Each of the major party gubernatorial candidates have discussed the usual litany of expected issues facing Connecticut: budget deficits, high taxes, unfunded pension liabilities, high salaries/benefits of state and municipal workers, depressed cities, exodus, lack of jobs, disadvantaged educational funding, lack of school funding in the inner cities, health care, needed reforms in provision of social services to our most needy residents and so on. And they’ve offered plans to take action meaningful steps and restore our once vibrant economy and reputation. With one candidate even offering to repeal the dreadful state income tax in about a decade.
But in casting a broad net of promised reforms/action steps, none of the candidates have zeroed in the “mission critical” actions to help restore our state’s economy.
The first order of business is dealing with the perpetual series of billion dollar budget deficits. That requires some combination of seeking larger tax revenues and cutting budget outlays.
The second order of business is far more challenging. Economic growth the world over takes place in cities. And Connecticut has no modern high-tech industrialized cities. Outside of Stamford, an adjunct of the New York City economy, each of our larger cities where a third our population lives are in varying states of disrepair. Of course there are some vibrant localized centers such as the huge Yale complex in New Haven, the insurance complex in Hartford and in the suburbs of our defense firms. By and large our large cities never made the successful transition from their war time industries into the modern age.
No wonder our state’s revenue stream is disproportionately influenced by roughly 130,000 Gold Coast families with median incomes of about $250,000 who collectively provide about 40 percent of our state budget. A stagnant or bear equities market clearly has a powerful negative effect on state finances and vice-versa.
What’s different now is that the Gold Coast is undergoing a significant Exodus of jobs, firms and residents fearing further property declines come the next recession. It’s little appreciated that Connecticut has more homes for sale than neighboring Massachusetts, a much larger state. High-end Gold Coast properties are challenged at finding buyers even at major discounts.
Even under the best of circumstances with knowledgeable economic and financial advisers our next governor will be hard pressed to deal with the distressed cities and overall budget constraints. But there are real risks that “business as usual” will just extend the pain further out into the future. While each of the candidates has a different “plan of action,” the inherent constraints of the state’s economy will preclude rapid progress — and perhaps not much progress for many years, especially with an early national recession.
The real story here as just about all seasoned state budget analysts, economic and fiscal experts acknowledge is that Connecticut’s problems extend back many decades and are not amenable to a quick fix. Again it’s always worth noting that Gov. Dannel Malloy was a well respected and successful mayor in Stamford, our states’ major city. Perhaps with a different (and more capable) set of senior advisers/managers and less dependence on public union support the outcome would have been better. But Connecticut would still have secured a problematic economy under any reasonable set of scenarios for our outgoing governor.
In a real sense, our new governor faces an economic and financial “mission impossible.”
Creating a viable Connecticut, one not wholly or mostly dependent on the Gold Coast,
requires at its heart creating truly viable modern cities offering good jobs in our modern high world. That will take quite some years, likely more than a decade.
Blaming Gov. Malloy for all of Connecticut’s ills may seem attractive. But it wouldn’t pass for a freshman economics student exam card. Creating viable modern cities with high-tech industries will remain our state’s most formidable challenge for decades to come.
Peter I. Berman lives in Norwalk.