The Register Citizen (Torrington, CT)
Seven shovels loom over fiscal hole
There’s a key scene in the evergreen film “It’s a Wonderful Life” when the villainous Mr. Potter nearly seizes the protagonist’s Bailey Building & Loan by offering shareholders 50 cents on the dollar during a fiscal crisis.
George Bailey stems the tide by convincing his shareholders to take what they need from his honeymoon cache. Survival, in vintage Hollywood, called for cooperation from all stakeholders.
How that applies to contemporary Connecticut is open to interpretation. Republican gubernatorial candidate David
Stemerman offers a scenario where he makes an offer to state pension-holders that is akin to Potter’s. At least Potter’s was legal. Stemerman acknowledges that he is banking on Brett Kavanaugh claiming the open spot on the U.S.
Supreme Court, opening the window to win a future case that — if negotiations were to fail — would allow the governor to pay off the pensions at a reduced rate.
“There is not enough money today, nor will there ever be, to pay 100 cents on the dollar on what has been promised,” Stemerman told the Hearst Connecticut Group Editorial Board.
Your political leanings may determine whether you view Stemerman as a modern Potter or Gov. Dannel P. Malloy as a version of Bailey, determined to deliver on the promise made to pension-holders.
Imagine — and maybe you don’t have to — planning your life based on projected pension earnings. Along come seven would-be governors with varying concepts about how to dig out of a canyon of pension debt created by Malloy’s predecessors.
The four candidates determined to handle the state like a business — businessmen Stemerman, Bob Stefanowski, Steve Obsitnik and Ned Lamont (the only Democrat among the four) — often fail to recognize the ways in which a state is not like a corporate entity. Stefanowski wants Hartford to declare bankruptcy. That’s not as easy as shaking off a failing business division.
Unlike some of the other candidates who offer vague plans, Stemerman’s are specific. Piece them together and the state climbs to great heights. But it seems like a game of Jenga; remove one piece and it’s a pile of rubble.
Republican Mark Boughton, the mayor of Danbury, talks the loudest about eliminating the state income tax, which Bridgeport Mayor Joe Ganim, a Democrat, literally laughs at. Obsitnik, who offers moderate solutions in the form of targeted tax reforms and efficiencies, also scoffs at the concept.
Along with former Trumbull First Selectman Tim Herbst, Boughton and Ganim share the invaluable experience of dealing with union negotiations, an advantage they hold over the political rookies they face in Tuesday’s primary.
The Bailey Building & Loan survived a subsequent fiscal crisis (let’s call it what it was, a sloppy bookkeeper), because of the generosity of shareholders. Residents have given enough in recent years and will have to choose the vision they feel will lead in the right direction.
But let’s face it, there is no Hollywood ending for Connecticut.
Tim Herbst, R: “My first preference would be to bring collective bargaining units to the table . ... My preference would be to recognize that the rank-and-file acknowledge and understand we have a problem, the present course is not working, we’re going to have to fix this. I disagree with a Republican governor who agreed to a 20-year agreement, and I disagree with a Democratic governor who extended it for another 10 . ... I’m not going to tell people that I’m going to eliminate a certain tax that accounts for 55 percent of total revenues in the budget without a plan to do it. I feel very strongly that you’ve got to dig out of this hole first before you can even have any realistic conversation about elimination of those taxes . ... I want to eliminate the estate tax, I want to eliminate the Social Security tax to give our seniors some breathing room ... If you really want to lift the middle class in our state rather than say you’re going to eliminate the income tax across the board, develop a plan where in the first four years you eliminate the tax for those people making $75,000 or less.
Mark Boughton, R: “Our big bold plan is the phase out the income tax over 10 years ... (First), we’ve got the (State Employee Bargaining Agent Coalition) thing that has to be addressed, we’ve got pension liability ... one of our pension recommendations is to build on a report done by Goldman Sachs to offer a voluntary buyout program much like we did in Danbury for state employees and retirees, which moves them out of the pension system but honors a commitment to them, be able to bend the cost curve on the annual required contribution later on in the budgetary cycle. We’ve actually started working on our first budget ... We immediately reduce the income tax by $400 million . ... About 85 percent of that tax relief goes to the bottom tier . ... The first low-hanging fruit of our plan is to eliminate some departments, condense some departments . ... It’s really years two through five where the hard work has to be done. ... Start with the Board of Regents, which is a landing place for people who are politically connected.”
