Bonding, The Budget And Corporate Welfare

When Mark Twain said ““Never put off till tomorrow what may be done day after tomorrow just as well," he might easily have been talking about bonding.

Usually a state sells bonds to pay for long term capital projects. But like any political practice, the selling of bonds may be subject to abuse. The use of bonding to pay off current expenses that ought to be discharged through tax increases or spending decreases is considered a “no, no” among agencies that rate state bonding. The practice, however, is a “yes, yes” among politicians who want to avoid either the unpleasant option of raising taxes or the equally unpleasant option of cutting spending. The beauty of bonding for such politicians is that it allows them to escape the wrath of voters who understandably resent tax increases imposed to pay for current budget expenses and improvident spending. The downside to bonding abuse is that current expenses are carried into the future, a benefit for cowardly politicians charged to the future generation on a “buy now pay later” plan.

Bonding puts off until the day after tomorrow payment for obligations that ought to be met today by those responsible for incurring debts.

Bonding for current expenses was one of Mr. Malloy’s bêtes noire when he was running for the governor’s office, and a change from a modified cash basis system to a Generally Accepted Accounting Principles (GAAP) system was the candidate’s answer to budgetary skulduggery that had led to unmanageable budget deficits.

Pointing to the delinquencies of his two Republican predecessors, Mr. Malloy was compelled, he said, to institute the largest tax increase in Connecticut history, second only to the tax increase that followed Governor Lowell Weicker’s income tax. Requiring revenues under GAAP to be counted in the year they are received necessarily created a budget differential of some $1.2 billion. Initially, Mr. Malloy had planned to bridge the gap through budgetary savings. The recovery that Panglossian Democrats in the General Assembly hoped might flood the state’s treasury with sufficient funds to pay down the differential never materialized, and Mr. Malloy now has decided to pay down the $1.2 billion gap through bonding. The funds generated through bonding will be dedicated to this purpose unless, according to one news account, “there’s an emergency,” in which case the money may be used for some other purpose following a three-fifths vote in the Democratic dominated General Assembly. It is not unheard of for governors in Connecticut to declare budget emergencies. 

During the fag end of the last legislative session, the Democratic dominated General Assembly ordered Connecticut State Treasurer Denise Nappier to borrow $750 million to facilitate the conversion to GAAP.  The decision to borrow rather than saving the money to pay down the differential will cost the state more than $200 million in interest over the life of the bonds.

The Malloy bonds naturally “improved” the state’s cash flow and, for the first time in many moons – prior to the elections too -- state Comptroller Kevin Lembo was able to predict a small budget surplus.  Cash flow is improved whenever taxes are increased or bonding is used to generate funds that are not made available in a depressed economy.

No political skullduggery here – just business as usual in a state addicted to chronic spending.

On the Republican side of the political barricades, Mr. Malloy’s decision to pay for the  differential by bonding rather than by the means he had first settled upon – save money in the state’s piggy bank and use it to convert to GAAP – produced  a forceful objection from Republican Party gubernatorial hopeful  John McKinney.

“Appropriating real dollars to reduce the state’s GAAP deficit,” Mr. McKinney said, “would have been an honest and direct way of dealing with the problem, and I would have supported those efforts. But that’s not what the governor is doing. Instead, he is borrowing in order to kick that commitment down the road another two years.”

For Democrats, GAAP has become the equivalent of a budget chastity belt. However, it is never an adjustable belt that assures chastity. A chastened big spender would understand that budget deficits are caused by the disposition to spend. And there is little or no acknowledgement among members of Connecticut’s spending class that spending must be curtailed or that excessive regulation – which always drives up business costs – must be pared back. Everywhere, big spenders await the “rising tide that will lift all the boats,” an expression employed by President John Kennedy in his well-known speech to the Economic Club of New York in 1962, in the course of which Mr. Kennedy said:

 “The final and best means of strengthening demands among consumers and business is to reduce the burden on private income and the deterrents to private initiative which are imposed by our present tax system – and this administration pledged itself last summer to an across-the-board, top-to-bottom cut in personal and corporate income taxes to be enacted and become effective in 1963.”

Mr. Malloy has instead used what little money he found in Connecticut’s debt ridden budget to advance a destructive crony capitalist program, which involves giving rare tax dollars to companies he bribes for the pleasure of doing business in the state, including profitable mega-companies or smaller companies that use abused taxpayers to finance their moves from one town to another.

Lifting all the boats is not a progressive specialty, and it is doubtful that John Kennedy could be elected dog catcher circa 2014 anywhere in progressive, crony capitalist Connecticut.

Red Flags Over Connecticut

A little more than a month ago, Jim Powell of Forbes Magazine did us the favor of pulling together in one piece – “How Did Rich Connecticut Morph Into One Of America's Worst Performing Economies?” -- a load of data much of which was already in the public stream. It’s useful to have all the festering lilies together in one bunch, so that one might get a good whiff of them.

Before and since the publication of Mr. Powell’s distressing news, some Republican opponents of Connecticut’s progressive governor and his helpmeets in the state’s General Assembly have been energetically flourishing some of Mr. Powell’s little red flags, hoping that the state’s sometimes inattentive media might awaken and take note that Connecticut is teetering on the brink.

Without mentioning all the points touched upon by Mr. Powell, here are a few worrisome indicators:

In Connecticut for the past two decades, out-migration has exceeded in-migration by about 300,000 souls; Connecticut no longer competes on a level playing field with other states for investors and entrepreneurs, both drivers of prosperity; Connecticut small businesses declined 2.2 percent BEFORE the financial meltdown; state spending has increased threefold since the Lowell Weicker income tax was promulgated in 1991, with much cheering from the state’s progressive media; Connecticut debt per capita, at $27,540, is the 4^th largest in the nation, exceeding even that of California; Barron's tagged Connecticut’s financial condition as the worst in the nation; the state’s debt and pension liabilities exceed its Gross Domestic Product (GDP) by an astounding 17.1 percent, compared with South Dakota’s 1 per cent, South Dakota’s financial condition being the strongest among all the states.

There is more depressing bad news, much of it omitted here for reasons of space. The figures are, as always, interesting but perhaps unnecessary in a state that has for more than two decades felt on its back the lashes of overspending and prosperity suppressing regulation. Looking around the table at Thanksgiving and Christmas for the past 20 years, one counts with a sinking heart the empty chairs once occupied by sons and daughters and nephews and nieces who have moved out of state in search of greener pastures elsewhere, carrying with them their very expensive Connecticut diplomas. Their aunts and uncles and fathers and mothers occasionally have joined the outmigration – to be with their grandchildren, once the fruit of prosperity in Connecticut, now gone.

                   

The 2014 edition of the State Business Tax Climate Index released by the Tax Foundation at the beginning of October places Connecticut among the ten worst states. Our neighboring state, Massachusetts, formerly called “Taxachussetts, placed 25^th. Connecticut weighed in at 42^nd, number 9 on the list of the ten worst states.

