Malloy signals he’s ready to deal to fix budget

In calling Republicans to the table, Gov. Malloy is not only challenging them to move beyond rhetoric and offer serious ideas, but also signaling that he would be prepared to form a coalition of Republicans and fiscally moderate Democrats to move an agenda forward in a special session. T his is the governor The Day endorsed for re-election in 2014. He arrives after cutting a deal with his fellow Democrats in the legislature that went back on his campaign pledge not to raise taxes, watching that budget run into problems within a couple of months, and seeing his job approval rating plummet among voters.

Whatever the reason, Gov. Dannel P. Malloy is leading again.

While never happy with the formula the governor pursued to address the massive deficits he inherited when elected in 2010 — it leaned too heavy on tax increases and not enough on budget cutting — he did confront the problem and he used his political capital to push the legislature.

That was not so in the past legislative session, after his re-election, when the governor seemed too much the spectator following the lead of Senate President Pro Tem Martin M. Looney and Speaker J. Brendan Sharkey.

Now the governor is doing what he should have done during the budget session. He is calling all parties to the table. Gov. Malloy said he wants policies that provide some long-term relief, not gimmicks and temporary fixes that allow the state to struggle through yet another budget cycle only to face another crisis when budget preparation begins anew.

In calling Republicans to the table, Gov. Malloy is not only challenging them to move beyond rhetoric and offer serious ideas, but also signaling that he would be prepared to form a coalition of Republicans and fiscally moderate Democrats to move an agenda forward in a special session. We like this guy. How big is the immediate hole the state faces in its $20 billion budget? Somewhere around $400 million if the legislature wants to ease or eliminate the cuts in Medicaid funding to hospitals that the administration turned to when it first conceded revenues were falling short of budget projections. Perhaps more if the state rolls back some of the business taxes it imposed or plans to impose.

In expressing his seriousness, the governor said he is ready to cut 500 jobs from the state workforce, by “attrition and some other means.” The executive branch already has about 1,000 less jobs than when he took office. No one likes job reductions, but Connecticut needs a government the people can afford.

Gov. Malloy is ready to take a second look at the unpopular unitary reporting system, a tax intended to prevent corporations from hiding earnings with affiliates in other states. Set to be imposed next fiscal year, that has proved a potential business killer in a state that fancies itself as a place for corporate headquarters in the New York Metro region. The governor has also put up for discussion easing the new restrictions placed on the ability of businesses to use tax credits to reduce their taxing exposure.

Looking at a longer-term issue, but one with massive implications for state budgets, Gov. Malloy proposed changes in how Connecticut funds its state pension plan. The fund only has enough assets to cover 42 percent of its obligations. To his credit, Gov. Malloy has done far better than his predecessors in working toward adequately funding the plan, but it has not proved to be enough.

Currently the annual contribution stands at $1.5 billion. To keep up as planned, the contribution would have to quadruple by 2032, according to Benjamin Barnes, the administration’s budget director, crowding out needed programs or spiking taxes, or likely both.

Gov. Malloy proposes a boost to $2 billion annually, but keeping it there, a move that would push solvency out to the middle of the century, but maintain a manageable payment.

The point is not whether that is the best solution, the point is that the governor is engaging a needed discussion. And that discussion should include moving new hires to a 401(k)-style defined contribution plan.

The coming weeks will test the seriousness of this effort.