Taking the measure of a new governor

The Dems will reject the cuts, approve more tax increases and Malloy will shrug and say he tried. He'll cut the towns who didn't support him and let them tax themselves, and he;ll reward the big cities who did elect him. The unions will make some small concessions. But CT will stay the 3rd worst business friendly state after NJ and NY unless those governors cut more from their budgets.
The Dems will not turn on the unions who own them.

Because they pulled the numbers out thin air. The number is not realistic and they know it.

Chicopee John, I am not an economist or a finance person, but I think I understand what is going on. Essentially Gov Malloy was handed a 2011-2013 budget after his election. This is the current spending budget--that is, if life went along as usual & no action was taken to change anything at all, the project is a $3.2billion deficit. This is because the last budget (Gov Rell's) used one time revenue (like federal stimulus money), didn't pay into the pensions (because of that famous 20 year contract with state employees Gov Rowland signed), and borrowed for operating costs. So although Gov Rell's budget "balanced", it didn't really balance, it was all smoke and mirrors....leaving the state much worse off than it had been before. Perhaps you remember all the discussion about how that budget just put off all the hard decisions?

So Gov Malloy was handed a budget with a $3.2B deficit, which is actually huge on a per person basis. The budget must balance and Gov Malloy felt it would be wrong to use tricks to do so. He felt, that to grow jobs, the state of CT should show that it is fiscally responsible & is going to fix the mess it is in. (This grows jobs because big employers have confidence in the state and consider moving operations to CT). He said he would use GAAP-Generally Accepted Accounting Principles, which is a very big deal to finance types. He said he would create a "sustainable" budget--that is, he isn't using tricks or one time games to get us to a good place. He is calling for EVERYONE (even you) to sacrifice, so that together we can grow jobs in CT. (I should also add that CT hasn't grown jobs in 20 years because of the terrible govs we have had.)

Now, the federal stimulus was a big deal during Gov Rell's budget-what she did was cut an amount of the aid to local towns that pays a big chunk of education and replaced it with stimulus. Gov Malloy said he would reinstate that aid...so the aid to towns for education is the same as it was in 2008-9. This is actually a lot of money, and it increases the CT State budget by a lot because this money was artifically removed by Gov Rell....so the actual budget for 2011 is higher than 2010, even tho the amount of money for education is the same. Other spending has been reduced-Gov Malloy has made spending cuts, otherwise the the increases in budget would be way, way more...so there are spending cuts, while the budget goes up. It doesn't sound logical, but it really does make sense if you examine it.

(You may disagree with the decision to again fund education, but I imagine you won't--because if Gov Malloy had not done that there would be class sizes approaching 60, and 1/2 the schools would close in many towns because they would be forced to lay off many teachers-maybe 20%, maybe 40%--a lot, anyway. And before you say the teachers shouldn't get raises, you should be aware that a number of towns had teachers who said don't give us a raise (last year),plus, a few teachers in a lot of towns I know about were laid off.) The teachers did not create this problem. Poor decisions by Govs Rowland and Rell made the financial situation in CT much worse than it would have been if they had been responsible stewards of the citizen's trust. Gov Malloy is doing his best to fix it & really, he deserves our support.

So, CT is going down the tubes if nothing is done..I agree 100%. But, we must be adults & recognize that we must straighten out our finances.

Ahh, just a quick note to state employee: NYTimes had an aricle yesterday questioning whether state employees made more or less in pay and benefits that workers in the private sector. The paper said that some states pay more, some less, and it was hard to get a handle on it, so they focused just on pay. And then they divided the state employees into those in jobs that requred a batchelor's degree and those that didn't. And they made one comment that really stuck with me...CT is one of the 3 states with the highest difference in pay between state and private for worker's without a batchelor's. In fact, those state workers are paid about 25% more than private workers. That is just pay & doesn't include benefits like pension (which most private workers don't have) and health insurance premiums (which are quite high for private workers). I think it is totally appropriate to look to state workers to give back quite a lot.

"Soak the Rich" - That's rich (pun intended). The "rich" did very well when the state instituted the income tax. There was already an income tax on dividends and interest which only applied to those making more than $54,000 which was a decent income back then. That tax was bringing in around 2 billion dollars (if memory serves) and the new income tax simply replaced that 2 billion dollars. However, instead of it just being on people earning over $54,000 it now applied to everyone in the state. Huge tax decrease for the rich. Huge tax increase for the middle class. The Bush tax cuts resulted in another huge windfall for the rich. Making the tax rates a little more progressive isn't soaking the rich. They're the only ones who have had their incomes improve over the past two decades. In Connecticut they're also the ones who almost destroyed the economy. To top it all off hedge fund managers, who make millions every year, only pay a maximum tax rate of 15% to the Federal government on their income.

