Cost Burdens ‘Biggest Threat’ to Economic Growth

If one theme rang clearly and loudly at CBIA’s Jan. 15 Economic Summit + Outlook, it’s this: Connecticut’s affordability crisis will dominate the 2025 legislative session.
And interwoven with that theme was the future of the 2017 bipartisan fiscal reforms, which stabilized Connecticut’s financial health and remain critical to the state’s long-term outlook.
“Addressing Connecticut’s high cost of living is key—with housing, energy, childcare, and healthcare costs the major contributors,” CBIA president and CEO Chris DiPentima told a summit crowd of almost 500 attendees.
“Our overarching message to policymakers this year is simple—everything you do, every bill you review, must be looked at through this lens: Will this legislation make Connecticut more affordable?
“Will it lower the cost of living so that we keep more people in the state and attract more residents?”
Webster Bank chair, president, and CEO John Ciulla added that “making Connecticut a more affordable place to work and live—these are concepts we can all rally around.”
Energy Costs
Gov. Ned Lamont, speaking a week after delivering his state of the state address to a joint session of the General Assembly, singled out energy costs in his summit remarks.
“One of the biggest killers we’ve got, in terms of the high cost to live in this state, is energy costs,” he said. “It used to be labor costs, and that was really our Achilles heel. Today, it’s electricity costs.
“It’s very important for me when I talk to businesses thinking about expanding in the state or moving to the state: ‘What does it look like in 10 years? How do I know you’re well positioned to have reasonably priced electricity for the foreseeable future?'”
Connecticut’s average residential electricity rate is 29.96 cents per kilowatt hour, the third highest in the country. The average U.S. rate is 16.94 cents.
Lamont told the audience of public and private sector leaders that “the two things that make a real difference is reducing demand and expanding supply.”
He emphasized energy efficiency programs as a means of cutting demand, adding that “I have very few ways I can add generation capacity right now.”
As he did in his address last week, Lamont said increasing nuclear power generation at the Millstone plant in Waterford was “the best opportunity” for expanding supply.
Clean Energy
Lamont’s comments on nuclear power drew support from Sen. Cathy Osten (D-Baltic), co-chair of the legislature’s Appropriations Committee and one of four lawmakers who took part in a panel discussion at the summit with CBIA’s Chris Davis.
“Fully 50% of our generation power comes from Dominion Millstone,” she said. “We need to expand that, and work hard to expand that as carbon-free energy.
“It is extremely important that we continue moving in that direction now. Many of these issues are not something that happens in two years—the federal permitting process of nuclear is about 15 years.”
Sen. Ryan Fazio (R-Greenwich), ranking member on the Finance, Revenue, and Bonding Committee and Energy and Technology Committee, warned that “in 20 years, we’re going to have rolling blackouts in this region if we do not do anything to improve energy reliability, increase energy supply.”

“We should have an all of the above clean energy strategy in this state where we have all forms of clean energy compete on a relatively equal playing field against one another, and may the best rise to the top,” he said.
“We have the third highest energy rates, and that’s unfair, but I think we have a responsibility to offer solutions.
“I have gotten hundreds, if not thousands of emails from constituents saying, ‘How the heck am I supposed to pay an energy bill of this size, even with a decent income?’
“It’s hurting seniors. It’s hurting low and middle income workers the most, and it makes it very, very difficult to create new jobs and to invest in our state.
“There is a lot we can do to bend the long-term cost curve down for residents, for businesses, in order to improve economic growth in the state.”
Housing
Planning and Development Committee co-chair Rep. Eleni Kavros DeGraw (D-Avon) said addressing housing costs was among her priorities for the session.
“We have to make sure that we have housing here for those folks to help fill those 73,000 job openings,” she said.
“We will absolutely be going back to transit-oriented development. We know in many ways it helps.
“We have to make sure that we have housing here for those folks to help fill those 73,000 job openings.”
Rep. Eleni Kavros DeGraw
“First of all, it helps reduce costs, because if you’re near transit, then hopefully you’re not having to own a car—unless you absolutely want one—but then you can be able to get to work a lot easier.
“I think we also need to look at things like light density, we need to be getting as creative as possible.
“And what I’ve done is ask a lot of organizations to give me solutions that don’t cost a lot of money, especially from our town planners.
“They know how to get things built faster, because they know all the red tape and where it is and how we can get rid of it. Those are the kinds of solutions that we’re looking for.”
Occupational Licensing
The panel of lawmakers pointed to the state’s onerous occupational licensing requirements—including restrictions on hiring apprentices—as an area needing reform.
“We have very strict licensing caps in this state for every three licensed workers,” said Appropriations Committee ranking member Rep. Tammy Nuccio (R-Tolland).
“We only allow companies to have one apprentice. That’s unfair. That makes it more expensive to build the housing that Rep. DeGraw was talking about.”
