
Gov. Dannel P. Malloy told a group of business leaders Wednesday that there’s not going to be a budget deficit in 2016 and he’s not going to raise taxes if there is. That’s assuming he runs for re-election and is elected to a second term.
The Office of Fiscal Analysis predicted last November that the state would have a deficit of more than $1 billion starting in fiscal year 2016.
“If we did have a deficit we’re not going to raise taxes. We’re done,” Malloy said. “I gave.”
He said in 2011 when he took office he faced a $3.6 billion budget deficit and there was no other way to fix that problem without taking a look at everything from tax increases to changes in the state’s relationship with its workforce.
“I think we’re entering into a phase where over the next few years revenues will rise—not cause we’re adding new taxes—but because the economy is slowly but surely getting better,” Malloy said.
He said the state is also at a point where state government isn’t growing. He promised to keep spending at 2. 8 percent. He said those two indicators combined make him feel confident there’s no need for a tax increase in the near future.
That’s not to say the current tax code doesn’t need some work. Malloy said there are places the state charges too much money and the tax structure needs to be investigated more.

John Rathgeber, president and CEO of the Connecticut Business and Industry Association, said he thinks there should be changes in the revenue structure “but overall we shouldn’t be increasing taxes.”
“We can live within a sustainable growth rate and make the investments necessary,” he said. “Particularly, if we see a growing economy.”
Rathgeber said one of the things lawmakers tend to underestimate is the benefit of economic growth.
“If people are going back to work, if businesses are investing, revenue sources grow and not just the ones that are dependent on financial stock markets,” he said. “To me the more important thing here is the organic growth in revenues based on a stronger economy and it’s something, quite frankly, people don’t appreciate in this building as much as they should.”
Minimum wage
How many of you are paying more than 2 percent of your workers minimum wage? Malloy asked the group of more than a 100 business leaders.
Only three hands in the audience went up.
“The reality about the minimum wage in Connecticut is that on a seasonally adjusted basis somewhere between 70,000 and 90,000 employees earn the minimum wage,” Malloy said.
He said the total pool of workers in the state is about 1.7 million people.
A vast majority of those earning the minimum wage work “in the food service industry,” Malloy said. “Most of us don’t cross the border to get our food. It’s just a reality. So lifting people out of poverty is what we’re trying to do.”
Malloy will appear with President Barack Obama later today in New Britain to promote an increase in the minimum wage to $10.10 an hour by 2017.

The Connecticut Business and Industry Association is opposed to a hike in the minimum wage.
“His question was how many people pay it, not how many people support it,” Rathgeber said responding to a question about the response in the room to the governor’s informal survey. “A lot of people don’t pay the minimum wage in Connecticut nevertheless they are concerned about the impact that it has on other cost structures.”
He said the real issue is getting people the preparation they need to take jobs that don’t pay the minimum wage.
An insurance broker, who does employee benefit plans, told Malloy the one concern he’s hearing from his clients is the difficulty they are having finding and retaining good quality employees.
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“There’s a limit to how many liberal arts degrees we need without associated actual job preparation,” Malloy said. “You can do both, but we weren’t doing both well in the state of Connecticut.”
He said they’re working to use the community colleges in a way that guarantees Connecticut has a workforce that’s prepared to make 900 to 1,000 jet engines per year. Malloy said that’s the amount of business United Technologies Corporation believes it will do after it expands with the help of the state, which announced last week that it will allow the company to use $400 million in stranded tax credits to lower its tax liability.
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