Malloy, Foley on economy: some harmony amidst discord
Despite their seeming ability to disagree about almost everything, Gov. Dannel P. Malloy and Tom Foley share plenty of common ground about Connecticut’s future economic development.
The Democratic governor and his Republican challenger emphasize cutting taxes, urban revitalization and investments in transportation. And both of them are light on details on some of their plans for the next term.
But it’s their respective track records that lead them to butt heads most frequently.
Foley insists Malloy’s first term record is marred by a host of poor decisions that wounded Connecticut’s economy: a hefty tax hike, short-changing transportation and overly generous aid to big corporations.
The governor counters that he made the hard choices necessary to overcome a budget deficit and weak recovery from recession – both of historic proportions. And, he says, he’s made smart investments for the state’s future.
Meanwhile Foley repeatedly asserts that his past, specifically his business management skills in the private sector, make him perfectly suited to stabilize state finances. But Democrats not only challenge Foley’s handling of his former businesses – particularly of former Bibb textile mill in Georgia – but also assert his purported business acumen is a cover line to hide a lack of any specific plans for Connecticut’s economy.
Everyone’s talking tax cuts
“I’ve run large corporations and I know that I can do it,” Foley said of his dedication to bolster Connecticut’s economy.
Addressing Hartford-area business leaders last week at Capital Community College, Foley said the first step has to be stabilizing state finances, wiping out the red ink and rolling back the $1.8 billion tax hike Malloy and the legislature approved in 2011 to help close a $3.7 billion deficit.
“We need to unwind some of these taxes Governor Malloy has put on us,” the Greenwich businessman said. “But we can’t do it all at once.”
Foley said he believes he can keep state spending flat for each of the next two fiscal years, and also shave one-half of 1 percent off of Connecticut’s 6.35 percent sales tax rate. That cut – which would cost the state more than $300 million in annual revenue – will be very challenging given the nearly $1.4 billion shortfall projected for the state budget next year.
Still, Foley isn’t the only one who insists the deficit won’t stop him from cutting taxes after the election.
Malloy already has signed $220 million in tax relief for retired teachers, businesses, consumers and the working poor into law – all scheduled to arrive after the election.
Connecticut Needs Healthy Cities
Both candidates also rolled out tax cuts as part of their respective plans to revitalize Connecticut’s urban centers.
Connecticut has regained fewer than 70 percent of the 121,000 jobs it lost in the last recession, and its recovery lags the nation and the region.
Foley says a key component of changing that dynamic lies with the state’s cities.
“Connecticut isn’t offering young people much in terms of an urban environment,” he said, adding that the lack of attractive cities is leading many twenty-somethings to leave the Nutmeg State.
Foley wants to cap municipal property taxes on motor vehicles, which would cost the state another $30 million. The Republican nominee hasn’t said how he will pay for this tax cut. “We will find the money,” he said.
Though Malloy says repeatedly that Connecticut has more work to do, he notes the state has gained close to 60,000 private-sector jobs since he took office.
And while a new small business loan program has helped spur that growth, the governor recently proposed new tax breaks for college graduates with student loan debt and for urban businesses that create jobs.
“Just because we’ve made progress doesn’t mean that we’ve accomplished the mission, or that that progress has been shared evenly throughout the state of Connecticut,” Malloy said while announcing the tax cut proposals. “Until every Connecticut worker that wants a job has one, with good pay and benefits that they can use to support their families, our work will not be done.”
Investing in transportation
The gubernatorial rivals also both emphasize the need to invest in Connecticut’s public colleges and its transportation infrastructure.
Malloy insists he already has made huge strides in these areas.
When it comes to transportation, the governor says, he has outspent all of his predecessors in recent history.
For example, the administration touts an analysis showing state transportation “funding” has averaged $1.94 billion a year under Malloy, compared with $1.74 billion under Rell.
Transportation advocates counter this isn’t an impressive claim, and that Connecticut has been under-funding its transportation network for decades.
And since Malloy has been governor, state government has amassed billions of dollars of backlogged financing – borrowing approved by the State Bond Commission yet not executed. Much of this backlog involves transportation financing, and advocates say these bonds aren’t being issued, in part, because the budget lacks sufficient funds to begin paying them off.
“These are promises that are being made that aren’t being delivered,” said Foley, who said the bonding backlog amounts of economic “trickery” by the Malloy administration.
Foley told business leaders last week that, “I certainly will protect the assets in the Special Transportation Fund,” but offered no specifics on how he would direct more money to transportation.
Foley and Malloy both insist they aren’t seeking tolls, though they haven’t ruled them out.
The governor told transportation advocates at a forum last month that he would consider them if federal transportation aid to states drops dramatically.
“If there’s a doomsday, we’re going to have to look at this,” Malloy said, adding he would insist upon an amendment to the state Constitution to try to prevent toll receipts from being used for non-transportation purposes.
Saving jobs or corporate welfare?
But it’s the role of government incentives for big business where Foley and Malloy see things most differently.
Foley says the administration has lavishly doled out “corporate welfare” in an attempt to mask Connecticut’s sluggish economic recovery. He frequently cites two examples:
- $400 million in tax breaks approved earlier this year for United Technologies Corp. While it will trigger a $500-million expansion by UTC, it actually allows the aerospace giant to downsize modestly and still receive state aid. It passed with overwhelming bipartisan support, and Malloy said it was crucial to preserve Connecticut’s engineering base.
- $291 million in state bonding approved in 2011 to build a new genomic medicine research facility for The Jackson Laboratory, and to subsidize the nonprofit insitute’s operations for the first 10 years. The lab is required to employ up to 300 people by the decade’s end.
The Jackson Laboratory deal was more controversial, with nearly all of the legislature’s Republican minority opposing it.
Foley echoed GOP lawmakers’ concerns: A $291 million investment plus $120 million in interest on the financing represents more than $1.3 million for each guaranteed job.
“A million dollars a job? Are you kidding me?” Foley said last week just before the lab officially opened. “It’s government largesse.”
Under the Malloy strategy, “you have to keep up the bribes,” Foley added. “It’s like a gambling habit.”
But the governor fired back that The Jackson Laboratory would be” a center that attracts great researchers. … There is no downside to this. We’re very proud of it.”
An administration analysis insists it will create about 4,000 long-term bioscience jobs alone, with the economic activity from this cluster sparking growth of another 2,000 permanent jobs in other fields.
Foley’s economic plan also calls for the state to focus on attracting key industries – including biotechnology – that provide high-value jobs, including health care, engineered manufacturing, financial services, energy research and pharmaceuticals.
But while Foley said the key to attracting these types of businesses is lowering the cost of doing business here, his plan adds that he would reach out to businesses personally, “convincing them that Connecticut is the place to be.”
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