The annual fiscal review of State Comptroller Kevin Lembo, generally a straight shooter, brings little solace.

The good news -- from the point of view of politicians soon up for election who fear that additional taxes might sink their ships – is that the state had closed its $20.5 fiscal year 2013 budget with a nifty surplus of $398.9 million. The bad news is that Connecticut’s current debt and liabilities gap is a gargantuan $46.5 billion, which amounts to about  $18,000 for every man, woman and child in the state. And of course the surplus is the result of a temporarily strong market fueled by high capital gains and estate tax revenue. Payroll tax revenue, an indicator of business growth, declined by 0.9 percent.

All these red flags point to an economically diminished and bleak future – unless and until the grown-ups take charge of Connecticut’s tax grubbing, high spending, crony capitalist government.

Far from being a solution to our economic woes, crony capitalism – in which Mr. Malloy and leaders in the General Assembly plunder the private economy of entrepreneurial capital they then bestow on favored companies – encourages polite bribery between tax dispensers and large corporations, while introducing toxic levels of moral uncertainty into a business-governmental relationship that should be even-handed and just. Crony capitalism tilts in favor of large, resource rich companies what U.S. Senator Dick Blumenthal might regard, if he thought about it, as the economic “even playing field.” It is the work of a day for large politically connected companies to use the agencies of government to drive healthy competition from the field.

One of the solutions to state beggary might be for states to stop begging federal taxpayers for bailouts. And economic conditions in Connecticut could be greatly improved by cutting spending for all, reducing taxes for all and disencumbering Connecticut of the regulatory bonds that tie Gulliver to the ground. Those are solutions that really would level the playing field. Unfortunately, the state has been moving in the opposite direction for more than 20 years, and incumbent Republicans, satisfied with a token resistance, have winked at the decline for as many years.

    

And Now, the Campaign

Almost immediately after Governor Dannel Malloy and Democrats in the General Assembly had put their budget to bed, a Hartford paper noted that however much lipstick Democrats put on the budget porker it was in many important respects still a pig.

Another media resource noted that while the governor had indicated he had been faithful to his earlier promise to hold the line on taxes – but not, tellingly, on spending – the new budget, Mr. Malloy’s second, placed new limits on tax credits, extended expiring taxes, boosted the gasoline tax 4 cents per gallon, drained from the transportation fund $120 million collected at the pumps during the last two years, depositing the money targeted for transportation needs into the general fund, resorted to $550 million worth of fund raids to plug holes in the budget, borrowed about two thirds of the $1.2 billion necessary to convert to a GAAP accounting system and shifted a little more than $6 billion of Medicaid spending from a constitutional capped budget so as to draw down an otherwise embarrassing deficit. 

And so the budget session ended -- in magic tricks of a kind once derided by Mr. Malloy and the Malloyalists.

On to the campaign.

The first campaign pitch of the season was delivered by Mr. Malloy at the close of the session. The closing session of the General Assembly usually ends with a love fest among incumbent legislators, both Democrats and Republicans, who fetch from it bragging rights useful to them in upcoming campaigns.

This year was different, frostier some have noted. Those who pay for the legislative bills may want to applaud the last day of the legislative session. Mark Twain, were he alive – and even dead he is livelier than most people in Connecticut who write about politicians – certainly would have reason to rejoice. It was Twain who said “No man's life, liberty, or property are safe while the legislature is in session.”

On the last day of the legislative session, the Bureau of Economic Analysis reported that Connecticut had come in dead last among the 50 states in economic growth, a measure of the combined total of goods, services and salaries, the state’s equivalent of the nation’s Gross Domestic Product (GDP). Connecticut’s Gross State Product (GSP) fell by 1 percent in both 2011 and 2012, the only state in the nation that had experienced such a dip as well as a painful downward revision from last year’s estimate of 2 percent growth.

Democrats pronounced their budget plan a success and loudly patted themselves on the back, brushing aside a report from the state’s non-partisan Office of Fiscal Analysis that had projected, only moments after the General Assembly adjourned, a $712 million gap in the first year of Connecticut’s new budget. Mr. Malloy, whose budgets have consistently been short by hundreds of millions of dollars, pointed out that the economy was not static but dynamic: “They're predicting deficits assuming that all conditions remain the same. I think what we've shown fairly broadly in this administration is that conditions don't remain the same. We're eliminating waste. We have numbers built in the budget that in fact do that."

Ah yes -- the numbers.

Comptroller Kevin Lembo this year submitted to the General Assembly a bill that would throw windows open on the numbers and expose to public view the hundreds of millions of dollars the state spends every year in economic assistance and tax credits putatively designed to promote economic development and job growth. His legislation, the Comptroller said, “would have established key transparency and open government measures related to these dollars.” Although Mr. Lembo’s sunshine bill survived the House, it died from inattention on the floor of the Senate, crushed by the forces of darkness in the General Assembly that prefer a gloaming in which numbers might more efficiently be fudged. Mr. Lembo, it should be mentioned, is the only Democrat in state government whose numbers have been consistently correct.

When legislative gate keepers Senate President Pro Tempore Donald Williams and Majority Leader Martin Looney were asked why they didn't call the bill for a vote, “Williams and Looney,” Jon Lender of the Hartford Courant reported, “mentioned a number of factors, including time, lack of an urgent need, and what they characterized as only lukewarm support by the office of Gov. Dannel P. Malloy.”

When politicians find they cannot control the course of events, they more strenuously seek to control the flow of information, the better to create politically palatable fictional narratives – sometimes called campaigns. In a state in which competing parties have been neutered, fictional campaign talking points are rarely effectively rebutted by a somnolent politically compromised media. Some few reporters in the state stand out as exceptions that prove this rule, but there are far too few of them.   

The state Republican Party enjoyed two brief bright moments of bipartisan conviviality a short time ago when Republican votes were needed to pass a gun restriction law. The two parties came together a second time when Mr. Malloy needed Republican assistance in plugging an ever recurring hole in his first budget during a special session. After this bright dot of bipartisan sunshine, both the governor and Democratic legislative leaders, brought down the now familiar iron curtain when, for the second time, Republicans were shooed out of the room during budget negotiations.

The doleful Bureau of Economic Analysis report is more than a report; it is a marker of the state’s destiny. And the state’s swollen budget is also a directional marker. Budget wise, the state has returned to 1991, the date at which a state income tax was implemented to put Connecticut on a firm and permanent economic footing. Because spending has tripled since that auspicious date, the foundation has given way. The state is progressing backwards. Our destiny points downward, the usual direction of a one party operation. Darkness, secrecy, shady backroom dealings and the politics of the shadows has always followed in the uncontested rut of the one party state.

