New State Economic Commission Faces Daunting Task
A new commission charged by the state legislature with developing and recommending policies to grow the economy and stabilize Connecticut’s fiscal situation had its first meeting Dec. 15.
The Commission on Fiscal Stability and Economic Growth, charged with sending the General Assembly specific recommendations for fixing the state’s economy, features eight business leaders among its 11 members.
The group, chaired by Webster Bank chairman and CEO Jim Smith and Bob Patricelli, the former CEO of Women’s Health USA, faces a tall task, especially given its deadline of less than three months.
At their first meeting, commission members heard from Governor Dannel Malloy, state budget director Ben Barnes, and Department of Transportation commissioner James Redeker.
“This commission will serve to give the private sector a greater voice in strengthening our state’s fiscal foundation,” Governor Malloy said in a statement.
“In particular, it is my hope that they specifically focus on efforts to fund our transportation system in a way that best makes the needed infrastructure investments.”
Challenging Fiscal Situation
Barnes described the state’s fiscal situation as challenging, with projected budget shortfalls of $1.9 billion, $2.6 billion, and $3.1 billion in the three years beginning fiscal 2020.
“What’s coming in year three and and year four is just astronomical,” said commission member Cindi Bigelow, president and CEO of Fairfield-based Bigelow Tea.
“Right now we have a small window to make a difference.”
Redeker painted a bleaker picture when describing the solvency challenges facing the state’s Special Transportation Fund, which, he said, will be in serious deficit by 2020.
What's coming is just astronomical. Right now we have a small window to make a difference.
Even if the state were to resurrect tolls, it wouldn't be fast enough or raise enough revenue to fix immediate problems, he said.
Several commission members expressed concern over Redeker's comments, including Patricelli, who asked how transportation improvements can help the economy.
Redeker cited studies of Interstate 95 and I-84 that said selective widening of those highways with as few as nine miles of improvements would boost the economy by saving commuters time and money.
Poor Policy Decisions
Smith said poor decisions by previous legislatures have hamstrung the state's ability to achieve balanced budgets.
He said many of those decisions were made with no regard for the state's massive and growing unfunded liabilities.
And now is the time to revisit those decisions, Smith said, pointing out that the state's gross domestic product is currently 8% below what it was a decade ago.
He called for policies that take a long-term view, particularly when dealing with the state's unfunded retiree pension and healthcare benefits, which continue to be a major driver of Connecticut's fiscal woes.
"We have to change the way we raise and spend taxpayer dollars," Smith said.
"We may not have the right to not be competitive with other states when we're falling this far behind in meeting our obligations."
Stable Environment Needed
Commission member James Loree, CEO of New Britain-based Stanley Black & Decker, said Connecticut must focus on developing a competitive business climate and economic growth.
"We're sincerely, sincerely concerned about the state's ability to grow the economy," Loree said.
"We will invest in this state and we will create jobs, but we have to have a stable environment."
Commission vice chair Pat Widlitz, a former Democratic state representative, bemoaned the growing volatility of state income taxes as shown in charts Barnes displayed, saying Connecticut must explore other options.
We will invest in this state and we will create jobs, but we have to have a stable environment.
Three members have yet to be appointed to the commission, which includes the following appointments:
- Jim Smith (co-chair), chairman and CEO, Webster Bank
- Bob Patricelli (co-chair), former chair and CEO, Women's Health USA
- Pat Widlitz (vice chair), former state representative and co-chair of the legislature's Finance, Revenue, and Bonding Committee
- Bruce Alexander, vice president of State Affairs and Campus Development, Yale University
- Cindi Bigelow, president and CEO, Bigelow Tea
- Greg Butler, executive vice president and general counsel, Eversource Energy
- Roxanne Coady, president and owner, R.J. Julia Booksellers; Chair, Read to Grow, Inc.
- David Jimenez, principal, Jackson Lewis P.C.; Member, Connecticut Board of Regents for Higher Education
- Jim Loree, president and CEO, Stanley Black & Decker
- Paul Mounds, Jr., vice president for communications and policy, Connecticut Health Foundation
- Christopher Swift, chairman and CEO, The Hartford
For more information, contact CBIA's Pete Gioia (860.244.1945) | @CTEconomist
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