Malloy Budget: Two Years, Nearly $40 Billion UPDATE: New York celebrates

This is a great wrap up of the new Governor’s budget message to the legislature yesterday. Dana Whalen, WTIC News Director, has compiled a great post that includes audio of the Governor’s speech, text of the speech and links to reaction from business and political leaders in the state. Here’s a sample.

First some key points in the speech, that to be kind, was full of inconsistencies. The Governor proclaimed more than once that Connecticut is open for business, while simultaneously extending the business tax surcharge and raising income and sales taxes to the tune of almost $3 billion dollars over two years. But what caught my attention was his First Five program.

First, and I want everyone to hear this loud and clear: this budget says Connecticut is open for business.  And it does so in two significant ways.

To begin with, it makes a substantial, direct investment in job creation.We are combining our economic development efforts under one agency so we can have a single powerful voice when it comes to attracting, retaining, and growing jobs in Connecticut.

And that voice will have some new things to say, like our new First Five initiative that will offer powerful incentives to the first five companies that bring hundreds of new jobs to Connecticut.

This program takes our best job creation tools, like the Reinvestment Tax Credit, the Manufacturing Assistance Act and the Job Creation Tax Credit, and allows them to be combined and the benefits increased for companies that bring more than 200 new jobs to the state.

And we will hold these First Five to their commitments with mechanisms to ensure that the jobs and investment we support will last.

To these first companies that commit to creating hundreds of new jobs, Connecticut says, “Welcome, let’s get to work.”

The translation here is … we will offer a new business select tax credits, increase your corporate tax and then we will hold you hostage. And what happens if other taxes increase to a point where doing business her becomes untenable. Or when these credits expire. The Governor must understand this is not a welcome mat when other states like Florida and New York are lowering and even eliminating corporate taxes.

As for concessions from labor, purportedly to save two billion over two years, CT Mirror says, the number don’t add up.

After pledging to cut nearly $2 billion off the projected cost of maintaining current services next year, the new governor offered $750 million in specific reductions, focusing primarily on social service and Medicaid programs, a higher education consolidation plan and by waiving the same statutory-mandated increases in certain municipal aid programs that the legislature has disregarded for the past two years or more.

The biggest cut in the Malloy budget technically involves a “lapse” or relatively undefined savings still to be achieved. The governor announced this week that it would come from state employee wage and benefit concessions as well as other savings tied to rank-and-file labor and management.

But is it achievable?

Read both and follow these links to get reaction from the business community. Courage!

UPDATE: I thought I would add this editorial from this morning’s New York Post:

Looks like New York has a new secret weapon in its battle to keep residents and business from fleeing the state.

His name is Dannel Malloy — and he’s the new governor of Connecticut.

Like his counterparts in the tri-state area, Malloy faces severe economic constraints: a $3.2 billion deficit, amounting to 20 percent of revenue.

Unlike Andrew Cuomo and Chris Christie, however, Malloy is tackling his budget shortfall by proposing one of the largest tax hikes in state history on Connecticut’s middle class.

Malloy — Connecticut’s first Democratic governor in 20 years — is proposing to govern right out of his party’s classic playbook: tax, tax, tax.

Oh yeah. Read it all.