Malloy Says His Budget 'Tells the Truth'

One week after proposing a budget that raises taxes on Connecticut businesses and consumers, Gov. Dannel P. Malloy faced business leaders across the region Tuesday morning to explain how those higher taxes are good for business.

Malloy asked, how can raising taxes in the deepest recession in 70 years be good? Because it was what had to be done to stabilize Connecticut and ultimately bring businesses to the state, he said.

“There is a structural deficiency (in the state’s budget) that we have ignored for so long, at our own peril, that was going to swallow Connecticut,” Malloy said. “We need a budget that is going to tell the truth.”

Malloy was the keynote speaker at a breakfast meeting of the Chamber of Commerce of Eastern Connecticut, held at the Mystic Marriott. The room was packed full of business owners from the region, as well as local town and state legislators.

In defense of the budget

Malloy took the opportunity to defend his budget. When he began to transition into the job on Nov. 15, the state was already facing a $3.2 billion deficit, he said.

It would have been impossible to make up that amount in one year through cuts without causing further problems, and destructive to raise that much more in taxes, Malloy said. So instead, a balance was necessary, with state employees expected to give concessions and taxes levied to bridge the gap, he said.

Malloy also refused to borrow money for operating expenses, which are at the heart of the structural deficit, he said. And for the first time in decades, the pension plan was funded fully, addressing a massive debt that has gone ignored, Malloy said.

“(This budget) finally puts us on an even keel,” he said. “It tells the truth.”

By fully funding all the state’s liabilities and eradicating the deficit, this budget provides what all businesses look for, which is a stable government, Malloy said. Having higher taxes is better than having a tax rate “that doesn’t tell the truth” and only leads to the state having to dramatically raise taxes later.

And unlike other governors, no money was cut for municipal aid, Malloy said. Cutting funding to educational cost sharing for example, which provides funding to schools, would have been devastating, he said.

Last year, Connecticut received 14 percent of its revenue for educational cost sharing from President Obama’s stimulus bill, Malloy said. If the state did not fund that amount this year, thousands of teachers would lose their jobs, he said.

For example, if the ECS costs were cut by 14 percent this year, Bridgeport alone would have laid off 270 teachers, Malloy said.

Reaction

After Malloy’s speech, the audience asked questions. Donna Simpson, former director and now board member of the Eastern Regional Tourism District, asked what Malloy plans to do to invest in regional tourism.

She suggested he make a $2 million commitment to keep the district thriving through its work with the private sector, emphasizing her point by having those at the meeting stand up whose work is impacted by tourism.

Malloy promised to continue to push tourism in Eastern Connecticut, saying the state is “underselling” the area, which is a “hot spot.” With the two casinos and Mystic, among other things, Eastern Connecticut is the biggest draw in the state for tourism, Malloy said.

Ledyard schools Superintendent Dr. Michael Graner later said he was pleased that municipal aid was not cut in the governor's budget.

"The budget that the Ledyard school board adopted last week was based on the hope that the governor was not going to reduce educational aid, so I'm delighted to see no reduction there," Graner said.

"But the other part is that no municipal aid has been cut," he added. "If the state doesn't cut the aid to schools, but then cuts municipal aid, Ledyard taxpayers would still get hit, so I'm very pleased by what the governor had to say."