The 'Anti-Christie' Agenda Driving Connecticut

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Connecticut just finished its spring legislative agenda amid declarations in the media and among its political leaders that Hartford is now heading in a dramatically new fiscal and economic direction. That new path includes billions of dollars in additional taxes, a massive government stimulus program in the form of an $864 million debt-fueled building program, and significant new regulatory legislation, namely the country's first mandatory paid sick leave law.

But despite proclamations in the press and the statehouse that Dannel Malloy, the state's first Democratic governor in 20 years, was seeking to distinguish himself from anti-tax governors like Chris Christie and also from Connecticut's past, the new ruling regime in Hartford is merely taking the state in the same direction it's been heading for decades, albeit at a quickening pace. Under previous joint rule by Democrats and Northeastern Republicans, Connecticut became one of the nation's most heavily taxed, heavily indebted, and economically struggling states. The new Connecticut looks suspiciously like the old one, maybe just on steroids.

Back when those ‘tax-cutting' Republicans were in control of the governor's office in 2009, for instance, Connecticut already had the highest per capita state and local tax burden in the country, according to the Tax Foundation. The state's commercial taxes, the foundation estimated, amounted to the third highest burden on businesses in the country.

Critics of such rankings say they only reflect the low-tax bias of the organization doing the analysis and neglect other influences on business, such as quality of workforce and local amenities, where Connecticut is stronger. Business owners and executives, who make the decisions on where to expand or move firms, disagree. Recently, executives surveyed by Chief Executive Magazine ranked Connecticut the 6th worst state to do business in. That was the same ranking as in the previous survey, two years ago. Both polls were taken before the new regime of even higher taxes, more debt and more regulation were in place.

Although Hartford's agenda really hasn't changed all that much, the state's new political leadership better hope that the results differ. Connecticut finished 47th among states in net jobs created by existing businesses over a 15 year period, according to the National Establishment Times Series database, which tracks job dynamics from 1993 through 2008. On jobs generated by new businesses over the same time, the state ranked 46th, according to NETS. In fact, it's misleading even to use the term ‘job dynamics' in discussing Connecticut. The state has fewer private sector jobs today than it had in 1990.

Malloy and his fellow Democrats now in charge seem to believe that the state's only problem was that it just wasn't doing enough taxing and spending and borrowing. So the Dems aim to jolt the Connecticut economy with an $864 million expansion of University of Connecticut Health Center, which they project will create a whopping 16,400 jobs over the next 25 years. This is the same university health center that is losing so much money that the state has bailed it out four times since 2000, the same health center that is not projected to break even again for another seven years. Still, in fairness to Malloy, he merely took a previous GOP plan to expand the facility and supersized it, adding $254 million in new debt on top of $338 million in bonding that the Republicans had already approved. Connecticut, by the way, already has one of the highest per capita debt loads in the country.

Although the legislature has headed home, the state's budget is still in flux because Malloy is relying on $1.6 billion in concessions that he has yet to achieve from public employee unions, who backed his election bid. But Malloy has a fallback plan. The $2.6 billion tax increases he engineered would produce a surplus some experts think could be as high as $1 billion, which the governor could then use to plug any holes created by union resistance to cuts. Of course, the unions know that extra tax money is there, too.

Earlier this year in a Malloy profile, the New York Times drew a contrast between him and New Jersey Gov. Chris Christie, painting Malloy as something of the anti-Christie. But what the Times failed to understand is that Connecticut is currently on the same political arc as Jersey, just a few years behind. Northeastern Republicans ruled the Garden State more or less continuously for 20 years except for a brief hiccup here and there, and they brought the state an agenda of higher spending and borrowing shenanigans, like Connecticut.

Then, when the Dems took over Jersey in 2002 they merely supercharged the GOP agenda, sending the state budget careening out of control with spending increases that outpaced tax hikes, exacerbating what were already emerging economic woes. Christie was elected by a formerly indulgent crop of Jersey voters to clean up that mess after eight years of Jim McGreevey and Jon Corzine and decades of erratic Republican behavior, too.

From the looks of things, Malloy might not be so much the anti-Christie as the reincarnation of McGreevey/Corzine. Connecticut residents better hope not.


Steven Malanga is an editor for RealClearMarkets and a senior fellow at the Manhattan Institute

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