AP NEWS

Sean Goldrick GOP claims distort state history

February 18, 2019

Washington Post’s Fact Checker has documented more than 8,000 lies told by Donald Trump since he took office. Reading their highly misleading recent oped about the Connecticut budget, Republican state senators Len Fasano and Kevin Witkos appear determined to catch up with him.

In their Feb. 3 op-ed (“Connecticut has momentum; let’s not lose it”), Fasano and Witkos claim that, “While Connecticut endured years of massive tax increases that only led to bigger budget deficits, today’s budget numbers look very different.”

They’re referring to Democratic Gov. Dannel Malloy’s administration, but the facts contradict them. According to Connecticut’s Office of Policy and Management, state spending increased at an annual rate of 5 percent during Republican Gov. John Rowland’s 11 years in office. Republican Gov. Jodi Rell increased spending 4.3 percent per year during her five years. By contrast, during Malloy’s 8-year administration, spending rose a mere 2.1 percent annually. Indeed, spending growth under Malloy would have been even lower, but for the Republicans’ forcing the state to spend more than half a billion dollars more than Malloy requested in his Fiscal Year 2018/19 budget proposal. Far from implementing “massive tax increases,” as Fasano and Witkos claim, spending under Malloy increased at the lowest rate in decades.

Fasano and Witkos claim that, “Under one party rule led by Governor Malloy’s administration, Connecticut’s bonded indebtedness increased by $6 billion.”

That claim is misleading. According to the state’s Office of Fiscal Analysis (OFA), during the decade from 2001-2010 under Rowland and Rell, general fund debt expanded at an annual rate of 5.5 percent; by contrast, during the eight years of the Malloy administration, general fund debt rose at just 4.4 percent annually. But look closer. A more comprehensive accounting that includes other state debt affecting general fund debt reveals that outstanding borrowings rose 8.2 percent annually during that decade of Rowland and Rell, while, during Malloy’s tenure, debt rose less than half that rate, just 3.5 percent a year.

In 2008, Rell issued a $2.3 billion pension obligation bond and invested the proceeds right before the nation’s capital markets suffered a historic collapse. That bond increased state indebtedness by some 20 percent in one go, while the collapse in the value of its investments created a major drag on teacher pension fund performance for years. On her way out, Rell presented incoming Gov. Malloy with a welcome gift: a $900 million economic recovery bond which she issued to fill the hole in her last budget. In the last three years of the disastrous Rell administration, the state’s total debt rose from barely $10 billion to nearly $16 billion. So, far from Fasano’s and Witkos’s insinuation that debt rose fast under Malloy’s “one party rule,” bonded debt actually expanded dramatically more under Republican governors Rowland and Rell.

Fasano and Witkos claim that “skyrocketing fixed costs are making it more difficult to fund core services.” What they don’t tell you is that the “skyrocketing fixed costs” are the fault of Rowland and Rell, who failed to fully fund Connecticut’s pension funds for years, and dramatically increased bonded debt. Malloy fully funded the pension funds every year, and implemented the structural reforms that have put the state employees pension fund on a sustainable basis, with required contributions forecast to begin declining soon.

Fasano and Witkos make the misleading claim that their Republican budget “has resulted in significant surpluses, economic growth and a historic amount of money in our rainy day fund.” Their budget forces the state to put rising revenues into the rainy day fund, in the process creating a major deficit in the operating budget. And while taking credit for the rainy day fund surplus, Fasano and Witkos don’t tell you Rell cleaned out the $1.4 billion rainy day fund on her way out of office, handing Malloy a balance of zero. And that was after spending more than $4 billion in federal stimulus dollars. By contrast, Malloy balanced the budget every year in office, while creating rainy day fund surpluses every year.

Fasano and Witkos falsely claim credit for “fully funding Connecticut’s Special Transportation Fund (STF), creating five years of projected surpluses.” The truth, according to OFA, is that the major factor driving the projected surpluses in the STF is the increasing transfers of sales tax revenues from the General Fund to the STF, which Malloy began implementing in 2015.

Further, the Fasano and Witkos claims about the STF surplus are misleading. While the surplus is important, what is critical is STF’s maintaining a ratio of revenues to debt service exceeding 2.5X in order to continue to access new borrowings. But planned important new projects, including replacing the I-84 viaduct in Hartford, renovating Waterbury’s “Mixmaster,” and widening I-95, will reduce STF’s ratio below that critical mark by FY22. Fasano and Witkos fail to mention that critical fact, apparently because they want to maintain the fiction that the state doesn’t need toll revenues.

Fasano and Witkos should not be competing with Trump in deceptive claims. Nutmeggers deserve the truth.

Greenwich resident Sean Goldrick is an investment professional.