Malloy Tells Business Yes — & No

Gov. Dannel Malloy told New Haven business leaders some words they didn’t want to hear Wednesday, then walked away with an endorsement from the group’s chief for his ​“shared sacrifice” state budget.

That happened when the governor took his budget road show to the 10th floor conference room of the Chamber of Commerce’s downtown offices.

Malloy came to pitch his plan to close a $3.5 billion budget gap in the next fiscal year by raising taxes by $1.5 billion, shrinking 81 state departments into 57, slashing spending $1.76 billion, and seeking $1 billion in worker concessions from his allies in organized labor.

Sixty local business leaders crowded into the conference room to hear Malloy say he considers ​“creating jobs” the budget’s top priority and plans to reveal soon the name of a corporate turnaround specialist as his economic development chief.

Malloy acknowledged that business didn’t want him to raise taxes. But he said the alternative would have been shredding the safety net, closing nursing homes, ​“shortchanging” urban schools. ​“I don’t think people in Connecticut would deny a Medicaid patron a kidney transplant if it would save his life,” he said. (That was a dig at Arizona’s governor.)

Malloy took questions for close to an hour. Right off he was asked about the Chamber’s list of legislative priorities for the session. Last month when Republican state legislators were presented with the same list at a Chamber forum, they refrained from saying no about any of it to the crowd. (Read about that here.)

By contrast, Malloy found an item to say no to, even though he had under a minute to look at the list: a request to ​“reallocate 3 percent of the current 12 percent hotel/motel tax” to host towns and regional planning groups.

“You want to take my $3.5 billion deficit and add a whole lot of money to it. I don’t need that,” he explained. He did back the idea of allowing municipalities to add 1 percent surcharges to the tax to keep for themselves.

Overall, Malloy told the group, ​“I can assure you this budget is better than anything that will get passed [otherwise.] I think you better support it …

“If you pick at this thing too much, if you complain about it too much because it affect you too much in one area,” then it can ​“fall apart” altogether and be replaced by ​“backroom dealing” that will harm business, he warned. ​“If on the whole you embrace what I’m trying to do, you need to get that message out.”

Chamber President Anthony Rescigno said after the meeting that he’s giving Malloy the ​“benefit of the doubt” and heeding his call for support.

Albeit with trepidation.

“We are biting our tongue on the tax increases. We prefer no tax increases. Understanding what we’re up against, understanding this is a shared responsibility, we’re OK with it as long as he can get those” $1 billion in concessions from labor next fiscal year, Rescigno said.

He did express one reservation: In response to a Chamber question, Malloy had said during the hour-long exchange that he has no ​“back-up plan” should he fail to win the $1 billion in concessions.

“We have to be successful. If we’re not successful, we’re talking about thousands of layoffs and the shredding of the safety net,” Malloy had declared to the group. Rescigno later said he fears that with no back-up plan the legislature will approve tax increases but no significant cuts in worker health benefits.

A Maybe & A Disagreement

Overall, though, Malloy earned the respect of the crowd, based on conversations afterwards, both for the overall thrust of his budget (its incentives for businesses, the labor concessions, preservation of arts and school funding) and for the forthrightness of the exchange. Rather than tell people what they wanted to hear, he told people what they could expect from him, they said.

For instance: Marna Wilber of Assa Abloy asked Malloy where he stands on a proposal to give incentives on state construction projects for buying hardware products made in-state — like the locks her company makes on Sargent Drive.

“I hadn’t thought about it, at least in relation to hardware,” Malloy responded. ​“It becomes very complicated. We have this thing called the [U.S.] Commerce Clause” that make certain restrictions on using out-of-state products ​“no-nos.” He also said he has to think about ​“cost factors” in construction. Still, he said, ​“We’re absolutely open to ideas. I don’t have a quick answer for that.”

He did have a quick answer for United Illuminating CEO Jim Torgerson.

Torgerson asked Malloy where he stands on the recommendations contained in three reports written by a group Torgerson heads, the Regional Institute for the 21st Century. Malloy said he used to serve with the group and had read the reports. Malloy praised the reports — then cited a section he disagrees with, about nursing homes.

He said he agrees with the call to change Medicaid rules to enable many patients to move from nursing homes to home care. But he said he disagrees with the report’s claim that that will save money over the long run and enable the state to have fewer nursing home beds. ​“There are going to be more people than in our history” living longer and ​“living sicker,” Malloy said. So even with lots of people moving out of nursing homes, the state will probably need all the beds it has, he predicted. However, in the short run the policy could save money, and perhaps the state can allow the homes to ​“bank” the beds until they’re needed later. He made a similar argument on the campaign trail last year, when he had to balance concerns about the crisis in paying for nursing care with the support of nursing-home workers who fear job losses. (Cities like New Haven have seen nursing homes close or file for bankruptcy.)

After Wednesday’s Chamber meeting, Torgerson said it sounded as though Malloy agrees with his group on the policy proposal about Medicaid rules but differs on the cost prediction. Torgerson said his group crunched the numbers and concluded that the state can achieve $900 million in ongoing annual savings in long-term care.

Click here to read and on the play arrow to watch snippets form last month’s Chamber legislative budget event with legislative leaders.