Malloy, The Budget And The Pinocchio Test

On budget matters, the governor proposes and the legislature disposes. Connecticut’s General Assembly has in the past been disposed to tinker with budgets presented by the state’s chief executive.  No one knows precisely what the Democratic dominated General Assembly will do to a budget that has been etch a sketched by Governor Dannel Malloy and Democratic leaders in the General Assembly.

Once again this fiscal year, Mr. Malloy and Democratic legislative leaders have stiffed Republicans on budget matters. During Mr. Malloy’s first budget negotiations, Republican leaders were shooed out of the room so they might not interfere with delicate negotiations then underway between Mr. Malloy’s agents and union leaders representing SEBAC, the state union conglomerate authorized to negotiate contracts with the governor. On that occasion, Democratic leaders in the General Assembly pre-approved a budget submitted to them by Mr. Malloy and invested him with plenipotentiary powers to make whatever adjustments SEBAC, Connecticut’s fourth branch of government, and the governor thought advisable.

The budget was batted around between Mr. Malloy’s Malloyalists and union leaders. After a few bloody rounds, a budget sprang forth about which Edith Prague, a union friendly state senator, said that union leaders would be crazy to reject it. It was rejected by the union crazies, more negotiations ensued, and finally a budget was produced that, Mr. Malloy said, was balanced , contained no gimmicks, was GAAP compliant and “fair share” observant.

Mr. Malloy’s first budget, heavily freighted with the largest tax increase in state history, tilted several times since it had been extruded, sausage-like, from the Democratic dominated General Assembly. There are some number crunchers – though none among the Malloyalist crew, save Comptroller Kevin Lembo, who sometimes demurrers – who doubt that Mr. Malloy’s first budget ever was in balance.

Now comes Mr. Malloy’s second budget – and how fares it?

So far, the second budget appears to be a deja vu all over again repeat of the first.

Republicans – called upon by the governor to iron out in a special session a few deficit wrinkles, a love fest praised by both Mr. Malloy and Republican leaders as a show of non-partisanship the national government would do well to copy – once again have been shown the door.

A one party state like Connecticut does not need the budget input of a bystander party. And never mind that the Connecticut Supreme Court recently ruled that Republicans should command the top line on the ballot in future elections because Mr. Malloy’s party garnered fewer votes than the Republican Party in the gubernatorial election; it was THAT close, Mr. Malloy winning the election because of votes cast by the putatively independent  Working Families Party.

Every time Mr. Malloy failed to include Republicans in his budget negotiations he disenfranchised the majority of Republican and Democratic Party voters who cast their ballots in his gubernatorial election. This budget year, Mr. Malloy – who twice refused to include Republicans in his budget deliberations – cited Republicans in the General Assembly for failing to offer a shadow budget. Chutzpah, thy name is Malloy.

Mr. Malloy’s budget outline will be presented to the General Assembly, which likely will tinker with the product in an attempt to satisfy union dependent Democratic members in the legislature.

Mr. Malloy recommended his budget to the Democratic dominated General Assembly -- and to the general public -- with his chest expanding to incoming Republican rhetorical bullets: “The bottom line is we will not increase taxes or create any new taxes. The budget will be in balance and will be GAAP-compliant.”

A story in CTMirror added a few cautious “buts” to Mr. Malloy’s brag.

The Malloy budget would not “increase taxes or create any new taxes” in keeping with a previous Malloy pledge that followed the imposition of the largest tax increase in Connecticut history. But “…it also would extend some controversial taxes on businesses and power plants that had been set to expire next year." And but... "It also implements one of the largest tax hikes on gasoline and other fuels in state history on July 1 -- an increase approved in 2005 -- while diverting all of the proceeds to non-transportation programs.” And but “…it also employs a controversial new interpretation of Medicaid budgeting that effectively would remove more than $1 billion from under the constitutional spending cap over the next two fiscal years. The affected Medicaid programs are paid for up-front with state dollars, but all costs are reimbursed with federal aid.”

Mr. Malloy’s budget raises spending, raises taxes and is over reliant on federal reimbursements from an Obamacare that has in it more mirrors and trapdoors than a funhouse. Obamacare recently has met a stiff resistance from union chiefs who fear that union membership will be reduced after the very expensive Obamacare proposition compromises union offered health plans. No word yet from SEBAC as to whether they will join their brothers on the union line who fear that Obamacare will reduce both union membership and dues.

Bottom line: Spending in Connecticut will increase under its present union reliant one party state. And since taxation follows in the rut of spending, taxes in the future will also increase. Neutered legislative Republicans are simply too cowardly to place exorbitant spending rather than tax increases at the center of their assault against a runaway progressivism -- because they too reap the political fruits of heedless spending.

Walker In Connecticut

Republicans this year asked Governor Scott Walker of Wisconsin, much maligned by union folk, to give the keynote address at the Prescott Bush Awards dinner in Stamford.

Mr. Walker is a grown-up, so his address was low key, interspersed with amusing vignettes. There was very little coverage of Mr. Walker’s remarks in Connecticut’s media. Most of the media accounts went for the color and passed over the discomforting  substance.

Unions were protesting outside the building, and someone was thoughtful enough to bring along the usual protest props. A photograph of one protesting group shows several union workers wearing cardboard cutout faces of the Koch brothers pulling puppet strings attached to another union worker wearing a Walker face. There are pictures galore in the Greenwich Times report: of Republican Senate leader John McKinney, who was given the Prescott Bush award this year; of Mr. Walker; of prominent Republicans in the state and of Linda McMahon, always good for a line or two in a lede story.

But one searches in vain for comprehensive coverage of Mr. Walker’s address and finds just a few scattered references here and there, studding the stories like glittering political sequins.

When readers of newspapers in the Lincoln era wanted to know what two major politicians debating each other for a Senate seat in Illinois actually said during their debates, they had only to turn to their newspapers to find there the transcribed speeches of Abe Lincoln and Steven Douglas. Republican papers polished the Lincoln oratory, and Democratic papers polished the apple for Douglas. Those days are gone, and with them a good amount of newspaper credibility – not to mention readers.

What precisely did Mr. Walker say to Republicans at the Prescott Bush Dinner?

Ameriborn News TV put up the speech here.  And so while Mr. Walker’s address is accessible, the substance of the address has not been sufficiently reported in Connecticut’s print media.

Republicans, Mr. Walker said to the sea of Republican faces in his audience, have reason to be optimistic. Republicans now control governor’s offices in 30 states. This was not always the case: “A lot of those states in 2010 were pretty blue. In fact, in my case, four years ago when I thought about running for governor and announced in April of 2009, everything in our state was controlled by Democrats: both Houses of the legislature, the governor, the lieutenant governor, both U.S. Senator’s and the majority members of the House of representatives.”

