In this week’s gubernatorial debate, moderator Ray Hackett didn’t ask — or get to ask — one of the most glaring issues facing the two candidates: What are they going to do about the projected budget deficit? Where will the money come from? Or what will they cut?
Republican candidate Tom Foley should have brought the deficit up during the debate, especially because Gov. Dannel Malloy keeps denying it exists. Despite his denials, non partisan analysts say the deficit will be $2.8 billion in 2016-17, and given this year’s track record — not once but twice we were told the surplus looked good, only to see the money evaporate — we may be looking at an even higher number.
Malloy likes to talk about the $3.67 billion deficit he inherited when he took office the beginning of 2011, but he doesn’t much like to talk about the deficit he’s leaving behind.
Maybe that’s because he told voters the deficit would go away after he signed into law the biggest tax increase in Connecticut’s history, worth an estimated $1.5 billion.
The question on many voters’ minds is where did the money go? And also, given that we in Connecticut pay among the highest combined local and state tax rates in the nation, why can we still not make ends meet?
The most obvious answer to that question is that Malloy increased spending every year he was in office, exceeding the constitutionally mandated spending cap and the rate of inflation.
The other reason is that Malloy’s policies did not work to get the economy moving.
Not surprisingly, significantly raising taxes, as the state limped through an economic recovery after one of the nastiest economic downturns in recent history, was not a good idea.
Looking closely at the job numbers from the past three years, as Foley was somewhat clumsily trying to do during the debate, a picture emerges of what happened after Malloy took the reins of the economy.
The number of people in the job market was ticking up even as the economy struggled during 2008, 2009 and 2010. But in 2011, just after Malloy took office, the number of people working or looking for work in Connecticut started to fall, and it kept falling for the next three years, from 1.92 million to 1.85 million.
That means 70,000 people left our workforce in three years, whether because they moved, or retired, or gave up.
Malloy keeps claiming he created 50,000 jobs, but during Malloy’s tenure the number of people employed went from 1.73 million at the beginning of 2011, to 1.74 million last month. Meanwhile, the state is still missing more than 20,000 jobs from before 2008, making us one of the last states in the nation to not have recovered all of the jobs lost during the downturn.
So how do our revenues catch up when we’ve lost so many jobs? Malloy assumed he would rev up the state’s economic engine with a tax increase, and the deficit would disappear, but he was wrong.
Increasing taxes during the best of times hurts job growth, but Malloy increased taxes on a middle class that was already stressed out by job losses, shrinking salaries, and disappearing home equity. Tack that on top of an already high cost of living, and you can see why Connecticut’s economy deflated.
Malloy also decided that a slow economic recovery was the best time to introduce an aggressively liberal agenda that included raising the minimum wage higher than the rest of the country; unionizing home daycare and healthcare workers, first by decree and then through the legislative process; and making Connecticut the only state in the nation with paid sick leave.
On his campaign website, Malloy touts the use of Project Labor Agreements, which make state contracts available for bid only to companies who agree to hire union-only labor, leaving the vast majority of in-state contractors out in the cold.
Malloy thought he was leading the way, that regionally and nationally others would follow suit. But they didn’t. Connecticut alone followed this path and now we are seeing the fruits.
The effect of paid sick leave on the state is a good example — even in the report issued by the left-leaning Center for Economic and Policy Research, which was seen as vindicating the new employer mandate, 10 percent of businesses reported reducing their employees’ hours, which may not sound like much until you read the part about how 88 percent of the businesses surveyed already offered paid sick leave for their employees before Malloy passed the law.
In his nine-page policy platform released this week, Foley says he’ll work to improve the relationship between the state and businesses. While his words make him sound like he really wants to pursue this agenda, his performance in the debate lacked energy. Foley needs to show voters he means it.
It remains to be seen if Malloy will continue to tell voters that they aren’t really hurting, and that the future is bright even in the face of all of the bad economic news. That will largely depend on whether voters and the media demand something more from him — expressly, how he will do things differently in a second term so that things will improve.
It isn’t any one thing that makes big and small businesses skittish about investing in Connecticut. Instead, there is a slow drip of greater regulations and higher costs that continually erode business confidence. And that lack of confidence helps explain where we are with the job market, which then helps explain our deficit.
If only someone would have brought it up.
Suzanne Bates is the policy director for the Yankee Institute for Public Policy. She lives in South Windsor with her family. Follow her on Twitter @suzebates.
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