The Real State of the State

Govern Dannel Malloy’s State of the State message gave little indication of his plans for the future. From a budgetary or strategic planning point of view, there wasn’t much “there” there, but the speech evidentially was framed for a national audience.

Everyone who has made a speech on any topic will tell you that the substance of a speech is determined in large part by the nature of your audience. One report indicated that the address was, compared with other state of the state addresses, a bit out of the box; other governors have used the occasion to map out a plan of governance for the new legislative session, and Mr. Malloy didn’t. On the other hand, he felt compelled to say something about Sandy Hook, a national and even international story. On Sandy Hook, he should be telling the legislature not to be precipitous; wait for the investigation to be completed. He may be doing that, but one never knows what goes on behind closed doors.

Does any of this indicate that Mr. Malloy is making himself available for a spot in Washington?

No one knows. My own crystal ball is in the shop for repairs, but there has been some speculation about Mr. Malloy’s political strategy during the current legislative session, which began on January 9.

During his first term, Mr. Malloy raised taxes massively. The progressive wing of his party, those in Connecticut who have a stake in ever increasing spending, cheered him on from the sidelines. When deficits repeatedly appeared, Mr. Malloy quite publically took the pledge: No new taxes. He said several times on the post-election stump he would not raise taxes to liquidate a deficit of about half a billion dollars. He didn’t.

During a special session called to address the deficit, renamed by Mr. Malloy “a shortfall, the governor reached out to Republican leaders he had earlier spurned when crafting his first budget. Together, along with majority Democrats in the General Assembly, across the board cuts were applied, but a much larger $2 billion deficit must be addressed this fiscal year. Additional cuts likely would not be possible without Republican support in the General Assembly. Some Republican leaders, following the special session cuts, appear to be quite willing to let bygones be bygones. Having been frozen out of the smoke filled back room during Mr. Malloy’s first term, Republican leaders in the general Assembly were exceedingly grateful the governor included them in the special session -- the chop, chop session. Democrats, most of whom would like to hold the line on spending cuts, appeared to be suffering from a pronounced case of agita. Did Mr. Malloy intend to stiff them in the new session, they may have wondered.

The Democrats whose nerves are frayed belong to the progressive wing of their party and are easily stampeded. We sometimes forget that the Democratic Party here in Connecticut does have a middle; it’s easy to forget --especially during the Malloy administration when, for the first time in more than 20 years, both houses of the General Assembly and the governor’s office have been claimed by Democrats. Contrary to media opinion, the Republican Party in the state is all middle. Here and there, a conservative or two – there cannot be more than a fist full in the General Assembly – opposes a post-Keynesian piece of foolishness and immediately the entire party is denounced by the state’s left of center media as dangerously ideological.

The reality is nearly the opposite. The capture by Democrats of the two houses of Connecticut tripartite government has given us the most progressive administration Connecticut has seen since former governor Wilber Cross hung up his spurs. It should be noted that the third branch of Connecticut’s government, the courts, always sensitive to political power, is also up for grabs. Only in comparison with the Malloy administration, acting in concert with dominant Democrats in the General Assembly, do middle of the road Republicans appear to be arch conservatives.

Since the modern conservative movement sprang pretty much fully grown from the brow of Bill Buckley, Connecticut has never elected to office a conservative governor or a conservative legislature. Indeed, the number of conservatives in the General Assembly can be counted on the fingers of one hand.

There is no question that Mr. Malloy is pro-union; also no question that unions, especially the powerful teachers’ unions, are left of center political goads that push individual Democrats far to the left. Yet, Mr. Malloy, courageously in the view of some, proposed a few education reforms that left an ashen taste in their mouths. To be sure, his most important education efforts went down to dusty death: Mr. Malloy’s apparently outsized ambition was to link the salary and status of teachers with measurable performance. In private business, that linkage is universal; in state and federal government, it is little more than a consummation devoutly to be wished. But it does say something about Mr. Malloy that he entered the fray at all. The left wing of the Democratic Party may have some reason – not much -- to be edgy. Of course, progressives, ever on the hut for new means of establishing their utopias, are by nature “on the edge.”

On the other hand… Mr. Malloy has positioned himself in such a way that Republicans may easily be faulted for any cuts in the upcoming budget which, strategically, would be to Mr. Malloy’s benefit.

Some people may have noticed that what is beneficial to status quo politicians does not always contribute to the greater good. Progressive influence peddlers interested in moving politics in Connecticut ever further to the left do not always have the greater good in mind; they have their own parochial interests in mind. The opposite of an ideological government is not, some may be surprised to learn, a non-ideological government. There is no such animal. The opposite of an ideological government is an anarchy of special interests, and no special interest spends more than a minute a month contemplating the greater good. When we see a politician buck powerful interest groups that surround him, there is some reason to rejoice. This happens usually because the politician feels in his soul the pull of an idea. In the absence of ideas, politics is a madhouse of interests.