Surely Republicans in the audience, if not union members in the streets outside, could well appreciate the parallel circumstances. Connecticut has been drifting in the direction of a one party state for years, a fait accompli celebrated by Democrats four years ago when then Mayor of Stamford Dan Malloy -- Dannel Malloy, since becoming governor -- won his contest against Republican contender Tom Foley, who lost to Mr. Malloy by the thinnest of margins. Currently there are 52 Republicans and 99 Democrats in the State House and 14 Republicans and 22 Democrats in the State Senate. Democrats have controlled the Senate since 1996 and the House since 1986. Following Mr. Malloy’s victory, Democrats captured all the political marbles. As a practical political matter, this meant that Democrats in the state no longer needed to involve Republicans in their deliberations.

Upon assuming office, Mr. Malloy felt confident enough to shoo Republican leaders in the General Assembly out of the room when he and Majority Democrats were cobbling together a budget satisfactory to SEBAC, a coalition of unions authorized to negotiate contracts with the governor. Marching under the banner of “shared sacrifice,” Mr. Malloy imposed on the state the largest tax increase in its history. This increase followed the second largest tax increase in state history, the Lowell Weicker income tax of 1991. After having given a leg up to Mr. Malloy during a special session of the General Assembly called to address the state’s deepening spending problems, Republicans once again, unsurprisingly, find themselves in Coventry on current budget discussions. One party states do not need bystander parties to govern.

The Malloy-SEBAC budget was never in balance. Even worse, negotiated incremental raises in salaries and benefits for union worker amounting to about 9 percent far into the future tied the governor’s hands behind his back in future budget negotiations. His school initiatives were opposed by teacher unions that benefited from his largess, and red ink, like some impish devil, kept popping out of the budget woodwork every time Comptroller Kevin Lembo screwed the jewelers loop into his eye.

Wisconsin and Connecticut are trains passing each other in the night in different directions. Mr. Walker thought Connecticut Republicans could learn important lessons from his own bruising but ultimately successful campaign and political strategy.

“Today,” Mr. Walker continued, “everything’s flipped. Both my legislative houses are Republican. The governor, one of the U.S. Senate seats and the majority seats in the House of Representatives are Republican.”

This political miracle was received with exuberant applause from Republicans in the audience. Wisconsin showcased a breathtaking change of events. The union members prowling and scowling outside the building for the benefit of news photographers hungry for color have not yet recovered from the whiplash. John Olsten, the President of the Connecticut AFL-CIO, groused, "He [Mr. Walker] surely is not what you would call a fit in the state of Connecticut.” Nor, come to think of it, are any of few Walker-like Republicans in the General Assembly; such would seem to be the message from both leading Democrats and the governor, who have successfully rendered politically impotent any Republican presumptuous enough to unfurl Mr. Malloy’s “fair share” flag by cutting spending.

Such was the case in Wisconsin before the advent of Mr. Walker. Almost in the twinkling of an eye, the stage set, the actors and the political narrative all changed.

The Interesting Times of Dannel Malloy

Connecticut no longer can produce sufficient revenues necessary to pay for its improvident spending. Its revenue engines, after years of uncontrolled acceleration, are sputtering and wheezing, businesses are looking for the exit, and the ONLY remaining option – assuming the state is not interested in declaring bankruptcy as its itch to spend dooms all prospects of recovery – is real spending reform.

Real reform would involve identifying spending drivers and offering solutions that cut spending permanently. Temporary and half solutions will not do. And spending reform, always painful, cannot be accomplished in the absence of a reform vanguard made up of courageous politicians and tribunes of the people who are willing to press needed spending reforms in the face of a strenuous opposition from entrenched interests.

One of the courageous politicians very well could be Governor Dannel Malloy. When Alexander Hamilton was pressing in the Federalist Papers for “energy in the executive,” he might well have been thinking of someone like Mr. Malloy.

Mr. Hamilton, arguing for a unitary executive and against an executive department in which the chief executive should render decisions in concert with a council, put it this way:“Energy in the executive is a leading character in the definition of good government. It is essential to the protection of the community against foreign attacks: It is not less essential to the steady administration of the laws, to the protection of property against those irregular and high handed combinations, which sometimes interrupt the ordinary course of justice, to the security of liberty.”

By “high handed combinations,” Mr. Hamilton was pointing to the special interests of his day, those suckers on the Republic who know well how to turn representative assemblies to their own purposes. The expression might well refer in our day to business cartels or union interests that easily could, by cuddling with powerful politicians, interrupt “the ordinary course of justice” and pervert “the security of liberty.” Pointedly, the purpose of“energy in the executive” is, in Hamilton’s view, to secure the inborn liberty of the individual “against the enterprises and assaults of ambition, of faction and of anarchy.” And no one reading Mr. Hamilton can fail to notice that the“high handed combinations” that deprive citizens of their liberty do so by a steady assault on laws protecting PROPERTY.

Mr. Malloy, everyone will agree, certainly is an energetic executive. Whether he has been captured by special interests – either the progressive gravitational pull of his party or powerful union interests or political campaign contributors or large corporations he has favored with tax money – is a matter that may be clarified after Mr. Malloy’s second budget is put to bed.

But first, Mr. Malloy’s first budget is in need of repair. Time and circumstances have continually blown large deficit holes in Mr. Malloy’s Plan B budget. The latest hole in the budget bucket amounts to $415 million, according to estimates provided by state Comptroller Kevin Lembo.

The correlation of forces in the General Assembly is such that Democrats – used to operating on the premise that every deficit presents an opportunity to jack up taxes -- will not be receptive to spending cuts; and Democrats, by their sheer numbers, control the business of the General Assembly. Indeed, the Democratic dominated General Assembly invested Mr. Malloy with extraordinary powers when his first budget, Plan A, ran aground on the Gibraltar of union opposition: Legislative Democrats, abandoning their constitutional responsibility to affirm final budgets, approved Mr. Malloy’s larval Plan A budget, rejected by the unions in budget negotiations, and pre-approved without legislative review the governor’s post union-negotiated Plan B budget.

Mr. Malloy’s first budget included the largest tax increase in state history, phantom savings, and a signed on the bottom line contract with unions that assured to the Democrats’ most pampered special interest three percent raises and increased benefits nine years into the future, a savings“hand cuff” that will hobble the governor’s negotiations with unions during his upcoming budget negotiations.

Hanging over the special session called to resolve the $415 deficit is Mr. Malloy’s vigorous, often repeated pledge that he will not resort to tax increases in backfilling Plan B’s deficit.

Given the General Assembly’s temperamental and ideological indisposition towards spending cuts, Mr. Malloy will need Republican support in the Assembly to secure even minimal savings to rebalance, for the umpteenth time, his first defective Plan B budget.

Republican leaders in the Assembly – effectively shut out of budget negotiations in 2011 – appear to be game, and there is no indication thus far that Mr. Malloy, having secured Republican support without which he will be unable to make cuts necessary to balance his first budget, will NOT once again stiff Republicans and shoo them out of the room when the time rolls around to present to the Democratic General Assembly a second budget that may, like Mr. Malloy’s first budget, rely heavily on tax increases for a deceptive“balance.”

