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Malloy, Christie both feeling the pain

Published November 20. 2012 4:00AM   Updated November 20. 2012 1:28PM

Gov. Dannel P. Malloy of Connecticut and Gov. Chris Christie of New Jersey agree on little.

In addressing the fiscal crisis he inherited when elected governor in 2010, the Connecticut Democrat worked with a Democratic legislature on a "balanced approach," wringing concessions out of state labor unions, consolidating some agencies and signing into law a wide range of tax increases. Gov. Malloy vowed to protect social services and maintained state aid for towns and cities. Spending went up, but not as fast as it would have without labor givebacks and staff reductions.

Elected in 2009 and facing his own fiscal crisis, Gov. Christie gained stature in his Republican Party, and national repute, by battling with a Democratic legislature to cut spending, including aid to municipalities and for some social services. He used his executive authority to block funding to entire agencies, including the Department of Public Advocate and the Office of the Child Advocate. While not very successful in getting lawmakers to cut taxes, he has blocked increases.

Since Gov. Malloy's election the two Northeast governors have provided political entertainment, taking linguistic pot shots at one another about the misguided strategies of their counterpart. The rivalry led to speculation about which model would work best — the Malloy prescription of a balance of tax increases and spending cuts or the Christie remedy of holding the line on taxes and cutting government.

Right now neither governor has much to brag about. Unemployment in both states remains high — 9 percent in Connecticut and 9.7 percent in New Jersey. And in both states revenues are lagging far behind projections, and as a result both states face new budget problems, which while not as severe as the fiscal crises they inherited, are serious.

Gov. Malloy this past week learned that one-third into the fiscal year Connecticut faces a $365 million projected deficit. Projections for the following two fiscal years show a roughly $2.1 billion deficit gap between what Connecticut can expect to collect in taxes and fees and what it can expect to spend. Earlier this year, Gov. Christie learned that Standard & Poor's had downgraded New Jersey's financial outlook to negative from stable. It pointed to overly optimistic revenue projections and a reliance on one-time revenue sources to close holes in the state budget.

For both governors, poor economies are driving up social service costs, in particular Medicaid, while driving down tax revenues.

Judging by the comments coming from Hartford and Trenton, Gov. Malloy and Christie appear to recognize that despite their many differences in approach, they both share a common need. They are desperate to see a compromise reached in Washington between the Democratic-controlled White House and Senate and the Republican dominated House to curb long-term spending on entitlement programs, find savings in the federal budget and boost tax revenues. A deficit-reduction compromise is necessary to avoid a "fiscal cliff" of across-the-board tax increases and large, indiscriminate budget cuts, including in defense, that would likely pitch the country back into recession.

Both these governors and many like them across the country recognize that not only must the fiscal cliff be avoided, but Washington needs to demonstrate that the political parties can work together to solve big problems. Only then will corporations use the cash they have sitting on the sidelines to expand and create jobs.

Both Gov. Malloy and Gov. Christie know that whatever their respective approaches to government spending and economic growth, without a strong national economy they both face perhaps an impossible challenge.

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