November 9, 2010
By DAVID M. HALBFINGER
A week into his transition, Dannel P. Malloy can finally, officially, call himself Connecticut’s governor-elect. Now, maybe he can remind himself why he wanted the job in the first place.
With backbreaking budget deficits of as much as $4 billion, and a lifeless economy threatening to deepen those shortfalls, experts say the state is mired in its deepest financial hole in decades.
Mr. Malloy’s task is particularly daunting because he must try to create jobs in a state that has ranked last in employment growth since 1990.
“It’s never been this bad,” said Fred V. Carstensen, director of the Connecticut Center for Economic Analysis. “We’re looking at years of deficits, even making heroic assumptions about revenue growth.”
Even worse, most of the usual deficit-closing tricks have already been tried, Democratic and Republican officials say, leaving Mr. Malloy, a Democrat, with little choice but to resort to blunt instruments: tax increases, layoffs or union givebacks, or going deeper into debt.
In an interview on Tuesday, Mr. Malloy, 55, a former mayor of Stamford, acknowledged the gloomy forecasts of deficits as large as 20 percent of the state’s budget. But he sounded upbeat.
“It’s real ugly,” he said. “The gimmicks have run out. It falls to the next governor, who happens to be me, to right the ship.”
Mr. Malloy said he planned to squeeze every penny by consolidating state agencies, but acknowledged there would still be plenty of pain to go around. “I suspect it’s going to be something of everything,” he said. “I don’t have any other options. You can’t tax your way out of it. You can’t cut your way out of it.”
As a candidate, Mr. Malloy outlined a variety of ideas: cashing in $1 billion in unexploited state tax credits to build new research and manufacturing centers, dispatching teams of local officials and business leaders to recruit out-of-state companies and accelerating economic development at Bradley International Airport, to name a few.
In the interview, he said he would move quickly to change attitudes about Connecticut among business leaders in the state and elsewhere, by working with lawmakers to cut state surcharges on electric bills, among the highest in the nation.
The governor-elect also said he would try to bring “a sense of reality and normalcy to government,” most noticeably by adopting generally accepted accounting principles, or GAAP, in keeping the state’s books and preparing its budgets.
Doing so means bringing papered-over problems out into the open, which would make the state’s immediate and structural deficits look even larger than they already do, Mr. Malloy said.“People will see we’re not going to hide our problems,” he said.
Political insiders said adopting the more stringent accounting principles could also strengthen Mr. Malloy’s hand with union leaders and lawmakers.
“It’s the handle of the ax,” said Richard Foley, a political consultant and former state Republican chairman. “Honesty can be an expensive hobby. But he might be able to use it as a tool. If you want to have truly honest budgets, we have to do this, and he’ll use it as a rationale to raise taxes, cut back some sacred cows and eliminate some positions. It’ll buy him cover.”
Mr. Malloy will at least enjoy support in the capital: his party will control both houses of the state legislature and the executive branch for the first time in 20 years.
His narrow victory over the Republican nominee for governor, Thomas C. Foley, also owed much to the state’s public-sector unions, which were eager for a Democrat after 20 years of hostilities with Gov. John G. Rowland, who laid off thousands of workers, and Gov. M. Jodi Rell — both Republicans.
Now, labor leaders say they expect Mr. Malloy will invite them into the cost-cutting process.
“Rowland was very tough on labor,” said Matt O’Connor, a spokesman for a coalition of 13 state workers unions. “Rell’s attitude was one of condescension. The reason why Governor-elect Malloy’s in the best position to bring real change is he’s willing to work with partners. He’s willing to listen.”
But it may be the union members who wear hard hats who welcome Mr. Malloy’s inauguration the loudest. In the interview, he said his biggest job-creation move would be to start evaluating infrastructure projects according to how many jobs and how much tax revenue they would create, and then to set about borrowing quickly to get the best of them off the ground.
Mr. Malloy said Governor Rell had cut capital expenditures in response to the economic downturn. “I, on the other hand, believe that infrastructure investment is long overdue, it primes the pump, and it puts people back to work,” he said. “All eight of the downturns since World War II, we were led out of by construction. Yet we elected people to Washington who don’t believe it’s an appropriate tool to use.”
“I want to be very clear,” he added. “I believe it is.”
Copyright 2010 The New York Times Company