Republicans, Democrats and tax payers in Connecticut live, as the Chinese philosopher says, not without a shutter, “in interesting times.”

Ideological Prisoners

Democrats, far more than Republicans in Connecticut, have shown themselves to be prisoners of their ideological convictions.

Some of these persuasions are mentioned in a recent column by Chris Powell, Managing Editor of the Journal Inquirer and a political columnist for the paper, who is often mistaken by politicians he has gored over the years as a conservative, an error Linda McMahon is not likely to make.

Mr. Powell begins his column by noting Governor Malloy’s colossal “‘shortfall’ of $365 million in the current year's state budget,”attributed by the governor to a poorly performing economy and increases in the Medicaid program, also springs from other more controllable causes.

Mr. Malloy has insisted that the state is suffering from a“shortfall” rather than a deficit. The chief difference between a “shortfall”and a “deficit” is this: A “shortfall” is a minor hole in the budget bucket caused by others, principally unforeseen circumstances; a “deficit” is a major hole in a budget that right thinking people attribute to imprudent policies.

Mr. Powell, who has an addiction for calling things by their right names, is very polite about Malloy’s rhetorical evasions. Hey, recessions happen. However, “the Malloy administration has never tried hard to economize. It just reduced the state budget's rate of increase a little. Indeed, the Malloy administration is most notable for a great expansion of the scope of state government, and its expansion of eligibility for Medicaid is just part of it.”

And the rest of the story?

It was the Malloy administration that “created a state version of the federal earned-income tax credit, cash payments to people who don't earn enough to pay state income tax,” and also “increased state grants to municipal education, which are mainly just subsidies for raises for teacher unions,” and also “created a program of corporate welfare dressed up as economic development, paying hundreds of millions of dollars to profitable businesses to stay or expand in Connecticut, including $115 million for the biggest hedge fund to relocate a few miles from Westport to Stamford, the governor's hometown,”and also undertook imprudent and “expensive public works projects for which there was no demand and little need, the bus highway between Hartford and New Britain and the high-speed railroad between New Haven and Springfield.”

And perhaps most strikingly, “The administration failed to obtain substantial concessions from the state employee unions [during its first budget], which gave up some but not all raises and received a four-year guarantee of job security. Amid the record tax increases he imposed, the governor described the union concessions as ‘shared sacrifice,’ but the taxpayers sacrificed far more than the unions did and municipal employee unions lost nothing -- and now the state employees will be exempt from any sacrifice at all for a few years no matter how much worse the economy gets.”

Mr. Malloy has pledged not to raise taxes or rely on layoffs to cover the deficit projected by State Comptroller Kevin Lembo. In view of the automatic salary and benefit raises for unionized state workers plugged into his first budget, the options available to the governor and the legislature to close the state deficit in a special session are varied: He could, as Mr. Powell points out, reduce the state income tax credit against residential property taxes; he might reduce educational financial grants, thus passing along to municipalities the state’s growing deficit and forcing towns to increase taxes for their employees, mostly teachers. No one expects the governor, who has appeared along with Lieutenant Governor Nancy Wyman on union picket lines, to give his internal assent to serious sacrifices made by union affiliated workers.

Now, the political theory driving this mad method revolves around a highly exaggerated and fantastical notion of the power and efficiency of government. No one who has a realistic operational understanding of government and the private economy would expect Mr. Malloy, or for that matter Mr. Obama, to micromanage free markets, which are far more efficient allocators of resources than government bureaucracies. Mr. Malloy’s “First Five” program is rooted in the perception that the governor can more reasonably direct the economic fate of Connecticut than the once invisible hand of the free market. Governments that seek to do everything – Mr. Malloy has several times said that he wishes to“re-invent” Connecticut -- do nothing well, which is why in a constitutional democracy the perimeters and powers of the three branches of government are carefully prescribed.

The real problem with defective ideologies is that they serve as blinders, preventing a view of reality that will bite your nose the longer you avoid recognizing it. Reality is a snarling tiger. Times of economic stress require maintenance chief executives, prudent cost conscious legislatures and independent appellate courts faithful to their mission, which includes preventing the executive and legislative departments from overrunning their constitutional banks.

Whether Connecticut has – or indeed wants – a government of prudent and modest means is a matter finally to be decided by what the founders used to call a “virtuous” public. When Ben Franklin emerged from the Constitutional Convention that had imposed a form on the government of the fledgling United States, he was asked by a woman what kind of government he had given us. “A Republic, madam,” said Franklin, “if you can keep it.” Implicit in Franklin’s reply is the unsettling notion that future less vigorous generations may not be able to KEEP the Republic at all.

The New Budget Gimmickry

It’s extremely important for politicians to hide horrors before elections. One shudders to think how voting in Connecticut for the General Assembly might have changed if Connecticut’s eminently dupable citizens had known before they entered the polling booths that their state was running a deficit of $365-million.

The admission that Connecticut was running a deficit large enough to require Governor Dannel Malloy to submit a deficit mitigation plan to the General Assembly came nine days after votes were tallied in Connecticut. State law requires the governor to submit to the General Assembly a deficit mitigation plan whenever a budget deficit reaches 1 percent of general fund spending.

State statute requires Mr. Malloy to submit to State Comptroller Kevin Lembo a deficit mitigation plan. After Mr. Lembo certifies the deficit on December 1, the governor is required to present his plan to the Democratic dominated General Assembly.

Members of the General Assembly no doubt were –SHOCKED!!! -- to hear the governor’s budget chief Ben Barnes, Secretary of the State of Connecticut Office of Policy and Management (OPM), tell the members of the Appropriations Committee on November 14 that the deficit was indeed a startling $365-million.

Mr. Lembo had an intimation, possibly before the elections had been concluded, that the deficit was big. But this big? How could anyone know?

Mr. Barnes assured the committee that he had not dozed off before the election vote tally. He was fully awake: “Please know that my office has already begun work on this plan, and while I’m not prepared today to address any elements that might or might not be included in that plan, you can expect that we will announce specifics as soon as possible.”

The governor, who in the past had accused his Republican predecessors of engaging in budget gimmickry, was surprised, we are to suppose, by the size of the deficit, a good portion of which, $260 million, was attributed by Mr. Barnes to an unanticipated increase in the Medicaid caseload. “The enacted budget,” Mr. Barnes told the members of the Appropriations Committee, “did not assume the current caseload of 83,827 would be reached until August 2013,” Barnes said.

But of course: Budget figures are only as good as the assumptions made by those compiling budgets. Who knew?

If there is a single reporter in the state who did not suspect Connecticut’s budget was hugely out of whack before Mr. Barnes' belated admission on Wednesday, he or she should be fired by their Managing Editors.

