GREENWICH—Gov. Dannel P. Malloy wasn’t afraid to lead with his chin Thursday morning when he gave a keynote address at the Connecticut Hedge Fund Association’s Global Alpha Forum.
Malloy, in addition to boasting about his handling of state finances, told his wealthy audience what it wanted to hear: that he won’t seek to add to their regulatory burden.
“Simply put, Connecticut hasn’t done a good job of creating jobs over the last 22 years…in fact it’s one of three states that has failed to create any net jobs,” Malloy said.
That, combined with the recession and the “fairly routine conversations” between legislature and successive governors about whether to cut services or raise taxes led to the mess he inherited upon taking office.
“I was handed a $3.5 billion deficit, the largest per capita deficit in United States, and I was asked to deal with that…representing 18 percent of revenue that debt was too big to our tax way out of and too big to cut way out of.”
Acknowledging “the new normal is difficult,” Malloy touted the steps his administration has taken to deal with that deficit in his nine months in office, and admitted that while this solved the current crisis, he continues to grapple with the size of government. Between now and Oct. 1 the state will shed “between 500-1000 additional employees” who have opted to retire early.
The hotly debated agreement with state employees will save $21.5 billion over 20 years – much of it post-employment benefits.
“You’re looking at the first governor in the state of Connecticut’s history to fully fund pension obligations,” Malloy said. This will enable him to push forward with the move to Generally Accepted Accounting Principles, which the state has required of local municipalities and boards of education, but never for itself.
Three of the state’s municipalities rank in the top ten hedge fund capitals, and Malloy ascribed this to the state’s favorable tax structure. In a pointed reference to rival New Jersey Gov. Chris Christie, who is addressing the conference Friday morning, Malloy pointed out that while top personal income tax rates in New Jersey and New York are 8.97 percent, even with the increase in the recent budget, Connecticut’s rate is still lower, at 6.7 percent. A New York City resident, paying city and UBT tax, forks over an effective tax rate of 16.85 percent, which is why the industry has made a home over the border in towns like Greenwich, Stamford and Westport.
Throw in the fact that Connecticut’s estate tax is also lower than its neighbors – 12 percent versus 16 percent in both New York and New Jersey – and it turns out the state is a pretty good place to live and die compared to others in the region.
Clearly trying to reassure his audience, Malloy said state regulations to comply with tighter federal requirements for hedge funds with capital of less than $100 million will be done “in a supportive way.” In a further assurance to an industry that an audience member termed the state’s “crown jewel,” Malloy said that he is not in favor of moving to regulate beyond federal policy.
Excessive regulation, Malloy said, has been one of the two overwhelming messages he’s heard from businesses on his jobs tour. “There is too much regulation and decisions are made far too slowly…. Let me very clear I’m not interested in more regulation. I’m trying to streamline regulation,” Malloy said. “We know the old adage that time is money… we need to move more rapidly and responsively.