Soak the rich?!? Hardly. I have to agree with earlier writers questioning when is a cut in the budget not a cut? We haven't seen any real spending cuts from Malloy yet just a decrease in the amount of increase - the budget is still higher than last year.

Highest electric rates?!? Governor Malloy, do something about them. Like fix the "auction" process and the penalty all the ratepayers are paying to provide Fairfield County with electricity on a congested distribution system.

While I took quite a few economic courses in college, I didn't take any finance courses. I also haven't closely examined the two budgets in question, going line by line to compare them. Don, I believe that I said that the new budget is higher than the old budget. Your analysis agrees that this is so. I did a quick search on the internet and found something which is interesting. When the last 2 year budget was adopted (and we are in the 2nd half of the 2nd year), it projected a $1.3B shortfall in the second year. Also, the total amount of the budget I looked at was $37.6B for 2 years, which, if divided evenly is $18.8B each year--but of course it probably wasn't divided evenly, because Gov Rell's budget was smoke and mirrors and wasn't reality based. (Also I didn't see anything about whether the transportation expenses were part of the budget or not-which raises a question, we are all aware that in the old budget the gas tax was put into general funds-so why wouldn't the expenses side be put there also? Just a side note-Gov Malloy said the gas tax would be only used for transportation related expenses in the new budget.)

Since Gov Rell's budget wasn't reality based, it isn't surprising that a realistic budget would be higher. This new budget reinstates the education spending, as I mentioned, and also pays this year's amount into the pension obligations, which the last one didn't. And, finally, it doesn't borrow for operating expenses, which the old one did. So, it is not a huge surprise that it is actually higher than the last one...but don't confuse that fact with the fact that there are real spending cuts in this budget. (Don, I suggest you look at the budget or at least hear the Budget Dir's presentation of it at the CT-N website. Examine his budget... it asks the state workers to give up quite a lot, and asks for shared sacrifice.)

And while we are talking about pensions, can someone correct me if I am wrong about something? I believe that State workers get a pension in addition to Social Security, just like some workers in private industry get 401K in addition to Social Security. So we can freely compare workers paying into pension and paying into 401Ks, knowing that both get Social Security. On the other hand, teachers do NOT get Social Security. A teacher that works for 10 years or so and looses his job thru layoffs, who then goes to work in private industry looses all of his pension. Is that right? I did hear that there was some sort of formula for teacher's who had a fair amount of Social Security pay ins and a fair amount of pension, so that they ended up with parts of both (but not all of both)in their retirement. Also,a teacher may buy a 401K on his/her own, but no one helps at all with that. Is that right also?

Watchdog, I was unaware that the state gave any money to banks in bailouts. In fact, I believe it was the federal government who saved us (and the world) from a massive depression by saving the mechanism by which the we all trade for goods and services. (I should also say that I firmly believe that the big 6 banks need to be broken up to ensure it doesn't happen again, but this is really off the subject.)

I absolutely agree that the state was mismanaged for years. And I think that part of the mismanagement was that state workers have total pay packages that don't reflect what it costs to have someone in private industry do those jobs. In some cases the state worker gets too little and in some cases the state worker gets too much -and in some cases the state worker is wildly overcompensated. This absolutely needs to be corrected. The quickest way to correct this is to examine and fix some things that are much more generous than private industry--health insurance premiums is one thing. How much does the average state worker pay each month to insure himself/herself? And how much is the state paying for health premiums for that worker? And how much is the state paying to insure that worker's dependents? These costs must be brought in line with private industry. Another thing to look at is pensions. NOBODY except state workers get a pension anymore! I would be absolutely in favor of switching the state over to a 401K system for state workers, except that the state can't afford the costs associated with the switch. (I am not including teachers in this--but moving teachers to social security needs to happen. And we don't have the money for that either.) And, finally, once the budget is passed, the Gov and his staff need to start looking at the work performed and bring the pay more in line with private industry-whether that is higher or lower.

Watchdog, you are right. You should get roughly what workers at Pratt, UPS, the other companies you mentioned do. If you are earning less for comparable work (which is quite possible if you are college educated) you deserve a raise! If you are earning more (which is likely if you are not college educated) you should get a pay freeze until your pay is in line with private industry. It is only fair.