Malloy Must Address

Structural Deficits

To the Editor:

In a previous letter to The Bee, I spoke about Newtown’s budget challenges. In it, I also stated that the various taxes imposed in the state’s upcoming budget by Gov. Malloy would create an additional hardship in the ability of Newtowners to fund this year’s local budget. The governor, while quick to impose a large income tax increase, has been unable to finalize spending cuts and has seemingly gotten nowhere regarding the $2 billion he was going to extract through public union concessions.

A recent article in the Danbury News Times quoted Larry Dorman, a spokesman for one of the unions, and hints at their ultimate strategy: “No matter what happens, public service workers will continue to work with fellow middle class and working families throughout our state and with our community allies in advocating for a state budget that reflects true ‘shared sacrifice,’” Dorman said. “A budget that asks our biggest corporations and ultra-wealthy citizens to step up to the plate in ways they have yet to be asked.” What a clever way of saying to the governor, no meaningful concessions until you raise taxes even higher.

So there you have it. No real concessions until even more taxes are raised on both corporations and “ultra-wealthy” citizens, the latter being a definition that somehow always seems to include most Newtown families. Already, Connecticut is among the three highest taxed states and is rated the worst by Moody’s in terms of its per capita debt and pension obligations. Any business would be crazy to relocate to this state while its fiscal affairs are so unsettled, and a growing economy is critical to our future financial health. Taxing all corporations and citizens to then subsidize a few favored corporations to increase hiring is no way to foster lasting growth, governor. The rest will simply move since Connecticut is not just competing with neighboring states but rather with all states that offer lower taxes.

As recently as January we have funded only 44 percent of our $21 billion pension obligation even though 70-80 percent funding is recommended in order to be actuarially sound. Newtown’s share of the total unfunded obligation is $3,400 per person which is over $92 million dollars! This amount alone means that Connecticut will face structural related deficits for years to come. It is highly unlikely this year or next for Gov. Malloy to balance the budget unless he institutes real reform to the pension and benefit system of the public sector, and also supports legislation to suspend all unfunded mandates.

Until then, you can be certain that the state will have to increase taxes, borrow even more money and push expenses down to the localities causing more local tax increases. A good start to help reverse these structural deficits would be: a cap on state spending relative to private sector growth, a move to 401k type retirement plans for new public employees, state pension reform, and a property tax cap, not policies that increase taxes and destroy job creation.

Joe Kearney

9 Daniels Hill Road, Newtown                                       April 27, 2011