Dan Haar: Sweeping economic plan will break into pieces
By Dan Haar
They said it should be all or nothing. “No cherry-picking.” Enact the sweeping package of reforms whole, without removing the politically tough measures, they insisted.
And members of the Connecticut Commission on Fiscal Sustainability and Economic Growth meant it — back on March 1.
Now, after five weeks of hard politics, it’s clear the commission’s remake of the state tax code, along with a boatload of other changes designed to move the state forward, isn’t going to happen in a short legislative session, in an election year, with business and labor opposing key measures.
So the “no cherry-picking” credo is out. Commission members are working behind the scenes in the hope of seeing some of recommendations in the 119-page report make it to Gov. Dannel P. Malloy’s desk.
“We would like to collaborate with Republicans and Democrats to produce a streamlined set of recommendations that would be acted upon in this session,” Co-chairman Robert Patricelli said Wednesday, “because doing nothing is not an option.”
Even with cherry-picking, the task won’t be easy because of both time and politics in a legislative session that ends in exactly five weeks.
Dan writes about the intersection of business, public policy and politics and how the issues affect the people of Connecticut.
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But if you favor at least some changes to knock Connecticut back into consciousness, and you should, here’s the good news: The idea of recasting the tax laws — the ciommission proposed to reduce the state income tax by $2.1 billion, raise sales taxes by eliminating exemptions, raise gas taxes and institute highway tolls, abolish the gift and estates tax and create a business payroll tax — is not on the table for these five weeks.
That tax overhaul makes some sense, especially as it would lower the state income tax by 30 percent for most working families. But it was too ambitious for quick action, with too many open questions such as which services would lose their exemption in an expanded sales tax.
Patricelli is right, some action is needed. Postponing a tax debate leaves plenty the General Assembly could still do. The list includes a revamp of the teachers’ pension fund including moving state lottery assets into the fund to shore it up; creating the framework for cities and towns to benefit by working together; raising the minimum wage to $15 an hour by 2022; expanding Tweed New Haven airport; and many, many other reforms in state law, such as eliminating tenure for school principals.
The 14-person group, including several very high profile business executives, met in a conference call for about an hour Tuesday night, and continues to meet in small groups, Patricelli said. They can do that without public notice because the commission formally disbanded after it issued its report on March 1.
They agreed, cherry-picking for a streamlined set of measures is now OK.
It’s too soon to say what measures, if any, the legislature might see. Friday is the deadline for the finance committee to advance its bills and as of late Wednesday, with the committee’s final pre-deadline meeting scheduled for Thursday, it was still unclear how the committee would handle the fiscal and economic reform measures.
By law, the General Assembly must at least vote on something. That rule was contained in the 2017 bill that created the commission, though it’s not clear what, exactly, that means because the language of the bill gives lawmakers plenty of wiggle room.
But more to the point, there’s a sense among just about everyone that Connecticut’s endless fiscal crisis and economic malaise won’t be ended by the lame patchwork of desperate half-measures we see every two years at budget time. That’s why this commission’s ideas are getting a serious look, rather than the usual dust-collection on a shelf.
The finance committee is considering bills to restart the fiscal and economic commission and to direct state commissioners to study some of its ideas.
“People are not available. They went back to their day jobs,” Patricelli said. “You can’t expect them to work intensely on a public service project for a year ... They worked like demons for 76 days.”
Besides, he said, “We did the study...It’s time to make some decisions.”
In testimony Monday, he told the committee, “Six study bills are no substitute for action...We believe there is ample time left in this session for you to meet with us to craft and enact legislation.”
The trouble is, as the commission members said when they issued their report, it’s hard to carve out pieces of a big fix.
“How you address fiscal stability and economic growth without addressing the role of inequality and race...makes for a flawed process from the start,” said Tom Swan, executive director of the Connecticut Citizen Action Group, who previously co-chaired two health-related state commissions.
Swan agrees with the moves toward regional cooperation between towns, shoring up pension funds and increasing the minimum wage, though without the exceptions suggested in the commission’s report.
But Swan and others continue to criticize the commission in part because its research was funded by private contributions to Connecticut Rising, a nonprofit Patricelli created. Swan believes all of the commission’s interaction with consultants, such as McKinsey & Co., the global management consultancy, should be public.
Connecticut Rising previously received $300,000, Patricelli said, including $100,000 each from himself; Yale University, which had a vice president, Bruce Alexander, on the panel; and Webster Bank, whose recently retired CEO, James Smith, was commission co-chairman.
Patricelli said Wednesday that Stanley Black & Decker donated $100,000 last week. That company’s CEO, James Loree, was a member of the commission and prepared a comprehensive economic analysis.
Whether those payments and the commission’s consulting arrangements are subject to open-government reporting laws remains a matter of debate. Along with Common Cause in Connecticut, Swan’s CCAG requested copies of all correspondence between commission members about Connecticut Rising, and all correspondence between commission members and consultants for the commission.
After they didn’t receive the requested material, CCAG and Common Cause filed a complaint with the state Freedom of Information Commission. That matter is pending.