Taxes, Jobs, Economic Growth: Where the Candidates Stand
CBIA invited the leading candidates for governor—Democrat Ned Lamont, Republican Bob Stefanowski, and independent Oz Griebel—to respond to four questions with important implications for the state’s economic future, fiscal stability, and business climate.
Economic Growth and Job Creation
A state government study recently reported Connecticut is the only state whose economy has contracted since the recession ended in 2010, and we continue to lag most of the nation in economic growth and job creation. What policies will you pursue in the next four years to promote economic growth and job creation in our state, including proposals dealing with transportation infrastructure and workforce challenges?
Lamont: I’m running for governor to resolve Connecticut’s fiscal crisis and revitalize our economy, to put in place policies that will ensure a new wave of job creation in our towns, and to offer a much-needed new kind of leadership in this state.
I’m not a politician—I’m an entrepreneur who started up and ran a small business right here in Connecticut. And I’ve released a detailed jobs plan that cuts property taxes for the middle class, transforms our business climate, and stands up for working families, small business, and Connecticut values.
Decades of fiscal mismanagement by career politicians have led to flat wages, lost jobs, and a sense that Connecticut has lost its way. But it wasn’t always like that: Connecticut was once a hub of global commerce, a place where entrepreneurs moved to start new businesses and see them thrive, and where immigrants began their American Dream.
That dream is not all in our past. We have a strong foundation for a prosperous future: a highly educated workforce, legacy and growth industries from insurance to aerospace to microbreweries, and world-class universities.
Decades of fiscal mismanagement by career politicians have led to flat wages, lost jobs, and a sense that Connecticut has lost its way.
My jobs plan builds on that foundation by upending politics as usual in Hartford, cutting business taxes that inhibit growth, eliminating needless and outdated regulations, streamlining permitting, and investing in our people.
I'll turn our cities back into the economic growth engines they once were, making Connecticut a destination for jobs, investment, and entrepreneurs. We'll let businesses thrive by getting out of their way.
We'll create good jobs with good wages that keep up with the costs faced by the middle class. We'll level the playing field so women and minorities have the same opportunities at economic success as everyone else. And we'll train students and workers to ensure they have the skills they need to compete for the jobs of today and tomorrow. I will create an environment where startups and small businesses can thrive. I've done it myself and I know what it takes.
Stefanowski: Connecticut needs to be more competitive in its approach to attracting businesses and jobs. That means we need to phase out the corporate tax to entice businesses to invest in Connecticut. Similarly, eliminating the income tax will provide another incentive for both businesses and workers to relocate to Connecticut.
Bringing businesses and jobs to Connecticut will help increase the tax base, raising the state's GDP and allowing us to recapture the wealth that has fled our state over the last eight years. The governor's office needs to partner with the business community to develop policies that will encourage growth, bring back economic stability, and restore trust in our state's trajectory.
Career training will be a big part of our economic recovery. Any workforce development plan must be based on an economy that is growing and competitive. We need stronger business mentorship programs that guide high schoolers who do not want to pursue a traditional college education through their training and development phases towards employment.
Connecticut needs to be more competitive in its approach to attracting businesses and jobs.
The state needs to continue and expand and invest in our vo-tech schools in order to ensure we are training the workforce for the jobs that already exist here in Connecticut, in addition to training them for the jobs we want to attract to our state.
By fostering a better partnership between our business community and higher education institutions, we strengthen the career pipeline and ensure that our businesses have the talent they need to expand and succeed.
We need to eliminate burdensome regulations that drive business costs up. Finally, we need to centralize and simplify the outdated state-permitting process that is currently burdensome for businesses and developers who have to go to several agencies at the state level and perhaps the local level. We shouldn't have businesses jumping through unnecessary hoops in order to locate in our state.
Griebel: Creating 200,000 net new jobs over the next 10 years will be the central goal of our administration—a goal we will achieve by reigniting private sector confidence; addressing the cost of Connecticut's unfunded pension and healthcare benefits; marketing Connecticut's assets and competitive advantages; privatizing certain state services; and investing in transportation, education, and workforce development.
