At campaign events throughout the election season, Dan Malloy repeatedly stated that his first act as governor would be moving his hand from the Bible on which he took the vow of office to a pen, and signing an executive order instilling generally accepted accounting principles for state government.
For businesses that have long relied on the certainty brought by GAAP accounting, it is not Malloy”™s first act that has them worried ”“ it is the uncertainty of what may follow.
In electing former Stamford Mayor Dannel Malloy governor of Connecticut, citizens are placing their trust in a government unified under the control of the Democratic party for the first time since the administrations of William O”™Neill, who served from 1980 to 1991.
Malloy wants that challenge ”“ and how effectively the state can repair its budget and renew employment will largely define his administration, the same way outgoing Gov. M. Jodi Rell will forever be linked with her efforts to rekindle confidence in the transparency of state government following the imprisonment of the man she replaced, John Rowland.
Malloy”™s job is far harder ”“ but he likes what he has to work with.
“We have great people, hardworking people, smart people,” Malloy said, in a debate with rival Tom Foley in the waning days of the campaign. “We led the Industrial Revolution; we”™ve led other monumental changes in society. We”™re ready to do it again.”
Transparency at top of agenda
Malloy has been crystal clear in his intention to further improve government transparency through GAAP accounting, throughout the election he has been more opaque on details of how he will tackle the budget crisis. In Nancy Wyman, he has a sharp-witted lieutenant governor well versed in deciphering the economic realities spawned by past budgets passed by the Connecticut General Assembly.
Malloy named as his chief of staff Tim Bannon, a onetime executive with Stamford-based Purdue Pharma L.P. who more recently has been executive director of the Connecticut Housing Development Authority; and who once co-edited a Yale University humor magazine alongside Doonesbury cartoonist Garry Trudeau.
Tax increases still a possibility
If Malloy ads and campaign flyers swashed red the face of his opponent Tom Foley in the closing days of the campaign, it is now Malloy who faces a sea of red ink. As both men pointed out on the campaign trail, Connecticut is only barely making ends meet by relying on one-time or unsustainable crutches such as federal stimulus funding, the drained “rainy day” pool, and borrowing. And looming down the road are billions more in unfunded commitments to cover the pension and health care costs of state retirees.
In one debate, Malloy responded to Foley”™s accusation that he will raise taxes ”“ while giving himself some wiggle room in his response.
“I don”™t want to raise anyone”™s taxes, ”¦ certainly in the middle of a recession,” Malloy said. “But I also believe that the people of Connecticut want a good, fair, decent and honest government; and I am prepared to bring that to the people of Connecticut. I have watched the last three governors … make promises about taxes, and had no expectations of keeping those.”
If not ruling out additional taxes on the state”™s wealthiest residents, Malloy has also promised to assess both taxes and regulations in the light of Connecticut”™s economic competitiveness.
“We don”™t benchmark our tax system and understand what we are doing to businesses and job creation in the state, against Massachusetts, New York, New Jersey and Rhode Island,” Malloy said. “We don”™t benchmark our regulatory system and understand what additional pressures we put our businesses under.”
Business groups want sound fiscal policy
For the Connecticut Business and Industry Association, the Business Council of Fairfield County and other groups, the prospect is a daunting one of a unified government under the Democrats.
“He has to set an agenda for that legislature, because that legislature ”¦ has really strayed from sound fiscal policy,” said John Rathgeber, CEO of CBIA. “A mistake I think almost every politician makes is they look at the budget deficit ”¦ in the context of a static economy, and our economy is not static. It is either going to grow, or it is going to shrink.”
Malloy touted Stamford”™s growth as proof of his ability to add jobs. Stamford”™s skyline grew under Malloy”™s 14-year tenure as mayor but so did residential taxes despite the arrival of behemoths like UBS AG, which spawned considerable outcry during the city”™s most recent property revaluation assessments.
“A lot of these politicians, including the mayor, were riding their success each election day on bringing business and industry into the city, and having benefits on several levels ”“ not the least of which was the added tax dollars,” said David Lewis, a city resident and CEO of Stamford-based OperationsInc. “The basic premise was that it would reduce the tax base in this city, and that did not happen. It also became more expensive to live here or have a company here, because now the caliber of business that was in the downtown area notched up (rents).”
Lewis says with all things being equal he would not choose to have his business anywhere else in Connecticut ”“ despite the pressures the city”™s escalating costs and the region”™s commuting woes place on some workers.
One area of spending Malloy has pledged to increase is transportation ”“ and that is something that might just draw the support of some in the Fairfield County business community.
“We need to design every entrance and exit on a 70-year-old road. ”¦ We need to squeeze in lanes where we can,” Malloy said. “We also need to invest in rail systems, and think about rail systems a little bit differently than how we”™re currently doing it ”“ not as the old, 150-year-old rail systems, but as subway systems as they go up and down our corridor; shorter trains, but much more frequently scheduled. We also need to look at the future of light rail in Connecticut, linking portions of our state that are not currently linked.”
