House speaker is a budget optimist despite dismal economic forecasts

Economists say Connecticut will continue to lose jobs for another two years. His own analysts are predicting that the next governor and legislature will face a $3.8 billion deficit, an astonishing 20 percent hole in the state budget.

But House Speaker Christopher G. Donovan is bullish on Connecticut’s economy.

In speeches to skeptical business groups and pep talks to his own nervous caucus members, the Meriden Democrat has emerged as a lonely and contrarian voice, contradicting the dire assessments of analysts, economists and other lawmakers and resisting calls for structural changes in government.

Fellow Democrats, while not openly critical of Donovan, are increasingly anxious about the state’s budget problems. The House Republican leader ridicules the speaker’s optimism.

“The speaker is an optimistic person, but how that optimism gets played out is the key,” said House Minority Leader Lawrence F. Cafero Jr., R-Norwalk, who says Donovan is disconnected from the Democratic rank-and-file.

“He is not acknowledging the present crisis and the depth of it, the longevity of it,” Cafero said. “What it does, it paralyzes the process.”

House Speaker Christopher Donovan, center, with Senate President Pro Tem Donald E. Williams Jr. and Gov. M. Jodi Rell

As gubernatorial candidates of both parties blame a dysfunctional state government for the budget crisis, Democratic legislators are pressing for action–or at least a coherent message in this election year–that signifies an understanding of the problem and a willingness to confront it.

“The message is critical,” said Rep. J. Brendan Sharkey, D-Hamden, one of the contenders to become the next majority leader. “If you say we can get out of it without draconian cuts, you are whistling past the graveyard.”

“I don’t think we are adequately addressing structural issues,” said Rep. Deborah W. Heinrich, D-Madison. “We’ve set up a system that is not sustainable. We’re having trouble as an institution finding the political will to address some of the structural issues.”

Rep. William Tong, D-Stamford, who voted against the budget adopted last year, distanced himself from Republican Gov. M. Jodi Rell and Democratic leaders in mailings to constituents.

“I have great respect for the speaker and our leadership and their responsibility in what are really historically difficult times. I think their job is, frankly, extremely hard right now,” Tong said. “But I do think we’ve got to get going and start working not just with the governor and Republicans, but with everyone in our respective caucuses to find a solution to the immediate deficits that we have and the long term structural problems.”

Rell’s proposed $18.9 billion budget for the 2011 fiscal year that begins July 1 is based on $2.7 billion in one-shot revenue, including federal stimulus dollars, reserve funds and borrowing against future revenue.

The legislature’s non-partisan Office of Fiscal Analysis says the 2012 fiscal year, which begins July 1, 2011, will bring a $3.8 billion deficit without new revenue, sharply lower spending or a combination of the two.

“2012 is coming soon, and we’re running of out of money,” said Rep. Timothy D. Larson, D-East Hartford. “That’s the facts.”

Larson said his constituents, who have watched well-paying manufacturing jobs disappear from Pratt & Whitney and other employers, see government doing little to control spending or help the economy.

“They don’t get that. They see that there are no jobs. They’re losing their jobs. And it doesn’t appear we’re trying to tackle some of this stuff, which frustrates them,” Larson said. “Yeah, it’s the governor’s job, but it’s also our responsibility to get that dialogue out.”

Donovan, who succeeded James A. Amann as speaker last year, is a social worker by training, a former state employee union organizer, and an unabashed believer in an activist government.

He does not accept that government must downsize or that the state needs to renegotiate state employee benefits to reduce the state’s unfunded liability for pensions and retiree heath costs.

“I think in some ways government is the whipping boy for other structural changes that have to take place,” Donovan said. “The Obama administration is right to look at health care. That’s a major cost.”

Donovan said unwarranted negativity is itself a drag on the economy.