“It shouldn’t cost you $600, $700, $800 as a middle-class skilled worker to work in Connecticut every single year.”
Sen. Ryan Fazio
Licensing requirements cover about 25% of Connecticut’s workforce, and reform is an issue that has drawn bipartisan collaboration between Fazio and DeGraw.
“It shouldn’t cost you $600, $700, $800 as a middle-class skilled worker to work in Connecticut every single year just to pay for the right to work,” Fazio said.
“We should be saying, ‘Come to Connecticut. Work in Connecticut. Please.’ We’re rolling out the red carpet, and yes, we impose these totally unfair and unjust costs on them every year.
“Let’s cut that to a maximum of $100. Let’s provide more reciprocity to licensed workers, skilled workers, who want to come and work in Connecticut, recognize their out of state licenses.”
Healthcare, Childcare
Fazio also pointed to regulatory burdens as a major factor driving healthcare costs, which he said were the fifth highest in the country.
Both Fazio and Nuccio stressed that allowing small business employees access to affordable, quality health insurance should be a legislative priority this year, an issue that Lamont also referenced in his remarks.
The legislature failed to act the past two sessions on transformational, bipartisan legislation addressing Connecticut’s growing small group health insurance crisis.
“The power of numbers, that’s really what this comes down to,” Nuccio said.
“In affordability, we have to look at how we can get you small businesses in groups together so we can lower the cost of insurance for you.”
Childcare—with the lack of affordable options keeping many residents, particularly women, out of the workforce—also will be a priority for the Lamont administration and lawmakers this session.
“We know that without childcare, nobody’s going to work,” DeGraw said. “We saw that during the pandemic. We know how hard it is. The cost is ridiculous.
“One of the things that I supported and put in was to make sure that there could be more homes that are able to provide childcare.
“That’s critical to our economy. And I think we need to try to expand more possibilities for people to open their own childcare centers.”
Fiscal Guardrails
Lamont shared his support for the state’s fiscal guardrails—particularly the spending cap—as efforts to weaken those reforms are certain to shape the state’s next two-year budget this session.
“Number one, I think the spending cap has worked. I think it’s sacrosanct,” he said. “I think it’s really important.
“As I said before, it’s not a straitjacket. It goes up with income, so it allows us to spend more as we earn more. And I don’t want to play any games with that.”
Osten noted the impact of the fiscal guardrails, saying “clearly one of the most important things we do, that we rein in legacy costs that have long hampered the state of Connecticut from moving forward.”
“I want to make sure we’re protecting our children and our grandchildren and our great-grandchildren from expenses incurred in the past,” she said.
“I told all my colleagues, ‘Don’t bring me a new program adding up to a billion dollars. We don’t have that money.'”
Sen. Cathy Osten
“That being said, we can’t break our safety net either. We have to make sure that we have safety net programs that work and that are funded correctly, and we have to make sure that we’re living within the confines of what we can afford to spend.
“I told all my colleagues, ‘Don’t bring me a new program adding up to a billion dollars. We don’t have that money. It’s not there.’
“We have to pay what we have already committed to, not add on new commitments to that. So we don’t have a billion dollars to add in new expenses.”
“It’s our job as legislators to make your job easier and create a fertile ground for job growth and income growth for everybody,” added Fazio.
“The preeminent way to do that, as the governor and and my colleagues were mentioning before, is to protect the fiscal guardrails that were put into place in 2017.”
Spending Reforms
In his opening remarks, DiPentima said the guardrails “triggered a remarkable transformation in Connecticut, reversing a decade-plus, corrosive cycle of budget deficits followed by tax hikes followed by more deficits.”
“What’s needed—to paraphrase the governor’s state of the state address—is to look under the hood of the budget for better results that can free up additional revenue to support essential programs,” he said.
“And there is an existing, taxpayer-friendly blueprint for doing just that. The 2021 CREATES Report identified over 200 opportunities to reform and streamline state government, realizing between $600 million and $900 million in annual taxpayer savings.”
Lamont told summit attendees that the budget discussions provided an opportunity to “not just talk about more, more revenues, more spending, more investments—more, more more.”
“Let’s also talk about better. Let’s talk about results,” he said. “Here’s our chance to see how we can do a better job of delivering results to the people of Connecticut, and we’ll have that debate about more as well.
“But I want to start with how we can do better.”
During the legislative panel discussion, Nuccio emphasized that “there’s a way for Connecticut to go forward without without sacrificing the fiscal stability that we have found since 2017.”
“This is a $52 billion budget. There’s room in there,” she said. “There’s waste in there. We have to find a way to provide these services, but we need to do it without irrational growth of $3 billion of new spending.
“We have to do it better. We have to be more efficient, and we can’t make our great grandchildren pay for it.”
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