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Malloy returns to some bad, old habits

Published February 07. 2013 4:00AM

It was appropriate that the Malloy administration released its two-year budget plan on Feb. 6, the anniversary of the Great Blizzard of 1978, because it was quite the snow job.

Yes, Gov. Dannel P. Malloy made good on his promise not to raise taxes, maintained his commitment to improving education and surprised this newspaper by maintaining municipal aid, sort of.

But his budget proposal is filled with the kind of gimmicks for which he criticized his predecessors when running for election in 2010 and vowed to eliminate. It may not raise taxes, but calls for continuing taxes set to expire.

The budget is too dependent on one-time revenue sources, on borrowing to meet current and past obligations, and calls for changing the rules by which the spending cap is calculated, rather than living within it. Evidence of the budget game playing are the projections of nearly $600 million in estimated new revenues over the two years, $460 million of that front loaded in the 2014 fiscal year that begins July 1, a neat trick without raising taxes.

While the governor boasted his budget keeps funding for towns and cities level, it comes with some interesting strings attached. More of the state aid to municipalities would be directed at paying for roads and other infrastructure, $1.5 billion for local capital projects overall. That should help job creation, a good thing, but it means a greater percentage of that municipal aid will come from borrowing, avoiding tax increases in the short term but unsustainable long term.

The big news of the day was Gov. Malloy's proposal to eliminate the property tax for cars valued at $28,000 or less. This is a particularly unfair tax, often falling heaviest on those who can least afford it, low- and middle-income taxpayers living in distressed communities. But the governor's plan would not cover the revenue losses, leaving towns and cities to find cuts or shift the tax burden more to homeowners and businesses. Revenue losses for towns and cities are projected at between $400 million and $500 million.

What the budget plan does not do well enough is cut state spending. Gov. Malloy points to $826 million in proposed spending cuts the first year and about $1 billion the second, but those are actually cuts in the increase that would happen if nothing changed to slow the growth in government. In real numbers, spending goes up 5.1 percent in year one and 3.9 percent in year two under the governor's plan.

The Malloy administration points proudly to the fact that growth in state spending has averaged 3.8 percent annually under the current governor, compared to 4.5 percent the prior five years. But while this governor boasts of not increasing spending as much, governors in other states are actually reducing the cost of government and its burden on taxpayers.

To be fair, the big spending drivers are $468 million to fund government pensions, $382 million in human services increases, including Medicaid, and $125 million tied to labor union salary increases as pay freezes approved in the prior concession deal expire.

Gov. Malloy calls them "large immovable objects." Yet the governor showed his penchant for launching new programs, creating new agencies and giving state money to private businesses remains strong. He spent far more time in his speech to the General Assembly Wednesday on spending than cutting.

Most troubling was the governor's plan to borrow $750 million over 15 years to make Connecticut GAAP compliant. Converting to generally accepted accounting principles was central to Gov. Malloy's candidacy. It amounts to honest accounting, something the state has long avoided. But the governor has to find $1.2 billion to close the deficit caused by past bad practices and reach GAAP compliance. Largely borrowing to do it is a misleading approach not keeping with the spirit of the governor's GAAP promise and would cost taxpayers about $185 million in interest.

The governor has been a strong leader with significant policy achievements - starting to repair the state's badly underfunded pension system, launching education reform, consolidating state agencies and reducing the state workforce.

But by not following the lead of some of his fellow governors and cutting more sharply from the start, his job is now more difficult.

On Wednesday he criticized past budgets that "relied too heavily on gimmicks and one-time revenues." His administration is at risk of falling into the same pattern.

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