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More consolidation, investment needed for job growth

  • by Paul Pirrotta
  • June 7, 2011
  • View as "Clean Read" "Exit Clean Read"

Governor Malloy will be focusing on development of economic policies which will hopefully promote the kind of job growth that has eluded Connecticut for decades.

The Connecticut economy has created zero jobs in the last 20 years. We are an extremely expensive place to do business; state government is perceived, correctly or not, as anti business; our young people are moving away from our state and for that matter so are our old people. Something has to change and not change at the margins but produce a wholesale restructuring that will radically transform our competitive position.

In my opinion the Governor needs to focus on three issues:

  • Consolidate the current agencies dealing with this important topic.
  • Move away from targeted credits for specific industries and focus on incentives which will benefit companies across the board.
  • Expand the recruitment of foreign companies into Connecticut.

The Malloy transition team correctly identified fragmentation as one of the biggest problems facing our state: “Another consistent theme was the need to streamline the structure and delivery of state economic development efforts. According to records we received from the Department of Economic and Community Development, 33 state agencies, boards and commissions are involved in economic development; thus, fragmenting the delivery of services.”

Additionally the transition team disclosed that Connecticut may be overstaffed in its managerial ranks when they disclose that the ratio of managers to workers in our State is of 1:6 vs the national average of 1:12.

I would favor a consolidation of key agencies or quasi state authorities into DECD so Commissioner Catherine Smith can control all aspects of economic development, companies would have one central point for all services and we can reduce costs.

For example DECD employees currently administer several financing programs. Additionally you have agencies like the Connecticut Development Authority and Connecticut Innovations which also provide financing. Why not merge ALL financing programs into a department at DECD so that companies can more easily access funding while the State can streamline the process and reduce costs?

Recent legislation designated Commissioner Smith the board chair for both CDA and CI: such a step does not go far enough! CDA and CI corporate structures are expensive: Each has an executive director, a chief financial officer, an administrative staff, a lending staff, etc. How much money could be saved by merging these units into DECD and eliminate unnecessary duplicative and expensive management and support services?

The same applies to economic research. CERC was created over 20 years ago to help Connecticut “sustain and expand” its economic development efforts. Do we need an independent CERC and its cost structure or can we accomplish the same goals if those functions are housed within DECD?

Consolidation alone, however, will not lead to economic development. We also need a strategy that will result in job growth.

I would hope we have learned something from the incentives of over $60,000,000 awarded to Pfizer some years ago: An initial surge in jobs has been followed by the decision to move  thousands of jobs out of our State leaving fewer employees than before the incentives were given. Could these funds be better spent?

I would suggest we focus on organic job growth emanating from small business based here in the state, that have invested human and financial resources in Connecticut and that are less likely to leave. Let’s take whatever money we may use on other proposals and reduce the corporate tax rate of ALL Connecticut companies; let’s utilize funds freed from cost reductions to lower the  unemployment insurance tax bill; let’s reduce  paperwork; let’s create an environment where small business is listened to and consulted.

Finally we must make investments in key areas and the International Division is one area within DECD that I would expand. Over the past several years the resources allocated to International have been reduced to where we have only one person supporting these functions. I would therefore allocate some of the savings resulting from the above restructuring to bring on board a seasoned International manager, re-staff  the unit so that it can play a role in bringing jobs to our state and restore a travel budget which has been either non-existent or  at best greatly reduced. Specifically, we should continue to focus on key trade shows such as the aerospace and medical instrumentation; we must expand the number of inbound trade missions with special focus on new and green technologies; we must re-energize and re-focus the recruitment of foreign companies into CT by leveraging foreign companies based here already; we must place heavy emphasis not only on manufacturing but also on service industries such as Insurance.

But above all no economic strategy will succeed without an active Governor to lead these efforts. I know that Governor Malloy understands this requirement and I am sure that he will take the same active role  he played when Mayor of Stamford.

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Paul Pirrotta

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