Gov.-elect Dan Malloy told a crowd of business leaders Tuesday morning that he supports President Barack Obama’s compromise on the extension of the Bush-era tax cuts because it’s based on Keynesian economics.
“In our frustration as a state and in our frustration as a nation we are almost prepared to reject that which we know works in the economy,” Malloy told business leaders at the MetroHartford Alliance Rising Star breakfast. “Keynesian economics do in fact work.”
“I think the president got the best deal that he could,” Malloy said. “The idea, however, that we would have cut people off from unemployment benefits in the deepest trough in our nations history since the Great Depression, made no sense at all.”
“That transaction, that deal, that compromise was acceptable in terms because it is the foundation on which we build a new economy over the next two years,” Malloy said of Obama’s tax compromise.
As for the state of Connecticut, Malloy doesn’t believe it’s made the tough decisions or strategic investments it needs to in order to advance in today’s economy.
“We have not done as a state that which we require our own families to do as they prepare for their own future,” Malloy said. “We have not made the kinds of investments that we needed to make.”
He talked about investments in both transportation infrastructure and education, which will help produce the states future workforce.
“What we do in this state is we fail to understand that we’re in this together. That we know how to get out. That we’re capable of making hard and good decisions,” Malloy said.
Over the past 20 years Malloy said the state has delayed making hard decisions it knows have to be made.
Malloy’s first order of business when he’s sworn in Jan. 5 will be signing an executive order requiring all state agencies to report under Generally Accepted Accounting Principles.
“What I’m really saying is if I’m going to take this portion of my life, four years, eight years—whatever period of time you allow me to be your governor—and I’m going to do with you what is necessary at turning this state around, righting this ship, and I want to make sure no one else puts it asunder in the future.“
He said the changes he plans on implementing in the face of a more than $3.5 billion budget deficit will be “systemic and sustainable.”
“We can’t cut spending by $3.5 billion. We can’t raise taxes by $3.5 billion,” Malloy said after warning that the state’s fiscal situation is not going to turnaround overnight.
He also had a message for state employees. “We can do this together,” he said.
“There is a win-win solution. That we have to have our eye on sustainability. Our agreements between ourselves with respect to employment and post-employment benefits need to be sustainable. Our agreements in the workplace need to be based on mutual respect,” Malloy said.
R. Nelson Oz Griebel, president of the MetroHartford Alliance, and one-time gubernatorial candidate, said Malloy “hit the ball out of the park,” as far as he was concerned. “I think he delivered the kind of message many of us in this organization really feel to be actively followed.”
“There has to be a change in the approach to the budget. There has to be a change in the approach to service levels. There has to be a change in how all of us are held accountable,” Griebel said. “And at the same time recognize that we’re not going to solve this problem by cutting expenses or raising taxes, so I thought he did a great job.”
Historically the MetroHartford Alliance has had a lengthy legislative agenda acknowledging the diversity of its industry members, but this year it only has one item on that agenda: a balanced budget by April 30th.
Griebel said the thinking of the organization’s legislative affairs council was that if the state legislature is able to pass a balanced budget by the end of April it will give municipalities a little more certainty in their budgeting process knowing what it will be receiving in state funds. That will also help give businesses some certainty about what their property taxes will be.
“It’s about balancing a budget so we can go into the CPA hall of fame. It’s about balancing a budget and sending a strong signal to the private sector that the state knows what its doing and therefore you should keep your business here or start your business here, or relocate employees here,” Griebel said.
Griebel said the business community also has a responsibility in giving Malloy some cover from the constituencies, such as the states labor unions, “that aren’t going to want change.”
But Leo Canty, vice president of AFT-CT, said his union understands that Malloy is going to in and have to figure out what works and what doesn’t work for him.
Malloy also spoke strongly about making the Department of Higher Education “more nimble” in allowing universities and colleges to make their own decisions and act less like a “traffic cop.”
“I think we have some untapped private entrepreneurship in our private colleges and public colleges and universities and I want a Department of Higher Education that is more entrepreneurial in nature and more accepting of that entrepreneurship in higher education,” Malloy said.
“Wanting it to work may not include what’s already there,” Canty acknowledged. He said the unions and Malloy can work together on creating a good, orderly, responsive process to determine what it needs and what it doesn’t need.