Hartford Business Journal

36 Hartford Business Journal • June 8, 2015 www.HartfordBusiness.com OPINION & COMMENTARY EDITORIAL CT Inc. voices no confidence in Malloy, legislature T he loud chorus of boos that echoed from the boardrooms of Connecticut's larg- est employers last week over tax increases proposed and then approved by state lawmakers wasn't public theater. No, instead corporate Connecticut was voicing a vote of no confidence in Gov. Dan- nel P. Malloy and the state legislature, which approved a two-year, $40.3 billion budget last week that raises $2 billion in new tax revenues and will do further irreparable harm to the business climate. What little faith Connecticut businesses, both small and large, had in state government to be fiscally prudent is now in the rearview mirror. Malloy, during his campaign last fall, pledged no new taxes. It's a promise he will clearly fail to keep if he signs the budget into law. Late last week, the governor left open the possibility that he could work with lawmakers to tweak some of the business taxes, but we aren't holding our breath. The new normal, it appears, is that Connecticut Inc. should expect new and/or higher taxes every few years. Such uncertainty will throw a wet blanket over hiring and investment. What's more alarming is the Malloy Administration's inconsistent, and oftentimes coun- terintuitive, economic development strategy, which includes giving hundreds of millions of dollars in grants, loans, and tax breaks to one, small group of businesses, and then soaking the rest of the state's employers with higher taxes. That's not a smart way to achieve long- term economic growth. When major corporations like General Electric, Aetna, and Travelers, which openly voiced their opposition to several budget measures two days before they were passed by the legislature, are publicly threatening to relocate to other states, it signifies a major problem. Yes, such threats are made on a fairly routine basis, but never in such a public manner. These declarations reverberated in the national press, sending a message that Connecticut is not open for business. That doesn't bode well for short- or long-term investment in the state. The root problem is many state legislators' failure to understand the significance of having a competitive business environment. Some lawmakers equate profits with greed and are unflinching in their approach to enact policies that chip away at companies' bottom lines so they can fund an ever- growing state government apparatus. Sadly, Malloy and the Democratic leaders in the legislature actually believe they helped businesses in this budget. The governor, for example, said the tax hikes will help pay for his ambitious 30-year, $100 billion transportation infrastructure overhaul, which will improve mobility around the state — something important to all businesses. That may be true, but Malloy is loath to admit that the budget only commits for the next two years $65 million in new money to transportation investment, after the budget transferred $371 million typically earmarked for transportation to the general fund. Meanwhile, Senate President Pro Tem Martin Looney, who said he was proud of the budget his chamber passed, defended lawmaker's adoption of the controversial unitary tax by arguing 25 other states have it and that Connecticut is simply following suit. Of course, the New Haven Democrat fails to recognize that Connecticut just lost one of the few remaining competitive advantages it has in its tax code. This budget, which comes only four years after the legislature enacted the largest tax increase in state history, is bad for business. Malloy should know that. Looney and the rest of the legislature should know it. Corporate boardrooms across the state do know it, and they will react accordingly. Lawmaker's tone-deaf attitude must stop. Unfortunately, it doesn't look like that will happen anytime soon. n OTHER VOICES The infrastructure investment fraud By Don Pesci S ome commentators may have missed the snarling irony of the moment. Gov. Dannel Malloy will soon approve the Democratic Party budget, the most progres- sive budget in state history and Connecticut's second most expensive budget in state history. The current bud- get provides "$436 million in sales tax receipts over the next two years to sta- bilize transportation finances and back a major infrastructure overhaul," according to a story in CTMirror incongruously titled "Proposed state bud- get diverts most new transportation dollars." The much neglected story was filed two days before the Malloy- Sharkey-Looney budget was finally passed in an Emergency Certification (E-Cert) measure. The government of Connecticut is autho- rized by statute to bypass during emer- gencies the usual legislative process. The familiar process involves such unavoidable detours as public hearings, the presentation of bills to legislators called upon to vote for or against them, and a certain amount of leisure to consider legislation and offer amendments; in short, what we were once taught to call in civic high school classes — when there were such rig- orous offerings in high school — the rudiments of democratic government. The term "emergency" calls to mind the kinds of floods now rampaging through Texas. That is the kind of emergency Con- necticut legislators imagined when they wrote the E-Cert bill; floods, destructive snow storms, brimstone blasts from an angry Republican God. A budget that fails to pass the legislature by a set date does not qualify as an "emergency" by any stretch of the word, especially since budget sessions are easily extended beyond their past-due dates. So then, why did Democrats — who have dominated the state legislature since 1965 — package the budget as an E-Cert bill? The answer to the question is simple: Democrats in the General Assembly did not want hear- ings or debates from the party of opposition. They wanted to marginalize their political opponents, and they had the political heft to do it. During his first budget, democrat (note the small "d") Malloy shut Republicans — who represent a little less than half of the voting pub- lic — out of the budget process. The autocratic Democrat now has repeated his performance of 2011. The one-party state, when it has seized power, lusts after efficiency — not democracy. It wants to make trains run on time. It wants to repair and in part reinvent Con- necticut's crumbling infrastructure. Auto- crats in a real democracy would be thrown out on their ears for having a) convinced the general public that a 30-year, $100 billion expenditure on infrastructure repair is nec- essary to the future prosperity of the state; b) pressed Democrats in the legislature to provide funding for the project and then, as the CTMirror story notes: "While the tentative state budget deal technically dedicates $436 million in sales tax receipts over the next two years to stabi- lize transportation finances and back a major infrastructure overhaul, that same spending plan effectively diverts more than 85 percent of those funds for non-transportation programs. "At the same time the receipts are assigned to transportation, another $371 million in general fund resources normally earmarked for trans- portation would stay in the general fund — which is facing big deficits in the coming biennium." Shall we pause over these delicious para- graphs and consider: Following the passage of the Democratic Party budget, which was hus- tled through the Dem- ocrat-dominated Gen- eral Assembly at the close of a legislative session in an E-Cert bill that brooked no debate, no amend- ments, no careful deliberation, Malloy will sign a measure that diverts to the gen- eral fund more than 85 percent of monies that were to be put into an untouchable lockbox for the governor's bread-and-circus infrastructure repair program. And an additional $371 million earmarked for the same purpose will remain in the progressive Democratic Party's slush fund, where most lockbox dedicated funds end up to patch holes in budgets created by destitute Gen- eral Assembly Democrats. Is that not a delicious piece of political knavery? The fraud is glaringly immense. However, it will not be long before the evi- dent fraud is forgotten. One expects that even Connecticut's unitary-tax whipped Big Three — Travelers, Aetna, and General Electric — their eyes fixed on the exit signs, will make necessary accommodations without reducing their campaign contributions to the progres- sive Democrats in Connecticut's executive, judicial, and legislative three ring circus. n Don Pesci is a writer who lives in Vernon. Contact him at donpesci@att.net. HARTFORDBUSINESS.COM POLL Which new tax increase will hurt CT biz most? ● 20% corporate tax surcharge ● 3% web/data processing sales tax ● Unitary tax ● Tax credit reduction to 50% of total liability To vote, go online to HartfordBusiness.com. Last week's poll results: Should employees be given free rein to compare their wages? 43.5% Yes 56.5% No Don Pesci ▶ ▶ The one-party state, when it has seized power, lusts after efficiency — not democracy. Send Us Your Letters The Hartford Business Journal welcomes letters to the editor and guest commentaries for our opinion pages. Electronic submissions are preferred and welcome at: editor@HartfordBusiness.com. Or you may fax submissions to Editor, Hartford Business Journal, at (860) 570-2493.

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