Before Mr. Barnes' reluctant and tardy admission, Mr. Malloy was corralled by a reporter and asked to dilate on what precisely he planned to cut in order to bring his budget into balance.

These are decisions, Mr. Malloy said, yet to be made. The governor, the architect of the largest tax increase in state history, had told reporters days earlier – three times in a single interview no less – that he would not raise taxes to balance his budget, recalling earlier professions by other chief executives, the most memorable of which was former President George H. W. Bush’s pledge: “Read my lips -- no new taxes.”

“What would really be nice,” the governor confided to the reporters, “is if they would settle some of these issues in Washington so that the budget I present in February actually builds in whatever changes” are made.

Asked the same question – what was to be cut in the coming budget -- Mr. Barnes offered coyly, “Government spending. State government spending. That’s about as specific as I’m going to get ... You act as if I have in my mind a full list of what we’re going to do and I don’t yet. We’re working hard to do that. Until we get through that process and work with the governor and make sure we’re right on what the deficit is going to be, it’s way (sic) premature for me to discuss what any kind of plan in the future’s going to be.”

However dark the deficit cloud, a ray of sunshine, one CTNewsJunkie reporter noted, pierced through: "Malloy and Barnes both expressed hope that the state may benefit from a one-time revenue spike generated by people selling off capital gains this year in an effort to avoid new federal taxes next year (emphasis mine)."

To put the matter clearly, Mr. Barnes and Mr. Malloy hoped to receive a mini-bonanza from the quarter millionaires taxed by a newly re-elected President Barack Obama, who claims to have received from the people a mandate to increase the capital gains tax on business producers. The business producers are expected by Mr. Barnes and Mr. Malloy to sell off their capital gains to avoid paying Mr. Obama’s onerous anti-entrepreneurial tax, but Connecticut will reap additional revenues from the selloff that then may be applied to reduce the state’s equally burdensome $365-million deficit.

This budgetary persiflage is, of course, a one time, temporary patch – precisely the sort of “fix” Mr. Malloy charged against his Republican gubernatorial predecessors.

And after the fix?

Comes yet another deluge of taxes –either higher state taxes imposed by Mr. Malloy or pass-alongs, cuts in state revenue sharing directed at municipalities which, of course, will require increased municipal taxes to plug state induced gaps in municipal budgets.

Or – a modest suggestion from the vastly outnumbered Republican loyal opposition in the General Assembly -- the governor can just cut spending like other prudent cost conscious governors, many of whom are Republicans.

Connecticut s Fiscal Cliff

Newly re-elected U.S. Representative Jim Himes, a moderate Democrat operating out of Connecticut’s 4^th District, has said concerning the nation’s so called fiscal cliff, “Washington understands how severe the consequences of the fiscal cliff are. When I saw House Speaker (John) Boehner speak two days ago, I thought he was conciliatory and traced the outlines of a deal."

Of course, the perceived severity of fiscal cliffs depends to some extent on one’s political vulnerability. Not all severity is created equal, and Democrats ensconced in Connecticut’s safe districts, such as U.S. Representatives John Larson and Rosa DeLauro, are apt to confront the fiscal cliff with less trepidation than Mr. Himes.

A recent study conducted by the Defense Technology Initiative should serve the members of Connecticut’s all Democratic Congressional delegation as a splash of cold water in the face. The study presents a sobering picture of Connecticut’s own fiscal cliff that should give vertigo to all freethinking and rational politicians in the state.

We learn that the amount of defense contracting in Connecticut has increased by 51 percent since 2003. The state’s defense contracting represents 5.1 percent of its economic output, not a negligible figure.

Should a lack of agreement between President Barack Obama, Democrats who control the U.S. Senate and Republicans who control the U.S. House trigger the automatic cuts implanted in the Budget Control Act of 2011, the effect on Connecticut would be severe, resulting in a loss of 36,000 to 50,000 jobs at a time when Connecticut is losing jobs to other states that are more business friendly.

The state treasury, presently more than $300 million in arrears according to a story in CTMirror or $690 million to $1 billion for each of the next two years according to a Bristol Today story, would also be hard hit as the state tumbles off the national fiscal cliff, since the defense industry contributes about $860 million towards Governor Dannel Malloy’s yet unbalanced budget. No one seems to know whether Malloy’s budget has EVER been in balance. According to Comptroller Kevin Lembo’s most recent report, the state has recovered only “31,400 (just over one quarter) of the 117,500 total nonfarm jobs lost in the March 2008 - February 2010 recessionary downturn.”Of the funds received by Connecticut from the federal government and parceled out to contractors, approximately $9.5 billion is spent on customary defense products: Virginia Class submarines, Black Hawk Helicopters, jet engines, turbines, other military components and the like. The spin-off economic activity generated by the contracts is even larger, about $22.4 billion, which affects about 101,000 jobs, according to the Defense Technology Initiative report.

Of the funds received by Connecticut from the federal government and parceled out to contractors, approximately $9.5 billion is spent on customary defense products: Virginia Class submarines, Black Hawk Helicopters, jet engines, turbines, other military components and the like. The spin-off economic activity generated by the contracts is even larger, about $22.4 billion, which affects about 101,000 jobs, according to the Defense Technology Initiative report.

Of course, the depth of the national “fiscal cliff” may be reduced if the president, the Democratic controlled U.S. Senate and the Republican controlled U.S. House are able to reach a satisfactory compromise on the self-elapsing Bush era tax cuts, otherwise known as tax increases.

But even assuming an end to the game of chicken, there must be defense cuts. Obama– who won the election -- needs the defense cuts to apply as a continuing payment on the Democrat’s new and expensive social programs, primarily Obamacare. And Connecticut’s all Democratic congressional delegation, having pledged its troth to Obama’s vision of the future in recently concluded state campaigns, is hardly in a position to offer at the alter a strenuous opposition to either Obama’s proposed defense cuts or increased taxes on quarter-millionaires or the increases in spending that will be plugged into a future Obama budget – presuming the president surprises everyone and offers a passable budget in his second term.

Unfortunately, Connecticut’s congressional delegation may not be ideally positioned to rescue the state from severe defense cuts. Its two U.S. Senators are relatively new arrivals and do not have enough political chits in the game – unlike departed U.S. Senator Chris Dodd and the departing U.S. Senator Joe Lieberman – to affect spending priorities in their state’s favor; and Connecticut’s House members will be joining an assembly controlled by Republicans averse to a crippling regulatory environment and increased business taxes that may, they predict, lead to a double dip recession and adversely impact an agonizingly slow recovery.

All of which leaves Connecticut in limbo, not to be confused with Lembo, who appears to be able to forecast deficits much more ably than the Malloyalists surrounding the governor, or indeed the governor himself – who recently promised no fewer than three times in one media availability that there will be no new tax increases in the coming budget – a dubious cry that recalls George H. W. Bush’s no new tax pledge and former Governor and Spendthrift Lowell “The Maverick” Weicker’s prophetic insistence that a state income tax would incinerate to Connecticut’s economic infrastructure .