“I think some people, constituencies hurt themselves by trying to make this worse. They don’t look for the silver lining,” Donovan said. “They look for the most negative thing. In some ways putting out that attitude, throughout the state, throughout business, throughout the community, it hurts our recovery.”

But other legislators see little reason to be optimistic about the economy in Connecticut, which tends to be the last to fall into a recession and the last to emerge.

The state’s 20-year record on creating jobs is dismal, and The Connecticut Center for Economic Analysis at the University of Connecticut recently issued its economic outlook under a headline worthy of a tabloid: “No Jobs Recovery! When will Connecticut’s misery end?”

The report’s author, senior research fellow Peter Gunther, wrote that “there is no jobs recovery in sight.”

“The worsening state budget situation and the fiscal challenges local government face may exacerbate the situation further,” he wrote. “Moreover, short-term countercyclical band-aids will not change the long-term deterioration of Connecticut’s economy and thus its fiscal challenges.”

It is a message that other legislative leaders are accepting.

“My take is that for the next couple of years, there’s not going to be room for business as usual,” said Senate President Pro Tem Donald E. Williams Jr., D-Brooklyn, who has proposed agency consolidations.

Williams said his message to the constituencies that rely on state government, including municipalities and non-profit social service providers, is that the state must fundamentally change how it does business.

“It’s in everyone’s interest to deal with that reality now,” he said.

Rep. John Geragosian, D-New Britain, the co-chairman of the Appropriations Committee and a close ally, said Donovan is offering a valid counterpoint to calls for immediate cuts.

“I think it’s important we as leaders do not buy into the sky is falling mentality,” Geragosian said.

But others also see some political pragmatism in Donovan’s optimism: Is there the political will in this election year to really debate fundamental changes to how the state delivers services?

Donovan said he has his doubts. Other legislators talk about “structural change,” but he questions if anyone really wants to deliver. Austerity is popular in the abstract, but cuts generate short-term political heat.

“It’s nice to talk in broad statements, but let’s be specific,” Donovan said. “Do they support cuts to the cities and towns? Do they support cuts to seniors in nursing homes?”

The biggest line item in the budget is $3.8 billion for Medicaid, which pays health care for the poor and nursing home care for the elderly. Another major expense is $1.88 billion in education aid to cities and towns.

Donovan asked if legislators are prepared to close prisons, do with fewer state police and limit access to nursing homes.

“Those are the real cuts,” he said. “People have to say that.”

Donovan said Rell and Republican legislators still are pressing cut the estate tax for the state’s richest residents,

Donovan teaches sociology part-time at the University of Hartford, where his fall offering is “Introduction to Social Welfare.”

His curriculum includes the Great Depression. Donovan said there was a greater willingness to sacrifice during the Depression for the greater good, a spirit he finds lacking today.

“It kind of irked me when people were complaining about cash for clunkers,” Donovan said. “The dealers were saying all the paperwork is ridiculous. Hey, people were buying cars. Can you be a little grateful for getting business? For the federal government helping you out and helping you make money in your business? Can you be a little grateful for that?”

Donovan said the Obama administration and the Democratic congress are under fire, even though the stimulus package has allowed the state to avoid massive cuts or a major tax increase.

“If it was the Bush administration, we’d be in really big trouble. We’d be in horrible trouble, but it’s not. It’s the Obama administration and the Democrats in Congress, who have helped us out,” Donovan said. “They’ve helped us out in the past. The federal government helped out the states during the Depression. The federal government helped us out during the recessions of the 70s.”

Donovan said he thinks more stimulus money might be available next year, giving the state another year to wait for the economy to recover. He knows people think that optimism is misplaced.

“I mean, oh, people say, ‘That’s the end.’ Then we keep getting more money,” he said.

Notwithstanding the projections and studies of the Center for Economic Analysis and the Office of Fiscal Analysis, Donovan said he feels things turning around.

“Things are going to get better,” Donovan said. “If they get worse…”

He paused.

“We need to make sure they don’t get worse.”