Reform State Spending, Grow the Economy

03.11.2011
Issues & Policies

Unless state policymakers focus on how to get Connecticut’s economy growing again, they won’t be able to solve the state’s enormous short-and long-term fiscal crisis. And the first step to restoring economic growth is to make state government leaner and more cost-effective.
Governor Malloy is right that the best path to economic recovery is to win back business confidence in the state as a good place for investment and job creation, said CBIA President and CEO John Rathgeber in testimony to the Finance Committee this week.
For that to happen, lawmakers must aggressively pursue additional state spending cuts, making Connecticut more fiscally responsible and reducing the size and scope of the tax package they are considering.
Connecticut has a serious spending problem, and there can be little debate that taxpayer dollars are not always used as effectively as possible, said Rathgeber. For example, significant budget savings could be realized from reducing the number of citizens institutionalized in long-term care and correctional facilities in the state; these are enormously expensive budget areas for the state.
Also, the state does not take advantage of Connecticut’s private, nonprofit sector, which could provide public services less expensively and more effectively.
In recommendations of the Connecticut Regional Institute for the 21st Century and in the best practices of other states, policymakers can find numerous and concrete ways to change the way the state provides healthcare and correctional services, streamline government operations and bring state employee retiree benefits
more affordably in line with those in the private sector.
This year, it is absolutely critical that policymakers achieve the governor’s goal for state employee concessions with real reductions that “bend the cost curve” beyond the immediate, two-year budget, said Rathgeber. Structural reforms must be made to wage and benefit contracts to address Connecticut’s mountainous long-term, unfunded obligations.
As longtime union leader Barry Bluestone, dean of Northeastern University’s School of Public Policy & Urban Affairs, spoke about earlier this year in Hartford, the state must forge a “grand new bargain” in which unions play a greater role in improving service, quality and innovation in return for greater job security and public respect.
This grand new bargain should include reforming outdated public-sector work rules and pensions, advocating regionalism and more effective state services, and promoting education reforms—efforts that would find strong support in the business community, which has been promoting greater fiscal responsibility and streamlining state government for many years.
Connecticut has the opportunity now to make the changes it needs in stategovernment fiscal policy that will lay the groundwork for a significant restoration of confidence in the state’s business community. And doing that will unlock
the great economic potential and job growth the state desperately needs, both for now and the future.
Restoring Connecticut’s image as “open for business” will produce a stronger economy with more people back to work, stronger state revenues, and fewer demands for state and local services.
For more information, contact CBIA’s Bonnie Stewart at 860.244.1925 or bonnie.stewart@cbia.com.

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CBIA IS FIGHTING TO MAKE CONNECTICUT A TOP STATE FOR BUSINESS, JOBS, AND ECONOMIC GROWTH. A BETTER BUSINESS CLIMATE MEANS A BRIGHTER FUTURE FOR EVERYONE.