Every decision made by our administration will be viewed through the prism of whether that decision helps achieve the goal of 200,000 net new jobs in 10 years.
Monte [Frank] and I will serve as the state's chief marketing officers to work with existing employers to help them grow and to work with out-of-state companies to attract new jobs.
Creating 200,000 net new jobs over the next 10 years will be the central goal of our administration.
We would reestablish the state's Transportation Strategy Board to engage private sector involvement with transportation planning. We support e-tolling on the condition that the Special Transportation Fund lock box be approved in November. We would develop a strategy for Bradley and Connecticut Airport Authority airports and seek additional nonstop service west of the Mississippi and in Europe.
In terms of workforce development, we would invest in education and place a singular focus on linking higher education and technical training with the needs of employers.
The state Office of Fiscal Analysis is projecting budget deficits for fiscal 2020 and 2021 of $2.1 billion and $2.6 billion respectively. How will your first biennial budget proposal close those gaps, and how do you plan to put Connecticut on a more sustainable fiscal path in the long term?
Stefanowski: I will work with the legislature and all key stakeholders, including business, labor, and nonprofit leaders, to restore fiscal sustainability. That will include taking action in connection with the "five Rs:"
- Rightsize—Connecticut has too many government entities, too many layers of management, too many outdated practices, and too much outdated technology. State government also engages in many activities that can be performed in a more economical, efficient, and effective manner by nonprofits and the private sector. The Department of Motor Vehicles is the classic example of a government run entity that could improve with private sector experience.
- Reprioritize—We must build a budget from the ground up. "Mandatory" spending continues to grow and now consumes more than half of the budget. While we need to keep promises made to retirees, we also need to focus on investing in Connecticut's future. I will adopt zero-based budgeting practices to help improve performance, reduce costs, and reprioritize state spending.
- Restructure—We must reduce the $100 billion in debt and unfunded pension and retiree healthcare obligations. We can restructure current pension and healthcare plans in a fair, equitable, and sustainable manner. Our current retirement plans are at risk and are very poorly funded due to years of abuse by career politicians and labor leaders. My objective will be to ensure that our retirement plans are competitive and affordable while ensuring that, after the needed restructuring, we will deliver on what we promise.
- Reform—Our current welfare programs are subject to significant fraud, waste, abuse, and mismanagement. We must modernize our welfare systems while maintaining a solid social safety net for those truly in need. We need to more vigorously pursue federal funding options to make sure that Connecticut obtains its fair share. We also need to develop clearly defined, consistently applied, and transparent criteria for providing fair and reliable educational assistance to municipalities.
- Revitalize—At least four of our largest cities face serious financial and competitiveness challenges. A strong Connecticut economy requires attractive cities that address the socioeconomic and racial barriers facing our state today. As governor, I will pursue federal opportunity zones and alternative ways for cities to restructure their finances and reduce their property tax burdens.
This election is a once-in-a-lifetime opportunity to change Connecticut's steady and bad habit of taxing and spending its way into economic instability.
By taking the above steps we can save billions in the annual budget and reduce unfunded retirement obligations. This election is a once-in-a-lifetime opportunity to change Connecticut's steady and bad habit of taxing and spending its way into economic instability.
Griebel: The state's long-term structural issues must be considered not only in the context of balancing the next biennial budget, but also in terms of balancing the next two biennial budgets. Required actions include taking steps to stabilize long-term pension debt, bonded debt, and existing state employee contracts.
To address the $4.7 billion gap in the first biennium, we would use the full rainy day fund balance to minimize damage to municipalities, social service agencies, education, and transportation. To immediately address the unfunded pension liability issue, we would offer a two-part proposal.
The first part would be to postpone funding the annual required contribution in the first biennium as part of a long-term approach over several budget cycles to address Connecticut's long-term structural weaknesses relating to underfunded pensions.
We would use the full rainy day fund balance to minimize damage to municipalities, social service agencies, education, and transportation.
