Malloy Praises, But Stops Short Of Endorsing, Reform Report On State's Finances

By Stephen Singer

Gov. Dannel P. Malloy on Wednesday praised an advisory committee’s report that calls for higher corporate taxes, an across-the-board cut in the personal income tax and an end to collective bargaining for state employee benefits.

But he stopped short of endorsing the report by the Commission on Fiscal Stability and Economic Growth. He spoke to about 300 business owners, representatives of local chambers of commerce and others who attended the Connecticut Business and Industry Association’s annual lobbying day at the Capitol.

“I think it’s a great report. I think they have said things that I’ve probably said,” Malloy said. “They’re just smarter and you’re more inclined to listen to them.”

The committee’s co-chairmen, James Smith, the retired chief executive of Webster Bank, and Robert Patricelli, a former health care executive, later briefed business owners and representatives about the report. The CBIA has not endorsed it, expressing wariness about proposals to raise business taxes and establish a payroll tax that combined would generate $475 million in revenue.

The commission was established last year for business executives to look at state government from the outside and recommend ways Connecticut can reverse its economic stagnation and chronic state budget battles caused by declining revenue.

It proposed scores of recommendations, inviting criticism from unions that say the affluent would gain at the expense of the poor and the middle class, and from businesses who are balking at higher taxes.

In speaking favorably about the report, Malloy did not cite its specific points. But he criticized the state’s tax structure and insufficient funding to fix Connecticut’s chronic transportation problems. The report discussed both issues and numerous others in detail.

Connecticut must broaden the tax base for revenue to be less concentrated on certain types of taxation, the governor said. The income tax generated nearly $9 billion in the state’s 2016-17 budget year, accounting for nearly half of state spending.

Property taxes are a primary source of funding for municipal operations, primarily education.

“That report and some of its findings are very, very important and quite frankly needed to be said by an independent body,” Malloy said. “The body of work points us in the right direction on a long-term basis.”

The report also called for a higher gas tax and a plan to introduce tolls that would raise revenue.

Malloy challenged the legislature to come up with solutions to the state’s transportation problems, specifically referring to the time motorists waste fighting traffic between central Connecticut and Fairfield County on any weekday.

“I have long advocated that if the legislature had any guts when it came to transportation they would schedule at least one month of every session to meet in Stamford, Conn.,” said Malloy, a former mayor of Stamford.

“That sounds like a joke, but if we can’t get there and if people who want to get out of New York can’t get to Connecticut then the job funnel that has long existed in Connecticut for the last 65 years doesn’t produce the jobs that we need to see produced in the state,” he said.