A Democratic Governor Gets His Way

In just a few months, Connecticut Gov. Dan Malloy is implementing measures that many state legislators would have balked at.
by | August 30, 2011
 

For the past eight months, newly elected Republican governors have made national headlines for their bold efforts to reshape government along conservative lines.

But in Connecticut, Democratic Gov. Dannel P. Malloy has taken an equally bold approach -- one that has been more pragmatic than ideological.

Immediately upon taking office, Malloy faced one of the nation's worst budget deficits. The state's general fund had a two-year deficit of $6.14 billion, says Benjamin Barnes, Malloy's budget chief and secretary of the Office of Policy and Management. Only six states reported a budget gap percentage that was larger than Connecticut's.

To fix the state's budget situation, Malloy pushed for and signed measures that would arguably make any state legislator, Republican or Democrat, very unhappy. Broadly, the three "legs of the stool" under Malloy's budget included:

$2.8 billion in increased taxes. Malloy's changes added three brackets to the state income tax and raised the top rate from 6.5 percent to 6.7 percent, while adding an Earned Income Tax Credit for those with lower incomes. The sales tax also rose from 6 percent to 6.35 percent, with many sales-tax exemptions eliminated.

$1.8 billion in budget cuts. These cuts involve items that are required to be paid for by law or contract and are expected to grow based on caseload increases. The cuts would hit, among other things, Medicaid dental and vision benefits, as well as cost-sharing increases for seniors receiving home care.

$1.5 billion in labor-union concessions. Most unions agreed to a two-year wage freeze, plus changes to health-care and pension benefits, in exchange for protection from layoffs for four years.

Initially, the tax hikes attracted the most attention. New Jersey Republican Gov. Chris Christie needled Malloy over his plan on MSNBC's "Morning Joe," saying, "I'll be waiting at the border to take Connecticut's jobs when he does it." Connecticut ended up being one of only five states to make "significant revenue-raising" measures this year, according to the Center on Budget and Policy Priorities (CBPP) in Washington, D.C.

More recently, though, the concessions by the state's public-employee unions have attracted notice. Malloy's first attempt to secure union support for the budget in June failed, but ultimately succeeded in a second round of voting in August. If it hadn't passed, the fallback plan would have been to eliminate more than 5,000 jobs and close more than 20 state facilities.

In announcing the agreement after the second union vote, Malloy called the deal "the most fundamental restructuring of the relationship between the state and its workforce that has ever occurred in the state of Connecticut."

A Quinnipiac poll in June (following the budget's passage in the Legislature, but before the unions' first vote) found that Malloy's policies and performance received unfavorable reviews. The poll found that voters disapproved of the budget, 50 percent to 35 percent, and disapproved of how Malloy handled the budget process by a 52 percent to 36 percent margin.

But despite these weak poll numbers -- which do not reflect the successful union vote -- observers here say the budget battle has earned Malloy somewhat grudging respect. Unlike President Obama, who pushed hard for a "balanced" approach to debt reduction but was blocked by congressional Republicans who rejected any tax increases, Malloy succeeded in enacting a plan that splits the budgetary pain among taxpayers and state employees. Using what many here called a "frenetic" approach, Malloy has held 17 town hall meetings across the state to defend his budget proposal, regularly taking tough questions from citizens.

"This has been a tough time" fiscally for the state, says Jon Shure, a state budget analyst with CBPP. "But the main difference is that Malloy chose to take a balanced approach instead of an approach that over-relied on cuts."

University of Connecticut political scientist Ronald Schurin adds that Malloy "essentially said, 'We're all grownups here,' and he was clearly not going to pander."

The reluctance to play to different constituencies was on display at an Aug. 23 press conference I attended in the state capitol. Malloy was there to announce the layoffs of 56 rookie state troopers -- the first such layoffs in two decades. The reductions came after the troopers' union had rejected the two-year wage freeze -- a key portion of the concessions deal. The deal was rejected by only one other union representing prison guards.

The decision carried risks for the governor, since many voters are predisposed to favor law enforcement. Asked at the press conference how close a call it was to proceed with the layoffs, Malloy responded, "It wasn't a close call. It was an important call, and one in which I took the time to measure all the consequences."

In an interview following the press conference, Roy Occhiogrosso, a senior adviser to Malloy, acknowledged that the budget will provoke widespread pain, but he portrayed the deal as a reasonable blueprint given today's difficult economic times.

"When the governor took office, the state was hemorrhaging left and right," Occhiogrosso says. "Our first job was to stop the bleeding from bad fiscal practices and stop borrowing for operating expenses. Hopefully this budget does that."

Donald E. Williams, Jr., the state Senate president pro-tem and a fellow Democrat, noted two other parts of Malloy's agenda that could help the state's economy, such as investments in projects to spur long-term growth, including an $864 million bioscience project to boost the University of Connecticut Health Center, and a refusal to cut aid to municipalities, which would have passed the fiscal hit on to lower jurisdictions.

"It's a balanced and thoughtful approach," adds Democratic state Rep. Roberta Willis. "Will it make an impact? Only time will tell."

Republicans, who account for distinct minorities in both legislative chambers, had only limited leverage in the budget debate. But GOP legislators, like the New Jersey governor, expressed criticism concerning the scale of the tax hikes, urging more spending cuts instead. George Gallo, the chief of staff to the state House Republicans, acknowledged in an interview the fiscal "bad hand" Malloy was dealt. Still, he says, "it's a question of whether [Malloy's approach] is sustainable. If we continue to be in a deficit, will we have to raise taxes again?"

Republicans have also taken shots at other items on Malloy's agenda, including passage of a first-in-the-nation measure requiring that employers with at least 50 workers provide their workers with paid sick days -- a bill opposed by, among others, the Connecticut Business and Industry Association.

The sick day bill, combined with passage of measures to decriminalize small amounts of marijuana and new protections for transgendered persons, led The New York Times to call it "the most activist, liberal legislative session in memory."

Some here see that description as an exaggeration, but most agree that Malloy's first legislative session may go down as a pivotal moment in Connecticut governance. That said, it's less clear whether the legislation he signed will help pull the state out of its economic doldrums.

Former Republican legislator Kevin Rennie, now a political columnist and blogger, suggests that national -- not state -- factors will eventually decide that question.

"Things do have to get better nationally" if Malloy's approach is going to work, Rennie says. "You need a rising tide that no single state will be able to create."

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