Ned Lamont, D: “First thing I do when I get up there, we get labor and business, Republicans and Democrats are going to be at that table. I’m a strong supporter of labor. I believe in collective bargaining, but collective bargaining means labor has a place at the table but also includes the word bargaining. I’ve got to be fearless when it comes to reforming our tax structure, so we have a more reliable and predictable revenue stream. Everybody else is going to eliminate the income tax, OK, that’s one way to balance the budget, but I want to make some reforms totally based on job creation ... If we’re not smart and we don’t train people ... we’ll regret that for the next generation . ... Our geographic location was always an amazing strategic advantage for us. We had easy access to the biggest markets in New England and the greater New York market ... we were less expensive in terms of housing and commercial . ... But now that it takes 10 minutes longer to take the train, now that we have gridlock ... we have to put money into transportation.”
David Stemerman, R: “The borrowing authority of our state is almost exhausted after the bailout of Hartford. And we have a $2 billion budget hole for our next governor ... the root cause of why we have that is because the typical state spends 10 percent of its receipts on retirement and debt and Connecticut spends about 30 percent . ... We’ve heard from the different Republican candidates these broad-based statements of ‘Oh, we’re going to reform the retirement benefits. We’re going to do something.’ We’re the only campaign in either party that has put out a specific plan on this ... We are proposing to create an independent locked privately managed trust that is effectively a one-time buyout ... It means there is not enough money today, nor will there ever be, to pay 100 cents on the dollar on what has been promised. But I view that 30 cents in inadequate. I view that the current arrangement is unfair to everyone . ... We want to be able to pay you the equivalent of the private sector ... If you do that, we will give you a financial interest in the future of the state.”
Bob Stefanowski, R: “We need to resize government. It’s too big ... I can take cost out there. Renegotiate (State Employee Bargaining Agent Coalition). We have to do it. It’s choking the state. We have to try to it fairly and protect existing employee retirees if we can. But that agreement is going to tear down this state if we don’t do something with it. We need to re-prioritize. We need to stop building busways from New Britain to Hartford. We need to use that money to invest in our roads and bridges. Invest in education. And finally, we have to revitalize. We have to revitalize our cities. And that doesn’t mean throwing money after it. I think we probably have to file Hartford for bankruptcy. We have to look at it. We keep throwing money into cities that are never going to get out of the hole . ... And, in the long term, tax cuts increase revenue and Connecticut is the perfect example of that. Malloy has raised taxes four times and so many people are leaving the state that it’s reduced revenues.”
Joe Ganim, D: “I’m probably the only guy who has dealt with unions. We have 13 municipal unions. Many are the same as the state unions ...We’ve got to get this budget on track. If you allow the fiscal mess to continue where you’re missing revenues and expenditures by $2 billion a year, then you’re never going to be able to get out of your own way as a state government in order to be effective as a state government . ... First of all, what are the real numbers? How do you predicate your budgets on either revenues being off by that about repeatedly? ... We set our budget on a tax collection rate ... You can fabricate numbers in the front end, but they will bite you in the back end . ... If you’re going to fix this thing, it’s going to be job growth . ... You’re not going to cut your way out of this ... (Regarding rivals’ proposals to eliminate the state income tax) I don’t mean to laugh, but the question has to be deal with skepticism. To do that a level of disingenuousness or lack of understanding the fundamentals.”
Steve Obsitnik: “I believe in targeted tax reforms Day One. I want to hug the customers of Connecticut ...Seniors, businesses and working people. I want to target 4 percent of our revenue receipts, and hug three important groups: The estate tax; tax on Social Security and pensions, that’s hugging seniors; and a tax reduction of middle class workers $100,000 or less, from 5.5 roughly to 4 percent, and I want to look at phasing out the corporate tax over a three-year period. By hugging those three groups that we really need an anchor in Connecticut, I’m only going to give up 4 percent of my revenue. They are going to be able to breathe and say that ‘I actually can live in Connecticut, build a family, build a business and retire. That’s step one. I immediately start going after the $3.5 billion in efficiency savings which we need to optimize in our cost structure. And as we’ve done that, then we’ve earned the right for broader-based tax reduction. Because right now the people who say, ‘Let’s get rid of the income tax’ It sounds wonderful, I love how it feels, the problem is you never get a second sentence.”