As I write this on Thursday morning, an awesome white cloud is swirling around the mountains and valleys of the Northwest Corner. The ivory blitz is proceeding at a pace so blinding that I can scarcely track the inches of accumulation. Come to think of it, that’s an apt metaphor for the dizzying array of budgetary pronouncements that have come out of the Malloy administration just in the last 10 days or so.
With the exception of Gov. Dannel P. Malloy’s budget chief Ben Barnes a few years ago, we haven’t heard much use of the dreaded word “crisis.”
There simply is no other plausible reason for most of the unpopular moves that Malloy has made in the last few days and months. With each passing week, Barnes’ off-the-cuff characterization of Connecticut two years ago as being in a “period of permanent fiscal crisis” reaches new heights of urgency.
And for the immediate future it looks like the state’s smaller towns and cities will be the ones to pay for most of it. Though he has announced he will seek to increase taxes and fees and eliminate some tax credits on the state level to raise $400 million in revenues over the next two years, Malloy has acted to effectively increase property taxes by rolling back perhaps the most popular program the state has to offer: aid to towns, cities and school districts.
Malloy, who seems to enjoy stepping on toes, has put forth proposals to offend just about everyone except those in the state’s largest cities. For example, Malloy, who is no friend of hospitals to begin with, wants to allow cities to put the buildings of nonprofit hospitals back on the tax rolls — an action the hospitals have vowed to fight vigorously.
But elsewhere in his budget proposal there is legislation to dramatically shift state education aid from the relatively well-off districts to the poor ones. Dubbed “the Robin Hood approach” by Joseph Cirasuolo, executive director of the Connecticut Association of Public School Superintendents, Malloy’s plan would scale back or eliminate education cost-sharing grants and special-education aid for districts deemed to be wealthy or, at any rate, more able to absorb the loss.
After already having made $300 million in labor cuts this year, Malloy’s budget also assumes $1.56 billion in labor savings over the next two years, which if you do the math would require a 10-percent reduction in the state workforce in the first year alone. That’s equal to about 4,200 state employees, according to Office of Policy and Management Secretary Ben Barnes. Courant business columnist Dan Haar has deemed the savings “virtually impossible.” And he’s probably right. My guess is the draconian labor cuts needed to achieve the savings are just a starting point for negotiations with state employee unions for givebacks. Still, at the end of the day, the numbers must add up, and the following year it’s not just rinse and repeat, for the savings Malloy expects to achieve in year two are even greater.
The cost-saving measure that really caught my eye was Malloy’s plan to shift one-third of the teachers pension funding obligations onto municipalities and school districts. If it prevails, the measure would pass on more than $400 million in pension funding costs to towns in the first year alone, but would not affect the benefits of current or future retirees. Depending on the town, it would require either substantial tax increases or budget cuts — or perhaps both.
This is another Robin Hood move, though one that might be more defensible than the ECS cuts. I understand that under the current system, wealthier districts pay their teachers higher wages and therefore put a greater burden on the state to fund the pension system. To wit, the state is slated to pay $24 million this year for the pensions of teachers in wealthy Greenwich. For low-income and far larger New Britain, where teachers are paid substantially less, the state pays only $18 million. But couldn’t the state simply set a cap on payments per teacher and require wealthier districts to make up the difference, rather than shifting a third of the costs onto all the towns? This is far too great a burden to impose on 169 municipalities in one year.
Malloy correctly points out that the state has no obligation to fund the pensions of other municipal employees such as police, fire and those who work for town highway departments. The question is why the state ever got involved the teachers pension system in the first place? After all, everything else — wages, benefits and working conditions — are a matter of collective bargaining between teachers and boards of education. My guess is it was a favor to the teachers unions, whose members do not have to pay into, and therefore don’t collect from, the Social Security System when they retire.
It will be fun to watch, this supercharged budget storm. And it seems like it’s been going on for decades. But this is the worst I’ve seen it since the recession of the early 1990s gave us Lowell Weicker’s income tax. The big difference now is there’s no great untapped revenue source to exploit. As a justification for passing costs on to towns, Malloy has said they’re better positioned to pick up those costs than the state. Translation: Towns have managed themselves responsibly and the state has not.
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