Building a vibrant economy in Connecticut requires addressing a financial crisis that is the result of decades of negligence. Pension contribution commitments have not been fulfilled, poor strategic decisions have been made, and little has been done to foster a long-term productive private-public business relationship. I believe the following three strategies will change the direction of Connecticut and set it on a path to a bright fiscal future.
1. Create a robust business roundtable.
Chaired by the Governor and supported by dedicated staff, Business Roundtables create forums for ongoing dialogue between state and business leaders. The core focus of the discussion is to create and maintain the best corporate climate, centered on critical topics that will advance economic growth and business performance.
The Department of Economic and Community Development should be refocused to support strategies outlined by the Business Roundtable, as well as narrow its scope to the programs and services that help companies prosper.
No roundtable like this exists on an ongoing basis in the state of Connecticut. The result is inconsistent application of policy and “one off” efforts that lack coordination and follow through. Projected state investment is minimal while the potential payoff of creating an attractive business climate is considerable.
Connecticut is perceived as a high tax state too expensive for retirement. We need to change this perception, which drives people to establish residency elsewhere. If the Gift and Estate Taxes – which together account for 1% of Connecticut’s income – are eliminated, future budgets can be adjusted to manage revenue loss while fostering an environment that keeps families and their money in Connecticut.
We must address the pension issue. Fixed costs accounted for 50% of the total spending growth in Fiscal Year 2018. Addressing this point of exposure requires the state to make full contributions to the pension funds – something that virtually no governor has done since 1939 – and requires negotiating with the union. There are two potential focal areas for the union negotiation:
a. Elimination of overtime as part of the base pay used for pension calculation. The Yankee Institute indicates that this is worth “billions,” although they do not provide an estimate.
b. Creation of a 5 tier pension plan for state employees that more closely matches the total plan rewards when benchmarked versus other states. The state has made considerable progress in reshaping the pension plan for state employees, but this effort needs to continue.
Together these strategies will provide the state with a feasible direction that will lead to fiscal stability and reduce the risk that so many people fear is a threat to Connecticut’s future.