First things first.

That was the simple message CBIA president and CEO Joe Brennan had for the state commission tasked with making recommendations for improving Connecticut's competitiveness and economic growth.

Joe Brennan at fiscal stability commission
"Solutions begin with addressing our fiscal problems." Joe Brennan speaks at the commission's Jan. 24 hearing in Hartford.

The Commission on Fiscal Stability and Economic Growth is focusing on a number of key issues, including tax policy, transportation funding, workforce development, population loss, regionalizing municipal services, and state employee benefits.

But Brennan, head of the state's largest business organization, said the commission needs to first straighten out the state's finances.

"These issues are all linked but solutions begin with addressing our fiscal problems," Brennan said during his presentation to the Jan. 24 hearing of the commission.

"Workforce development is important, transportation is important. But I think that the more difficult area to address—the most controversial area—is fiscal stability.

"Even if that's the only thing you report out on, then you have performed a service."

'Change of Attitude'

The commission, which lawmakers created last year, has a March 1 deadline to make specific recommendations to the legislature on repairing the state's broken finances and kick starting the economy.

Brennan noted Connecticut's many assets, including world-class companies that are the envy of other states and countries, an educated, productive workforce, high quality of life, and strategic location between Boston and New York City.

"But how are we going to maintain and sustain our great quality of life if we continue to have economic numbers that really lag the rest of the region and the rest of country?" Brennan asked.

"We're about trying to fix Connecticut from a fiscal and an economic standpoint because that's the only way we're going to have the revenues to provide the services that a lot of people desperately need."

Attitude is incredibly important. But attitude change by itself without policy change is not going to do the job for us.
— CBIA's Joe Brennan
Connecticut needs to change its attitude, Brennan said.

In years past, when Connecticut encountered financial problems, "it was a sense that this was a tough period and we're going to get through it."

"Unfortunately, over the last several years, I don't know that people have that same attitude," Brennan said.

"There's more grave concern about what the future entails for us and that's something we've got to turn around.

"Attitude is incredibly important. But attitude change by itself without policy change behind it is not going to do the job for us."

Growth Trails Region, U.S.

Connecticut trails its New England neighbors and many other states in economic growth.

Job growth since the 2008-2010 recession has been anemic, trailing the region and most of the country, and a lack of confidence in state government remains a significant concern.

Post-recession jobs growth
Connecticut is one of a just a handful of states yet to recover all jobs lost in the recession.

Brennan, however, noted that the third quarter 2017 economic numbers released the morning of his testimony were an encouraging sign after a tough start to the year.

"The gap between Connecticut and successful states is growing greater because we don't have the resources we need to invest in education, transportation, and workforce development," Brennan said.

"That's why we've got to get these fiscal problems behind us as soon as possible."

Commissioners agreed with Brennan that change is possible.

"Connecticut's best days can be ahead if we do a good job of making recommendations for fiscal stability and economic growth," said co-chair Jim Smith, the former CEO of Webster Bank.

"One of great things about Connecticut is that it's a small enough state that you can get things done," said former Women's Health USA chief executive Robert Patricelli, the other co-chair.

"We're here because we think we can get things done. We've just got to get everybody around the table, work hard at it, focus, and it's doable."

Confidence Drives Investment, Growth

Brennan urged the commission to understand that improving the state's economy and fiscal condition does not mean pitting one group against another.

"The notion that if one side wins, the other has to lose is wrong," he said. "If manufacturing wins, environmentalists lose. If business wins, labor loses. Unfortunately, that's often the way it's looked at by the legislature.

"The economy should not be viewed as a special interest. The economy has got to be looked at as something to be nurtured by policymakers for the benefit of everyone in Connecticut."

The decisions that have to be made are extremely difficult. There's no easy way. Making those decisions is key to restoring confidence.
— CBIA's Joe Brennan
He also urged state lawmakers to take the commission's recommendations to heart, work with the business community, other interests, and state officials to devise a plan—and stick with it.

"If this happens, I think you could start seeing investment levels going up because, in really simple terms, it's all about confidence," he said. "That confidence leads to investment, and that leads to growth.

"We've got to instill that confidence in people. I think people are looking for a plan and are ready for a plan and want to get behind something."

Difficult Decisions

Brennan said while most CBIA member companies report doing well, the bulk of their growth comes from out-of-state operations.

He acknowledged that getting the state's finances in order will involve hard choices.

Per capita pension costs
Paying off Connecticut's growing long-term unfunded liabilities would cost each Connecticut resident over $23,000.

"The decisions that have to be made by policymakers are going to be extremely difficult," he said.

"There's just no easy way. But making those difficult decisions is the key to restoring confidence."

Connecticut's recurring deficits are driven in part by the state's massive unfunded pension liabilities.

CBIA supports major changes to retirement benefits for state employees and ending collective bargaining for health and retirement benefits.

"We take no comfort in putting forward some of these recommendations," he said. "These are state employees—people I know, people I've worked with, and like quite a bit.

"But the vast majority of our members have had to make these changes and the state should, too.

"I'm hopeful we can go forward with having open discussions about the numbers and the hard facts that are before us and make the necessary changes. These will be tough decisions for everyone."

Cities, Towns Support Pension Reform

The day before, Waterbury Mayor Neil O'Leary, president of the Connecticut Conference of Municipalities, testified before the commission about the burden of pension liabilities on the state and cities and towns.

O'Leary lamented that Connecticut, unlike most states, includes health and pension benefits as part of the collective bargaining process.

"That's an area of grave concern to us," O'Leary said. "We're suggesting it's very difficult in the state of Connecticut under the current labor agreements and under binding arbitration."

CCM executive director Joe DeLong told the commission Connecticut's economy and fiscal health would be in a "stronger position if we don't negotiate for benefits," noting that most states set pensions and other benefits through legislative or administrative action.

Employee wages and benefits are just one of several areas the commission and, subsequently, lawmakers, need to address to turn things around.

Other areas include tax policy, adopting stable and predictable state budgets, funding transportation, and lowering municipal costs.

"Having economic competitiveness as a top priority is critical," Brennan said.

"If we can put our fiscal problems behind us, we can restore confidence, higher levels of investment, and greater economic growth."