Is He Rell Yet?

For General Assembly Democrats determined to frustrate Governor Dannel Malloy’s education reform plan, the most recent projected budget deficits came just in time. Ben Barnes, Mr. Malloy’s money cruncher at the Office of Policy Management (OPM), and Comptroller Kevin Lembo, after dickering over the red figures, have agreed that the budget is in deficit by about $200 million; the real deficit is probably closer top $300 million.

Mr. Malloy’s education reform plan includes features that have not earned him many friends among teachers, union officials and Jonathan Pelto.

The Malloy plan calls for additional spending on high performing charter schools, financing that in a shrinking economy progressive Democrats in the General Assembly yoked at the knees to union interests insist might better be spent padding the salaries of unionized public school workers. The governor’s reform initiative also seeks to connect hiring and firing to pedagogical performance; and, in the process attempting to facilitate improvement in low performing schools, the governor has touched and been jolted by the usual electrically charged third rail of Connecticut politics – teacher tenure. Mr. Malloy’s ambition to tie tenure to job performance has made hairs stand up on the necks of union vote-dependent Democrats in the General Assembly.

Legislation gate keepers within the relevant committees were determined to ditch the Malloy education reforms as untimely and expensive.

During the unlamented administrations of former Republican Governors Jodi Rell and John Rowland, Democratic committee chairmen in the General Assembly successfully resisted efforts on the part of “firewall” governors to limit spending. With the ascendancy of Mr. Malloy, the first Democratic governor in more than 20 years, chronic spenders in the legislature hoped that taxes would be increased, thus removing from progressive Democrats in the General Assembly a bothersome pressure to reduce spending. They were not disappointed: Mr. Malloy astonished even former Maverick Governor Lowell Weicker, father of state income tax, by levying on recession ravaged nutmeggers the largest tax increase in state history.

“Mine’s bigger than yours,” Mr. Malloy easily could have boasted to Mr. Weicker. Where in heaven’s name, Mr. Weicker wondered a couple of years passed, did all the surpluses generated by his income tax go?

As it happened, neither Mr. Weicker nor Mr. Rowland nor Mrs. Rell were fully functioning firewalls. Had the gubernatorial firewalls prevented spending, the bottom line of Connecticut’s budget would not have increased threefold since the last pre-income tax budget of former Governor William O’Neill. It became the fashion during the post-O’Neill period for left of center political commentators and politicians in the state to lament that Connecticut was not suffering from a spending addiction; the state, it was agreed by all, had a “revenue problem.” That fashion has not gone out of style in the Malloy administration which, to put the matter plainly, is not interested in spending cuts that bleed.

Waiting-for-Godot progressive Democrats still believe the tide they have lowered by means of punishing regulations and high taxes will lift their boats – at some magical moment in the future. Mr. Barns attributes the current deficit to lower than usual tax receipts, most certainly the result of the diminishing returns all the governor’s men should attribute to high taxes, burdensome regulations and improvident spending. Mr. Malloy, with a bow to previous sleight of hand governors he has vigorously spanked in the past, proposed this year to patch the most recent deficit by shifting funds. Asked to defend the administration’s latest budget shifting gimmickry, the governor – Wait for it! – described the state’s plunge into economic idiocy as “basically a revenue problem” certain to disappear when the state's economic fortunes improve, sometime after the governor is out-rigged with a magic wand.

Mr. Malloy has been no more successful than his predecessors in controlling spending. But he may well be the first Democratic governor in living memory to have been rebuked by a spending addicted Democratic General Assembly for having proposed educational spending increases that are untimely and expensive.

Not to dash any utopian dreams, but it would be rash to suppose that this objection by tax devouring progressives in the General Assembly signals a disposition among dominant Democrats to cut spending. It is merely a convenient cloaking device utilized by committee leaders to abort educational reforms that impact union interests leading Democrats in the General Assembly have sworn to defend with their political lives, their sacred honor and our money – for votes.

Is The Mayor Of East Haven A Disabled Idiot

The following note is taken directly from the minutes of a meeting of the State Employees Retirement Commission, an agency under the direction of Comptroller Kevin Lembo:

“I have a matter in the MERS [Municipal Employees Retirement Services] Unit that I would like to bring to your attention. A member of the system was receiving a disability retirement. In November he was sworn in as the Mayor of East Haven. At that time we provided him with a letter advising him that it was necessary to terminate his disability retirement benefit effective November 30, 2011 related to two provisions for MERS. First, under the rehired retiree provisions and second under the disability retirement provisions that to be eligible for a disability retirement you must continue to remain disabled. The member is appealing the decision to terminate his disability retirement benefits.”

The unnamed member in the MERS unit “sworn in as the Mayor of East Haven” is Joseph A. Maturo Jr., who recently came under heavy fire as a possible racist for having ineptly answered a question put to him by a New York TV Reporter.

Following an announcement that the FBI had arrested police officers in East Haven for unjustly hassling Latinos, the reporter asked the mayor, “What do you plan to do for Latinos tonight?”

The mayor responded that he might or might not have some tacos for supper that night. And then realizing he had dug himself a bottomless pit, clumsily attempted a tortuous explanation, jumped into the hole and covered himself in infamy.

The mayor apologized, acknowledged that his was a shallow answer to a shallow question – and what have you done TONIGHT for Latinos? -- said he was fatigued at the end of a long day, went to bed and rose up in the morning a roundly denounced bonafide racist idiot.

From snow swept Davos, there to commingle with the one per-centers denounced by the Occupy Wall-Streeter Movement, Governor Dannel Malloy got in a pretty good lick:

"The comments by East Haven Mayor Joseph Maturo are repugnant. They represent either a horrible lack of judgment or worse, an underlying insensitivity to our Latino community that is unacceptable.”

If Mr. Maturo’s appeal of the judgment already made by the State Employees Retirement Commission fails, he stands to lose $43,184.76-a-year in disability payments for back injuries he sustained on the job as an East Haven firefighter.

Continuing to serve as mayor of East Haven, it would appear, would not only stress Mr. Maturo’s fraying nerves; it might strain his bank account as well.

The betting among the large Italian community in East Haven is that Mr. Maturo is not so much the idiot that he can’t do simple math.

No Tax Increases, No Increase In Progressivism

Governor Dannel Malloy, busying himself with re-inventing Connecticut, has now formed a task force to review and assess the effectiveness of the state’s business tax credits, according to a recent press release.

Executive Order 17 “will create a nine member Governor’s Business Tax Policy Review Taskforce. The taskforce’s mission will be to review the state’s business tax policies to ensure that Connecticut is getting the maximum return on its investments, with an eye toward policies that will make the state even more competitive for future job growth.”

