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20 Hartford Business Journal • April 18, 2016 www.HartfordBusiness.com OPINION & COMMENTARY EDITORIAL Leadership doesn't equate to popularity D uring last week's victory parade, Gov. Dannel P. Malloy awkwardly faced a spat- tering of boos when he was handed the microphone to heap praise on the UConn women's basketball team for winning their fourth straight national championship. The response wasn't all that surprising. Faced with continual budget deficits since being sworn into office in 2011, Malloy has had to manage fiscal crisis after fiscal crisis and is now being forced to slash major spending, leading to state employee layoffs and myriad special interests with lighter pocketbooks. Indeed, Malloy's popularity is likely reaching another low point (58 percent of voters dis- approved of his job performance, according to a Quinnipiac poll released in October), but that's not necessarily a bad sign for the state. To be an effective government leader in Connecticut these days isn't about being popular; it's about making extremely diffi- cult decisions that will anger a large portion of the electorate, but hopefully get us on a stronger, stable fiscal and economic footing. We aren't endorsing all of Malloy's policies or tactics. We feel his attacks on hospitals have gone over the top, and his previous tax increases have weakened our state's economy. Neither he nor Democrats or Republicans in the House or Senate have been able to articulate and imple- ment structural reforms that solve our long-term budget problems, while also promoting economic growth. But Malloy's approach to cut spending rather than raise taxes to manage the latest deficit threat is the right one, even if it's drawing the wrath of state labor unions and others. Let's be honest, Malloy is in a no-win situation and the only way he could become a popu- lar governor is if he ignores our state's budget problems and kicks the can down the road. It's an approach all too common in Connecticut state government, and one that got the state into its current predicament. Unfortunately, there are no cans left for lawmakers to kick. Hartford Mayor Luke Bronin faces a similar challenge as Malloy. The young Demo- crat and former Malloy general counsel was voted into office with widespread, even exuberant support from a wide-ranging constituency, but he has already drawn the ire of unions, nonprofits and others for proposing to create a financial sustainability com- mission to help oversee the city's finances. The commission would have been able to re-negotiate and control labor contracts. Bronin was also seeking the ability to levy a payment-in-lieu-of-taxes fee on nonprofits and a surcharge on the largest commercial property owners, but his plan was soundly rejected by the city council and now appears dead in the state legislature. Politically, Bronin probably made a mistake proposing such a far-reaching plan dur- ing his first few months in office, expending political capital without much to show for it and engendering organized labor's mistrust. But we supported the commission because we realize there are no easy answers to remedy Hartford's fiscal crisis, which includes deficits approaching $100 million (out of a $530 million-plus budget) over the next few years. Major structural reforms are precisely what the state and city need, but implementing them won't be easy or popular. To be effective, Malloy and Bronin must detach themselves from the whims of public opinion and develop policy that will drive long-term economic growth and stability, even if it comes at the expense of their political futures. n RULE OF LAW State needs human-services lockbox By John Horak O ne of the most disturbing features of the state's fiscal melee is the insensitive manner in which the disabled, home- less, and the "least fortunate among us" are used as pawns to advance political and finan- cial agendas far removed from the actual plight of these people. The only organiza- tions with an untar- nished and authentic claim to serve the interests of the least fortunate are the state's independent nonprofit human ser - vices organizations — with respect to both the clients they serve and the people they employ to serve the clients. These nonprof- its are funded almost completely through state "purchase-of-services" contracts, and the fiscal tsunami that now threatens the cash flow of state employees and everyone else on the state's payroll swamped the nonprofits over a decade ago. The funding under the purchase-of-services contracts has been flat at best during this peri- od, and the nonprofits have already been doing what no other beneficiary of the state's money wants to do — the same amount of work with fewer resources. I wrote about the human-service non- profits last April (Ct. unfairly pays human services nonprofits), and I won't repeat what I said then other than this: First, Con- necticut maintains an awkward two-class system in which the state and the non- profits both provide social services in a competitive arrange- ment in which state personnel are paid significantly more than the nonprofit employees (who are paid close to minimum wage and often qualify for public benefits). Second, the care needs of the clients and prospective clients (there are waiting lists) continue unabated (and increase in severity as the clients age), a situation exacerbated by the inequality inherent in this two-class system. The duplicity was on full display at the Capi- tol last June when the argument for tax increas- es was based on a barrage of rhetoric (which the nonprofits were encouraged to support and did support) about making sure the wealthy and large corporations paid their fair share to help the less fortunate; however, at the end of the day the new tax money was siphoned off and into the abyss on the state's balance sheet, with some crumbs left on nonprofits' doorsteps. This brings me around to a story in the March 25th Hartford Courant concerning Connecticut's suddenly "new" budget real- ties (which are a decade-old reality for the nonprofits) in which a spokesperson for progressive interests in the state called atten- tion to New York state "where 40 millionaires said in an open letter … that they are willing to pay more in taxes for government services for the homeless and the needy." The argument is that Connecticut's million- aires should be similarly willing to pay higher taxes to help the least fortunate among us. I agree. Moreover, even though I do not have the financial capacity of any of the 40 New York millionaires (or of however many millionaires there are in Connecticut), I would gladly pay some form of human-services surtax as long as the additional revenue actually found its way into the nonprofits' hands. This is a reasonable suggestion assembled with some of the same thinking behind the pending constitutional transportation lockbox, which will secure tax revenues raised to fund the Governor's transportation infrastructure initiative. This plan could be implemented by statute, and it could be called the Connecticut Human Services Surtax. The surtax rate and the income levels on which it would be imposed could be calculated based on relevant data, and the statute would have two other features. First, because money is fungible there would be a funding baseline below which the amount of general budget dollars allocated to nonprofit providers could not be decreased. This would be necessary to ensure that the new human- services surtax reve- nue would be added to the nonprofits' budgets — to prevent the state from taking away with one hand what the sur- tax yields for the non- profits with the other. Second, to further lessen the risk that the new funds would be diverted, and to avoid the administra- tive costs of a "mid- dleman" collecting and redistributing the funds, the surtax would be paid directly to the nonprofits. The details would be easy to work out: There would be a published list of eligible human-services nonprofits, the nonprof- its would have to issue a receipt to prove pay- ment, and limits could be put on the amount contributed to any one nonprofit to ensure the money is spread about fairly. The appeal of a plan like this is obvious — it would very efficiently distribute funds from the most fortunate directly to the least fortu- nate (and those who care for them at woefully unfair wage levels) — a win-win situation. I am a realist and recognize that legislation of this type would be a hard sell in the legisla- ture. But we are living in times extraordinary enough to warrant out-of-the-ordinary ways of doing things, and it may be that government would be better able to sell tax increases to vot- ers if they know the specific purposes for which the new tax revenue would be spent. n John M. Horak has practiced law at Reid and Riege P.C. in Hartford since 1980. His opinions are his own. HARTFORDBUSINESS.COM POLL Should CT adopt mandatory paid family medical leave? ● Yes ● No To vote, go online to HartfordBusiness.com. Last week's poll results: Should CT legalize recreational marijuana use? 70% Yes 30% No John Horak ▶ ▶ To be an effective government leader in Connecticut these days isn't about being popular; it's about making extremely difficult decisions that will anger a large portion of the electorate. ▶ ▶ Connecticut maintains an awkward two-class system in which the state and the nonprofits both provide social services in a competitive arrangement in which state personnel are paid significantly more than the nonprofit employees.