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Dan Haar: Forget passing one sweeping state economic plan; now it’s in pieces

April 5, 2018 GMT

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 both 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 Robeert 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.

But if you favor changes — something, at least — to knock Connecticut back into consciousness, and you should, here’s the good news: The idea of recasting the tax laws to reduce the state income tax by $2.1 billion, raise sales taxes by eliminating exemptions, abolish the gift and estates tax and create a business payroll tax is not on the table for these five weeks.

The tax overhaul made a lot of sense especially as it lowered the state income tax by 30 percent for most working families, but it was too ambitious with to many open questions, such as which services would lose their exemption in an expanded sales tax.

Setting aside the tax changes, for this year at least, still leaves plenty the General Assembly could 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.

Business groups can’t live with the payroll tax and other measures; labor unions can’t live with dilution of collective bargaining and reforms in binding arbitration.

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 end 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. I was surprised when Patricelli told me he opposed that.

“People are not available. They went back to their day jobs,” he 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. The commissioners all testified. You have all that information. It’s time to make some decisions.”

Indeed it is, in a state that once again had zero overall economic growth in 2017, as we will learn officially next month. 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.

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 recently donated $100,000. That company’s CEO, James Loree, was a member of the commission, and prepared a comprehensive economic report.

But the way the money is spent and the communications around it remain private. Consultants worked for individual members, not for the commission as a government body.