What do permitting a third casino, legalizing marijuana and eliminating liquor price controls have in common? They all have politicians seeing dollar signs. Each of these policy directions have pros and cons and the potential for serious consequences if we adopt them. So they should not be made lightly. Unfortunately that is exactly how lawmakers are looking at them right now, or at least that’s how these policies are being sold by proponents. Don’t worry, supporters say, my policy will bring in revenue for the state.
Connecticut continues to struggle with budget deficits. In the past five years, our lawmakers passed the two largest tax increases in state history. And every year in recent memory the budget begins the year in balance and slowly falls behind as the year goes on. Why does this happen repeatedly, year after year? Here’s why: The cost of benefits for government employees is growing much faster than tax revenue. Some categories of benefits are growing nearly 10 percent each year while tax revenue is growing at 2 percent – at best. That means other aspects of government – services for people in need, road maintenance, town aid – face cuts even while overall spending grows. These benefits could be reformed, but they aren’t because of conflicts of interest present throughout the system.
It’s complicated. That’s the best way to describe the ongoing relationship between Gov. Dannel Malloy and Connecticut’s hospitals. Malloy has significantly changed the rules of their game since he took office five years ago - and the changes show no signs of slowing down. The past two weeks brought significant announcements highlighting these changes. First, Malloy intervened to prevent further hospital consolidation, a trend that raises concerns about increased costs and fewer choices. Then, worsening deficit projections led the administration to halt $140 million in payments to hospitals.
At the Yankee Institute, we will stand alone when necessary, but this time lawmakers overwhelmingly joined our side. Last week, the Yankee Institute was the only group to submit written testimony opposing a controversial UConn union contract, and our Policy Director Suzanne Bates was the only person to testify against it in person.
In response to Gov. Dannel Malloy's planned budget cuts, the SEIU, District 1199, released a television ad Monday featuring some of its members declaring that they are “not a political football.” However, based on some of the salary and benefit packages these workers received it would appear they have already scored a touchdown.
Governor Malloy is spending this week in Puerto Rico at the annual Democratic Governors Association meeting and then taking some time off with his family. Puerto Rico is facing bankruptcy and looking for a federal bailout. Years of poor fiscal policies, government cronyism, overreach and interference in the free market has left the island-state with high unemployment and crippling debt. Hopefully the policy lessons of Puerto Rico’s struggles will not be lost on the governor. The island may be pretty but the economic challenges it faces - like Connecticut’s - are pretty ugly.