In a move that could have ominous implications for Connecticut businesses on which he is depending to rekindle growth, Gov. Dannel P. Malloy has proposed raising an additional $1.5 billion through a mix of income and sales taxes.
This comes as he won plaudits from business leaders for appointing a globally renowned expert to lead a consolidation of the Connecticut Department of Environmental Protection and the state Department of Public Utility Control.
Under Malloy”™s plan, Connecticut would replace its current three tax brackets with eight, with the end result of raising taxes for households with income in excess of $100,000. The state would hike its sales tax to 6.25 percent from its current level of 6 percent, with some business purchase exemptions remaining in place. And he would extend a 10 percent corporate income tax surcharge another two years.
Malloy proposes $2 billion in spending cuts, including the goal to cut the number of state agencies by 30 percent. As part of that plan, he recruited Daniel Esty, a professor at Yale University, to run the new Connecticut Department of Energy and Environmental Protection.
Massachusetts claims status as the first state to consolidate its environment and energy agencies under a single cabinet-level administrator; it marked the second time this month that Malloy has borrowed what he sees as a better idea from another state, also planning to model after Minnesota Connecticut”™s higher education governance functions.
After appointing a succession of people little known outside of Connecticut to lead state agencies, in Esty Malloy has an internationally known figure with experience helping businesses implement new energy policies, being well versed in macro-economic energy trends as well.
Esty is a former senior official with the U.S. Environmental Protection Agency, and was on President Obama”™s transition team entering office. Esty also runs his own consulting company called Esty Environmental Partners, whose clientele has included Armonk, N.Y.-based IBM Corp., Stamford-based Nestle Waters, and Unilever, one of the larger employers in Fairfield County via a big research division in Trumbull.
At Yale, he leads a research center focused on business and the environment, and in 2009 co-authored “Green to Gold,” a book on how companies can use environmental strategy to their advantage that was named by Inc. magazine as one of the 30 best business books of the past three decades.
Esty outlined some of his views last year during a roundtable discussion sponsored by The Monitor Group, a consultancy based in Cambridge, Mass.
“The goal is, for many companies, evolving from where they are now ”“ transforming their businesses into ones that are poised for success in this new world of business where sustainability is going to be a major factor across almost every industry,” he said. “You start by getting clear on the issues that are out there and which ones impinge on your business. It”™s important to be careful how you do that. It”™s important to think through every aspect of the lifecycle of your business.
“It”™s not good enough to be great on the first six or eight issues that you face, but have a residual one or two you”™re not good at,” Esty added. “The environmental community is unforgiving, government regulators equally so.”
Now that Esty is on the cusp of becoming a regulator himself, it remains to be seen whether his expressed views will translate into reduced regulatory burdens on businesses, with DEP working on draft regulations on two fronts that businesses say could bury them in paperwork.
“Professor Esty is a world-renowned and highly accomplished professional with strong experience working with businesses,” said Eric Brown, associate counsel for the Connecticut Business & Industry Association. “He expressed strong interest in working with the business community to improve the regulatory climate in a way that would promote both environmental progress and economic development.”
