Thursday, Dec. 2
Gov. Lamont: Forgetting the lesson of 1998
November 14, 2021
As a candidate in 2018, Gov. Ned Lamont blamed former Gov. John G. Rowland for Connecticut’s notorious fiscal problems. Last week, we couldn’t help but recall that argument as Gov. Lamont made a proposal that has echoes of a now-derided move by Mr. Rowland.
During an April 22, 2018 Democratic candidates forum in New Haven, now-Gov. Lamont insisted then-Gov. Dannel P. Malloy, also a Democrat, had done the best he could with a bad situation created by Mr. Rowland, a Republican who served between 1995 and 2004. “If John Rowland did half of what Dan Malloy did, we wouldn’t be in this pickle today,” said candidate Lamont. In our contemporaneous response, we noted it strained credulity to say Mr. Rowland single-handedly caused Connecticut’s fiscal trouble. Nevertheless, it is fair to say Mr. Rowland made some ill-advised moves.
For instance, ahead of his ultimately successful 1998 re-election campaign, Mr. Rowland signed off on income-tax rebates. The rebates were popular with the public at the time, but as Governing magazine reported on Aug. 29, 2017, Connecticut really could not afford them, in light of the state’s inherit fiscal instability. With that in mind, we turn back to Gov. Lamont.
Gov. Lamont announced last week that he will seek re-election in 2022. Around the same time, the governor made a tax-relief proposal, “expanding the property tax credit within the state income tax,” as the Connecticut Mirror reported Nov. 11. Reporter Keith M. Phaneuf noted this proposal was made the same day Gov. Lamont’s Office of Policy and Management, and the legislature’s Office of Fiscal Analysis, projected Connecticut will see surpluses of $1.8 billion and $1.3 billion in fiscal years 2021-22 and 2022-23, respectively. The state’s finances were helped by a surge in sales-tax revenue. Income-tax revenue has been solid since 2018, thanks to a strong stock market.
It may seem safe to implement Gov. Lamont’s plan. However, we see a parallel to the Rowland era.
Connecticut’s finances remain fundamentally unstable. “More than two-thirds of the increased financial cushion (in FYs 2021-22 and 2022-23) is tied to better-than-anticipated funding from Washington,” Mr. Phaneuf reported. He related much of this money may not be Connecticut’s for the long term – it will be on the table so long as COVID-19 is a factor. Additionally, “Connecticut hasn’t recovered roughly 30% of the 292,000 jobs it lost during the worst of the pandemic,” Mr. Phaneuf noted. “And even before COVID-19 struck the state in March 2020, Connecticut had regained only about 80% of the 120,000 jobs it had lost during the previous recession of 2007-09.” The jobs trend will not help the state cope with expected annual deficits of approximately $1 billion, and long-term debt pushing $100 billion.
Needless to say, Gov. Lamont’s tax-relief plan is, at best, a big gamble in light of Connecticut’s continuing fiscal struggles. That is ironic when one considers Gov. Lamont once criticized Mr. Rowland for a similar lack of fiscal prudence.