In exchange for postponing the ARC in order to do minimal damage to key elements of the state's economy and social fabric while balancing the $4.7 billion operating deficit in fiscal 2020 and fiscal 2021, the Griebel administration would propose to shore up the state employee and teacher retirement funds by July 1, 2021, with contributions from the Connecticut State Lottery and proceeds from the sale of state office buildings and similar real estate assets in exchange for changes in work rules and benefit calculations during the negotiations with the unions for the renewed contracts dealing with base compensation and work rules that have to be in place by July 1, 2021.
Our proposal is not similar to actions taken by other governors when they postponed the ARC, because they had no part-two to the equation. Their actions further weakened the integrity of the fund, while my proposal would double the amount in the fund from approximately 30% to 60%.
Lamont: Leadership means having a plan to address the deficit—not a scheme to punch an additional $11 billion hole in an already strained $18 billion budget.
In the months since OFA's projections, stronger-than-expected quarterly tax receipts have significantly improved the outlook for the next biennium. To begin addressing the remaining deficit, I will work with teachers, legislators, municipal leaders, and bondholders to stabilize the Teachers Retirement System and put it on sustainable footing.
Next, I will add revenue sources and implement savings like those I've already identified on the campaign trail: cracking down on tax evaders, taxing activities that become legal—like marijuana sales and sports gambling—reducing corrections costs as the prison population declines, and allowing state government to grow leaner and more efficient as current employees retire.
More importantly, I will close the deficit in my first biennium in a way that creates the conditions for economic growth and starts Connecticut down a sustainable fiscal path at last.
Our next governor must begin to bend the curve on the more than two-thirds of the budget consumed by personnel costs, municipal aid, and Medicaid.
Our billion-dollar shortfalls cannot be addressed through ideological, line-by-line reductions in annual discretionary expenditures. Instead, our next governor must acknowledge that those shortfalls are structural and must begin to bend the curve on the more than two-thirds of the budget consumed by personnel costs, municipal aid, and Medicaid.
By bringing stakeholders together around the table; promoting shared services and regional cooperation; and introducing innovative, value-based healthcare that delivers improved outcomes at a lower cost; we can make a difference in the next budget and beyond.
I won't be able to undo decades of mismanagement overnight, or even in a year. But I'll bring Connecticut something it has missed for a long time: leadership that brings everyone together so that tough choices are made clearly and fairly.
Affordability and Taxes
Our state's personal income, business, and property tax burden is one of the highest in the country, a major contributor to Connecticut being among the least affordable states for families and businesses and a key factor behind the exodus of people and wealth from the state. What changes to tax policy will you propose to remedy this situation?
Griebel: We would eliminate the business entity tax and the estate tax in the first biennium.
With the overarching goal of creating 200,000 net new jobs, we would work toward lowering the income tax rate to the original 1993 rate of 4.5%, understanding that the goal is to create jobs and have more people working and paying income taxes rather than continually raising rates.
We would work toward lowering the income tax rate to the original 1993 rate of 4.5%.
Lamont: I know firsthand how state government can help businesses start up and succeed—and how it can get in the way. Whether entrepreneurs have the next big idea or a family wants to open a new neighborhood restaurant, our state government too often litters the path to success with needless fees, an endless maze of paperwork, and burdensome regulations that don't protect public health and safety.
Workers and business owners need relief so they can put their hard-earned dollars back into supporting their families, growing their companies, and contributing to a prosperous economy.
I'll deliver by holding the line on income taxes, reversing Gov. Malloy's property tax hike, and delivering up to $1,500 a year in property tax relief to middle-class families in high-tax towns. I will also make it easier to start or grow a business by eliminating the business entity tax, freeing nearly half of Connecticut companies from the business personal property tax, cutting the capital stock tax, and reducing regulations.
The current fiscal crisis means we can't afford pie-in-the-sky promises—but those targeted business tax cuts are a smart, achievable, and meaningful investment in revitalizing Connecticut's business climate.
State government too often litters the path to success with needless fees, an endless maze of paperwork, and burdensome regulations.
I also recognize that taxes are not the only burden imposed on residents and business owners. That's why I will avoid disproven trickle-down economics in favor of a measured approach that targets cuts to Connecticut's most uncompetitive taxes while maintaining the level of revenues we need to invest in an improved business climate.
