It is no exaggeration to say that Hamden is, and has for some years, been experiencing a remarkable exodus of cash. The value of the town’s grand list has been withering faster, relative to that of other towns, save that of any town except Naugatuck. Cash balances in Hamden banks have been steadily declining as depositors move their accounts elsewhere.
From 2010 through 2018, the value of Hamden’s grand list as a percentage of the state average was at a median 61.37% of that average (compare for example, to that of North Haven at 113%, or, for another perspective, West Haven at about 49%). In other words, the value of Hamden’s principal capital assets, its grand list, is catastrophically failing.
Hamden’s wealth polarization, represented by an index called a Gini ratio, has actually gotten worse since 2006 when it was .42 whereas by 2019 it was .43. This ratio measures how polarized wealth is in the hand of residents, with an index of 0 representing perfectly evenly distributed wealth and an index of 1 indicating all the town’s wealth in the hands of one person. Given the narrow range of the index, it should be alarming that the equity of Hamden’s wealth distribution actually went down 2.5% in a few short years.
Deposits in Hamden banks, a conventional measure of the flow of cash through town businesses and individuals, as a percentage of the total deposits in New Haven area banks, declined from 5.64% to 4.92% from 2014 through mid-2021. Cash, just as capital assets, is leaving Hamden and what’s left of it is becoming concentrated in fewer hands.
The town maintains at its heart a potential solution set that can attract more business, while more fairly spreading the tax impact and raising more money.
Towns in Connecticut are provided limited resources in state law by which to attract businesses. This, however, should not serve to limit the imaginations of economic leaders as they explore both the contours and the opportunities implied by those state constraints.
Towns, especially Hamden, should be considering both pro market and pro business strategies at they devise their growth plans for the future. Most towns contemplate only pro business approaches, typically limited to local tax incentives, and ignore the pro market opportunities which yield more long term and robust fiscal outcomes.
Pro business economic development strategies tend to favor incumbents and producers and include such prosaic examples as conditional tax abatements, start-up lending, and special infrastructure extensions such as sewer hook ups (in effect, a tax abatement). Pro market strategies favor new entrants and consumers. These strategies are, by no means, mutually inconsistent.
Hamden’s current economic development strategy manifest includes more than a dozen potential approaches to attracting business to town. All but one of them (tax abatements) are couched in abstract language that is, perhaps, more aspirational than genuinely implementable. The tax abatement strategy is, of course, pro business rather than pro market. To gain some perspective on this approach, imagine, for a moment, every business in Hamden asking for and receiving a multi-year tax abatement. The magnitude of how calamitous this would be for the marketplace needs little explication.
Rather, the town might work to remove barriers to competition through aggressive infrastructure expansion such as fiber optic networking, installation of 5G support, and establishment of a town business ombudsman who can help level the competitive environment for less well-capitalized business prospects.
As an additional observation, while the necessity for no-bid contracts might be argued in certain exigencies, they are among the most insidious form of pro business economic policies that works to serve only the business awarded the work, and do nothing for the market as a whole.
Hamden can emerge from the decades long fiscal trench it has dug. While I do not suggest such emergence will be simple or without significant investment, I encourage our economic leadership to face into the wind and start to make the necessary steps forward.
Dan Smolnik is a tax attorney and a member of the Hamden Economic Development Commission. Any views expressed herein are solely his own.