“Over the last year,” Mr. Malloy said, “we’ve made every effort to reinvent our state, so that we could turn around twenty years of job loss and spur our economy. From ‘First Five’ to the bipartisan jobs package, we sent a message across the country and around the world that Connecticut is open for business. This taskforce will make sure that Connecticut is getting a solid return on those investments by closely examining ways to reduce costs, improve efficiency, and ensure that taxpayer dollars are being used to create and retain good, permanent jobs for our workforce. It will also be charged with finding policies that will make our state even more competitive so that we can pull even more jobs into our state.”

In tandem with Mr. Malloy, Comptroller Kevin Lembo let loose his own press release:

“I am delighted that the Governor agrees on the importance of evaluating tax expenditures. Whether through existing law or through the Governor’s new order, I look forward to an open and impartial conversation and analysis of this important portion of our state budget.

“There are more than a half billion state tax expenditures on the books – and we need to confirm whether they’re working. With so many dollars at stake, particularly concerning job-creation initiatives, they must be monitored closely to ensure success.”

Mr. Lembo suggested that the Business Tax Credit and Policy Review Committee, dormant since its 2005, should be raised from the dead “to study and evaluate existing credits against the corporation business tax and to make recommendations on changes or modifications necessary where tax policy …is not providing a measurable benefit sufficient to justify any revenue loss to the state.”

There is no indication in the press releases that the Governor’s Business Tax Policy Review Taskforce will be tasked with measuring the measurable benefit of the governor’s First Five program and its effect upon tax receipts that might better be put to use elsewhere.


Reading between the lines of these mystery laden media releases yields the following possibilities.

1) Net taxes once again will increase, this time by pruning unnecessary tax credits, i.e. those in Mr. Lembo’s view that do not prove “sufficient to justify any revenue loss to the state.” The operative premise of this view is that taxes attributable to tax credits not collected by the state already belong to the state; businesses presently using such forgiven taxes for other purposes – for instance, to pay the salaries of their workers – are simply renting the tax money from a once and no longer generous government.

2) Net tax receipts will not increase because Mr. Malloy, serious about resetting the relationship between business and state, will abandon all tax credits and, at the same time, reduce business taxes proportionally, thus sharing the benefit of lower business costs with every business in the state, as well as every business outside the state drawn to Connecticut by a promise of equal and fair dealing.

The first choice is the path to ruin. All business taxes are passed on to consumers in the form of higher prices. Small businesses, working within a very tight profit margin, cannot afford to increase costs without making economies elsewhere, usually by reducing the price of labor. This is done by firing workers and increasing joblessness.

The second choice will not be the first choice of Connecticut’s ruling class because, in the short term, a reform that does not increase taxes deprives progressive politicians of the walking around money they need to shore up the support necessary for reelection. And in the long run, we’re all dead.

Politics as usual suggests that Mr. Malloy and Mr. Lembo, after laundering the responsibility for their choices through nine member Governor’s Business Tax Policy Review Taskforce will settle upon number 1. No taxes, no progressivism.

The Surplus State

Zach Janowski, the Yankee Institute investigative reporter singled out by incompetent SEBAC leaders in their baseless complaint to the attorney general’s office as a “so called” investigative reporter, has disclosed in his latest report that Connecticut has collected “$1.1 billion more taxes than expected last fiscal year, the same day that Gov. Dannel Malloy’s $900 million retroactive income tax increase went into effect.”

Although the Malloy administration failed to reach by some $400 million the $2 billion in cost savings measures it initially had demanded from SEBAC, the coalition of state unions authorized to negotiate contracts with the administration, the tax increases the administration imposed upon nearly everyone in the state as a part of its “shared sacrifice” effort has, perhaps unsurprisingly, yielded an “unexpected” surplus.

The Malloy surplus, made possible in part by an ex post facto income tax charge, should not astonish those commentators in the state who have previously reported on state budgets. Surpluses were common in the budget years following the imposition of the Lowell P. Weicker Jr. income tax.

The predictable announcements of surpluses during these years of plenty followed an almost religiously observed rite, beginning with an declaration of a possible deficit, followed by an agonizing appraisal of the likely damage done to Connecticut’s fragile social services net should the legislature be so unwise as to insure savings necessary to balance their budget through prudent cuts, followed by a last minute announcement that an unanticipated surplus had magically materialized, obviating the need for cuts and permitting legislators to return to their districts and there proceed to hand out state distributed goodies before their next election.

This budget year, the usual dance varied, but not much, from the usual formula.

Mr. Malloy, the first Democratic governor in more than 20 years, had been wafted into office on a promise that as governor he would not resort to the same discreditable budget persiflage as his predecessors – two Republican governors and another, Mr. Weicker, of indeterminate party status -- all of whom had produces surpluses to avoid raising taxes or cutting costs.

GAAP would be instituted, Mr. Malloy vowed during his campaign, to prevent wily politicians from drawing revenue from future budgets and dragging them into the current year, while at the same time pushing costs into succeeding budgets. The state’s current Comptroller, Kevin Lembo, recently advised that the state’s antique computer system is not prepared to handle such accounting changes; which is all very well and good -- because Mr. Malloy had postponed implementation of the new accounting procedures for a couple of years. And there is no need to fudge figures in any case, because wily Democratic legislators – Big surprise here! – had embedded into the Malloy budget an artificial surplus that would relieve the pressure put upon them to cut costs.

All this spelled frustration for Republicans and others who were trying unsuccessfully to force Democrats who control the legislature to cut costs by denying them revenues. The presence of red ink in a budget usually is a persuasive spending disincentive for rational legislators. But time-serving progressive ideologues committed to wealth transfers from productive workers in the private marketplace to unionized state workers are addicted to reflexive spending. So long as the General Assembly’s table sags with surpluses, crapulous senators and house members will continue to feast on fare taken from the more modest tables of productive workers. Surpluses, which are tax overcharges, are anti-stimulants for anyone who is not a tax consumer. While prudent tax cuts – a prospect far beyond the intention of the average spendthrift politician – stimulate the economy, wealth transfers stimulate the ungovernable appetite of spendthrift politicians who, unlike the fascists of a bygone day, lack in a functioning democracy the means of making the trains run on time.

A handful of legislators in the General Assembly, Sen. Joe Markley of Southington among them, get all this.

“The enormous tax hike,” said Sen. Joe Markley of Mr. Malloy’s tax boost, “was the sad result of our addiction to spending, which we still haven’t kicked. The bigger the tax increase, the more dire its affect will be on our state economy. I’d love to see Malloy call us back and undo some of the new taxes in light of this surplus, but I don’t expect it – big-government types generally celebrate such surpluses, rather than feel ashamed of them.”

A few more Markleys in the General Assembly may save Connecticut the embarrassment of a rapid decline, followed by default.