I will create a fair and honest budget balanced without gimmicks, launch a top-to-bottom regulatory review that eliminates burdensome mandates, and invest in training and infrastructure. That's the kind of certainty and sustainable long-term planning that business leaders need to be able to rely on.
Stefanowski: There are approximately 350 taxes and fees that are levied on residents or businesses. Connecticut is ranked as one of the worst states in terms of personal income growth. The past eight years have been economically devastating.
Connecticut is also near the bottom in net domestic migration over the last eight years. High tax policies have resulted in more than 100,000 people moving out of our state. We've lost an estimated $6 billion in revenue due to terrible tax policy, which common sense tells us we must reverse.
My plan is a change from the past failed practices. I believe that in order to grow the economy, we need to let people and businesses prosper as well.
I am committed to significantly reducing income taxes... As our fiscal position improves, taxes will decrease—putting more money in your pocket.
I am committed to significantly reducing income taxes with the goal of eliminating the individual income tax over eight years by using trigger mechanisms that rely on economic growth and reduced spending.
As our fiscal position improves, taxes will decrease—putting more money in your pocket. This will be a multiyear effort that gradually and responsibly reduces the income tax rate as we can afford it.
What steps will you take to partner with Connecticut's business community to address the state's fiscal and economic challenges?
Lamont: I spent my career creating jobs. I built a business from scratch, grew it right here in Connecticut, took on big industry giants, and beat them at their own game. I know what businesses need, and I know what businesses can contribute.
The best day I've had in Connecticut in years was when we brought Infosys, a global IT leader, to Hartford. It didn't happen by chance; it happened because I convened a group of business leaders, including representatives from Travelers, Aetna, Hartford HealthCare, and Stanley Black & Decker to show the range of Connecticut's economic ecosystem and to convince Infosys to build their newest training and innovation hub right here in our state. Infosys leaders were blown away by this show of solidarity and support and realized Connecticut's vast potential. Our business leaders got together for our shared prosperity.
Now it's time for state government to recognize that potential, and multiply it. As governor, I will create a business recruitment board led by the governor and business leaders from a range of Connecticut industries—along with leaders in the state's higher education, arts and culture, and real estate sectors—to aggressively pursue bringing businesses and jobs to Connecticut.
We'll demonstrate that Connecticut is the right place to do business, with a thriving and connected business community and a state government ready to help.
Together, we'll demonstrate that Connecticut is the right place to do business, with a thriving and connected business community and a state government ready to help.
I will also convene a workforce development council that ensures every level of our public education system is preparing our residents to meet the demands of the modern economy so our business community can be confident of finding the employees it needs to succeed.
And I will look for ways that community can enter into public-private partnerships with the state to develop the infrastructure and deliver the services our companies and residents rely on.
Stefanowski: As governor, I would work in close collaboration with the business community to help fill and supplement the infrastructure repairs that Connecticut has been dreadfully behind on.
The beauty of public-private partnerships is the ability to leverage private support to help advance projects that would otherwise not happen for years to come.
We absolutely need to look at how we can utilize private investment and support for transportation, redevelopments, human service programs, and other functions that can help ease the financial burdens on the state.
By fostering direct collaboration between the business community and our educational institutions we can drastically improve the quality of our workforce.
Public-private partnerships can also be valuable in the education and job training arenas. By fostering direct collaboration between the business community and our educational institutions we can drastically improve the quality of our workforce.
Ensuring that our graduates are prepared for the jobs we currently have available and training them to fill jobs in the industries we hope to bring to Connecticut will give us a leg up on the competition when competing for jobs.
Griebel: The business community would be a key and invaluable partner in our administration. The foundation of our administration would be a public-private-nonprofit partnership engaging all sectors.
State government has historically operated in silos, with little engagement with the business community, hospitals, nonprofits, and higher education.
The foundation of our administration would be a public-private-nonprofit partnership engaging all sectors.
On day one, our administration would reverse that dynamic.
Just as we would reestablish the Transportation Strategy Board to engage the private sector in transportation planning, we would engage the business community, our municipalities, and the education and nonprofit sectors in discussions relating to the state budget, regional delivery of services, and other key issues.
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