Now, what is the controlling interest of a free floating politician? Maintaining his status. Under the skin, all incumbent politicians are conservatives; everyone wants to continue being what he has been. To accomplish this aim, the run of the mill politician will pay court to whatever special interests help him maintain what Aristotle called his “quiddity,” his “whatness,”his own essence, as he perceives it. There is some indication – slight, but some – that Mr. Malloy may have an idea or two sloshing around in his head, which means that he may not be wholly the plaything of special interests –reason enough for us to rejoice, moderately. Just as dying men sometime slip in and out of consciousness, so politicians, especially the pragmatic variety, slip in and out of ideas as advantageous circumstances dictate.

Could Mr. Malloy benefit politically by inviting Republicans to take part in upcoming budget negotiations?

Republican leaders seem very eager to “have a place at the table,” as politicians sometimes say. There are two questions: Why involve Republicans in budget negotiations this time around? And why do Republicans want to be involved in budget negotiations? The non-cynical answer to the second question is pretty straightforward. Republicans want to be involved for the same reason they wanted to be involved in previous budget negotiations; they want to leave their mark on the budget. Previously, they were locked out; a tax and spending spree followed. A budget – the national government hasn’t had one for four years – is a destiny-plan that marks the boundaries of the future. It also marks the limits of political power. What politician elected to represent his constituents would not want to be involved in mapping their future? Mr. Malloy froze out Republicans when producing his first budget because he needed a sizable, broad based tax increase, and Republicans wanted spending cuts. Without Republicans in the room, it was an easy matter for Mr. Malloy in negotiations with unions to strike a deal that then Senator Edith Prague characterized as so favorable to unions they would be insane to reject it. To this day, Malloyalists insist that Malloy’s spending cuts were sufficient. In his state of the state address Mr. Malloy said, “We came together and passed a balanced budget. We cut more than we added in new revenue.”

Three misrepresentations in a 17 word self-congratulatory pat on the back may be a record in political dissimulation. How Republicans in the audience, shown the door when he budget was being assembled by Mr. Malloy in concert with union representatives,must have winced at that “we.” The governor’s first budget very likely has never been in balance, and the notion that the Malloy administration cut more than it added in revenue doesn’t pass the “Do you think I was born yesterday?” test.

“It’s not true – nor did they reduce salaries” of state employees, said Sen. Rob Kane, the ranking Senate Republican member of the budget-writing appropriations committee.

Some editorial boards appear to be catching on. Here is a whiff of grapeshot from the Day of New London:

“Yet the governor now finds himself boxed in by some of the deals he struck to address the $3.5 billion deficit projection he inherited when elected in November 2010. The Democratic governor did win concessions from state labor unions, but they came at a hefty price. Workers in place when the concession deal was signed have been assured they will not be laid off. After a two-year pay freeze, the deal also provides state workers substantial pay raises in each of the next three fiscal years.”

Mr. Kane and other Republicans should be viewed as Mr. Malloy’s spending speed bumps – the spending “firewall,” preceding Republican governors, has entirely disappeared -- which is why Mr. Malloy did not involve Republican leaders in the General Assembly in constructing his first perpetually imbalanced budget. Mr. Malloy wanted to raise taxes and did; Republicans wanted effective and proportionate cuts in spending. Someone had to leave the room.

Will things be different in the New Year?

We have Mr. Malloy’s repeated avowals that he has no intention of raising taxes further. He will need Republican support to realize savings in his next budget. At some point, Mr. Malloy either will or will not cross the Rubicon and march on Rome. There are some indications that Mr. Malloy will not spare Municipalities this time around. When the head of the governor’s Office of Policy Management, Ben Barns, said offhandedly that cuts to municipalities would not be taken off the table in upcoming budget plans, members of the Connecticut Conference of Municipalities (CCM), a body that represents the state’s municipal officials, began rending their garments and pouring ashes on their heads. That hint suggests the governor, this time around, might be serious about spending cuts. As they say in the news business– We’ll see.

And the real state of the state is?

Bordering on beggary. On the opening day of the legislative session, the Yankee Institute, a glowing candle in Connecticut’s dark night, took out full page advertisements in four major Connecticut newspapers. “We aren’t just doing worse than average, Executive Director of the Institute Fergus Cullen said, “We are doing theworst." Here is the Institute’s list of lasts.

