughed.

Later, Leroy Hollis, a state employee from Willimantic, challenged Malloy to make sure he and his staff endure any concessions elicited from other state employees. Malloy is seeking $1 billion in labor savings next year.

“I want to know exactly how much is going to come out of the pockets of yourself, all legislators, the judges, all of the state university presidents and, especially, how much is going to come out of the highest-paid state employee, who makes over $2 million?” he asked.

Malloy replied that any concessions on pensions and health care would apply to every employee, but he didn’t want to talk about the highest-paid employee.

“I gotta tell you, I’m not sure I want to pick on Coach Calhoun this week,” Malloy deadpanned. “But maybe next week.”

The crowd laughed again. By late Monday night, all of Connecticut will know whether Jim Calhoun has guided the Huskies to their third NCAA basketball championship.

For the second consecutive night, Malloy told backers of the SustiNet health reform program he objects to a key provision, the creation of a quasi-public entity that would take control of the state’s spending on employee health, as well as Medicaid.

And he told union activists and others who say that corporations like Bank of America get away with paying no taxes that he favors taxing corporations at the same rate as surrounding states.

Arvind Shaw, the chief executive officer of Generations, a community health center, had complained about the shortage of primary care doctors in Windham, and he suggested that some of Malloy’s budget cuts, as well as his failure to embrace SustiNet, would harm the region.

“Some of the cuts you are proposing, you are really preserving some of these inequities that have existed for decades in this county,” Shaw said.

He urged Malloy to look for revenue from elsewhere, especially corporations that now avoid taxes thanks to lobbyists in Washington.

“You’re asking for a shared sacrifice? You can’t take the path of least resistance over here,” Shaw said. “You have to go up and you have to advocate for some of the small folks who live here.”

Malloy replied that his beef about corporate taxes is with the federal tax code, not Connecticut’s.

“I can’t change the federal rules. You know that. You’re a smart man,” Malloy said. “So to use examples that are based on federal lobbyists in Washington for a corporation and then to look at me as if I can change the federal rules — maybe you don’t intend it to be — but it’s a little unfair.”

Malloy did seem to concede defeat on one element of his budget: a proposal to begin transferring control of vocational and technical schools from the state to local communities or regions. In response to a student’s question, Malloy noted that his proposal is stalled in the legislature.

“So I don’t think you have to worry,” he said.

Williams, the leader of the Senate Democratic majority, later said he is urging his caucus to support Malloy’s budget without major changes, a message that would not have been applauded Wednesday night.

“The framework he’s proposed is the framework the legislature should move forward. I would like to see that as soon as possible,” Williams said. “He is sticking to the framework he has proposed, and it’s a courageous framework. It’s one that makes sense in terms of moving Connecticut forward out of the economic ditch we’re in. I think he deserves credit for sticking to his guns.”