Connecticut’s List of lasts

• Barron's rated Connecticut's debt situation as the worst in the country in 2012
• TopRetirements.com ranked Connecticut as the 2012 worst state for retirement
• The Institute for Truth in Accounting ranked Connecticut's financial status as the worst in the nation with a debt burden of $49,000 per taxpayer
• Connecticut's credit quality was ranked 50th in the nation by Conning Inc.'s State of the States Municipal Credit Research Report in 2012
• Connecticut's Tax Freedom Day of May 5, 2012 was the latest in the nation according to the Tax Foundation
• Connecticut's Achievement Gap is the worst in the nation according to the Connecticut Council for Education Reform
• The Fiscal Policy Report Card on America's Governors by the Cato Institute gave Malloy an "F"

"On the first day of the Legislative Session,” said Mr. Cullen, “we are calling on the General Assembly to address the state's financial challenges by reducing spending and adopting pro-growth tax policies to move Connecticut from last to first."

It really is becoming difficult to keep the bad news under your hat.

The Real Budget Deal

Governor Dannel Malloy’s strong suit in budget negotiations with unions is that his proposed budget limits the pain for unionized workers in Connecticut only to state employees. In a hitch, he might easily choose to broaden the shared sacrifice to cover municipal union workers as well. Under a contingency plan prepared by the governor’s office, municipalities would lose one-third of their state aid should the legislature unwisely resist Mr. Malloy’s proposed budget.

Having already socked taxpayers for $1.5 billion, the governor is asking $2 billion in spending cuts only from state union workers. Given the economic condition of the Connecticut – ambulatory, according to The Connecticut Society of Certified Public Accountants -- the state’s long term debt can only grow larger over the years. Very little in Mr. Malloy’s plan patches the hole in the boat caused by excessive spending, which can be ameliorated only by permanent long term cuts. The governor has to wring $2 billion or more from the budget – permanently.

Following the presentation to the legislature of Mr. Malloy’s budget outline, the word on the political street and in union halls was that the savings Mr. Malloy had demanded in very stern tones from state union workers could not be realized, largely because the pool from which he hopes to recover $2 billion in savings has been restricted only to state workers. Unionized Municipal workers are not touched by Mr. Malloy’s withering hand. The “shared sacrifice” Mr. Malloy has asked of taxpayers has not been expanded to include unionized municipal workers, a group that would include teachers, the largest tax drain on state resources.

Delighted with this arrangement were: municipal politicians – especially town administrators who are members in good standing of the Connecticut Conference of Municipalities, sometime derisively titled the Connecticut Conference of Crying Mayors -- legislators elected in districts composed of town voters, and all municipal workers, including teachers, a voting bloc partial to Democrats.

The state-wide tax increases Mr. Malloy had proposed were trumpeted as a highly principled effort to share the pain of sacrifice. Because the sacrifices were so widely shared, they would be more tollerable for everyone. All were to shoulder an equitable burden. Had Mr. Malloy disappointed the above named interests by requiring a similar “shared sacrifice” of all union workers in the state, including teachers and other municipal employees, none of the state workers now protesting the enormity of their sacrifice, said to be an unrealizable $20,000 per year per worker, would have had much reason to complain – because, in that case, the “shared sacrifice” would have been distributed more equitably among all unionized workers throughout the state.

Mr. Malloy could only have distributed the pain of “shared sacrifice” more equitably throughout the state’s larger union pool by passing along the burden of “shared sacrifice” to municipalities in the form of – listen for the GASP! – state cuts to municipalities. It was argued at the time that this would inevitably raise the dreaded property tax, a prospect that always had drawn crocodile tears from the Connecticut Conference of Crying Mayors, unionized municipal workers, town property taxpayers and state legislators.

There was but one political commentator in the state who suggested this line of reasoning was hokum; the governor all along should have been proposing cuts in state aid to towns said Chris Powell of the Journal Inquirer.

Under threat of increased property taxes, municipalities have often chosen though budget referendums to cut spending; and, in fact, the ever increasing tax buck in Connecticut more often is brought to a stop at the desk of a mayor than that of a state legislator or governor. It is far easier for state legislators to raise taxes -- because Connecticut has no state budget referendum, whereas many towns do. It is at the municipal level, in other words, that cost cutting is most effective, because through referendums town voters directly influence budgets, doubtless at the cost of many tears shed by mayors and other administrators who find cost saving measures too painful to execute.

The latest news is that union negotiators are largely satisfied with the outline of Mr. Malloy’s budget proposal. They want to tweek it a “very little” bit, according to Senate President Don Williams. One cannot help but think of Danton itching to tweek the neck of Marie Antoinette, who was said to be imperious.

The Democratic majority in the legislature has been much in the habit of tweaking the budgets of previous Republican governors, and there is little reason to suppose the same extravagant spenders will not similarly tweak the budget of one of their own on behalf of their most clamorous and grateful constituency – union workers. If the Republicans were of a revolutionary frame of mind, they’d propose a constitutional convention to be convened only for the purpose of establishing a state budget referendum and attach the measure to any and all pending bills increasing the cost of state government.