An Important Session

A closely divided legislature facing an unprecedented budget crisis could make the 2017 session of the General Assembly one of the most important in recent Connecticut history.

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Lembo Urges Support for Union Deal

Comptroller Kevin Lembo is urging lawmakers to approve a deal worked out between state employee unions and the Malloy administration over pension costs.

He argues now is not the time for partisan warfare over the issue.

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Power Deal

After more than a month of negotiation, Democrats and Republicans have come to agreement on how the state Senate will be managed with both sides holding 18 seats.

The final deal could have an impact on policy debate in the upcoming session; slowing the progress of certain legislation and perhaps pulling the discussion toward the center.

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Major Budget Cuts

Buried at the end of a routine story on this month's Connecticut budget projections is a big hint about the nature of the debate over state spending that will commence in two weeks at the start of the legislative session.

"[Governor]Malloy already has warned legislators he will not propose any major tax increases to help balance the books, meaning he also will recommend deep spending cuts," as reported by the CT Mirror.

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An All Options Budget

With the state facing combined budget shortfalls in each of the next two years totaling approximately $3 billion, all options must be on the table, according to the governor's office and top lawmakers.

That's the assessment of a Hartford Business Journal analysis, less than three weeks before the start of the next session. While all parties seek to avoid tax increases, most at the capitol acknowledge it will be difficult to balance the budget without at least some changes to the tax code.

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Jobless Rate Down

The week ends with some good news on the economic front. Connecticut's jobless rate fell to 4.7%.

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No Spending Cap Deal

The commission on the state spending cap was unable this week to reach a full agreement on the terms of the cap and which spending items should fall outside the cap.

As the legislature faces a two-year budget cycle nearly $3 billion short, the 25 year fight over the spending cap - what it means and what it should do - illustrates how difficult it is to change bad spending habits, even when everyone knows changes must be made.

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Support for Labor Deal

Governor Malloy is winning conditional support from some state business leaders for the agreement announced last week on pension payments for state employees.

At a MetroHartford Alliance breakfast, the deal was described as a step in the right direction. Meanwhile, Republican lawmakers say the deal only goes so far and ignores the fundamental changes necessary in current state labor contracts.

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Pension Deal

In an effort to relieve pressure on the budget, Governor Malloy has come to an agreement with state employee labor unions to stretch out pension payments over the next twenty years.

The deal needs legislative approval. There are concerns the agreement may lead to higher costs over a longer period of time, but in the current fiscal environment the opportunity for immediate relief may be too good to pass up.

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Regionalism or Crisis

Hartford Mayor Luke Bronin is speaking increasingly about his city's financial challenges and how they may effect the state as a whole if not addressed.

Speaking in West Hartford Tuesday night, Bronin warned that if his city is forced to declare bankruptcy the effects on the state will far exceed the blow that followed the departure of General Electric's headquarters from Fairfield county. Bronin's solution - which is largely undefined - depends on a regional approach.

The Hartford issue is just one more layer on top of an already burdened state budget.

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Lesson from Ol' Miss

In case you missed it, the CBS program 60 Minutes had an interesting story this past Sunday on Mississippi's efforts to lure manufacturing to the state. While the lessons are not fully analogous to Connecticut, we can certainly learn something from the determination it takes to achieve an economic development goal.

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Lembo Straight Talk

Echoing themes long promoted by CT21, state Comptroller Kevin Lembo told a business group in Norwalk last week that the state needs to get out of crisis management mode when it comes to budgeting and to re-think everything we do.

Lembo's audience appeared to be in general agreement with the direction, but seemed unconvinced anyone at the state capitol is hearing the message.

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Negative Outlook

One of the nation's leading bond rating agencies is down grading its outlook for Connecticut from stable to negative.

S&P Global Ratings says Connecticut's fixed costs are rising at levels that may not be sustainable. The news follows two presentations done earlier this week by government budget experts before the budget and finance committees.

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Halcyon Days Over

According to the Hartford Courant, legislators at the Capitol now agree the Halcyon days of state budgeting are over and there are few good choices left.

Lawmakers got a briefing on the budget situation Wednesday from members of the Malloy administration who now say the state could be as much as $1.5 billion short in the budget that begins in July of next year unless major changes are made.

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$1.5B

Just a few days after twin reports pegged the state's potential budget deficit next year at $1.3 billion, a new report puts the number at $1.5 billion with the potential for a $1.6 billion shortfall in the following year.

The numbers represent about 8% of the General Fund budget meaning lawmakers will have little choice but to dedicate all their efforts to closing the gap in the next eight months.

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Perhaps as troubling, is the sense that state agency leaders are offering little that is new in ways to reduce spending. Budget options presented to the governor for consideration include the typical list of "Washington Monument cuts," that would reduce services for the state's most vulnerable citizens and end small budget items like rifle salutes at veterans' funerals.

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$1.3 Billion

As expected, new reports suggest the incoming legislature will need to close a $1.3 billion gap in the next state budget. With this news as a backdrop, Governor Malloy is signaling his own budget proposal will not "lead with" new tax increases and may even include tax breaks designed to make Connecticut more business friendly.

Taking Budget Toll - CT Mirror

Budget Woes - CT News Junkie

Time Indeed!

The Hartford Business Journal editorializes this week about the need to turn the focus at the state capitol away from the election and toward solutions to help the state's economy.

The influential journal says the outcome of the legislative elections - divided government - is a good thing.

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Priority One: Long Term Plan

By Scott Bates

There is one over-riding issue facing Connecticut in the next legislative session. The state budget must be brought into balance and a long-term plan for fiscal sustainability put in place. Our economic security and quality of life depend on it.

Here’s the problem. The latest consensus revenue figures released by the Malloy administration and the legislative budget office indicate the state is facing projected deficits of $600 million over the next two years. The numbers may be much higher than that and could end up exceeding $1 billion. With such a challenge before us, the ability for state government to invest responsibly in new programs to stimulate the economy or improve the job market is greatly curtailed. Simply filling the budget gap to fund existing services will take all the revenue government can raise and more. That’s no way to build an innovation economy needed to capture the high value jobs we want for ourselves and our children.

Red Tide

The challenge of the next legislative session is becoming even more clear in the days following the election.

A new consensus revenue report suggests the state is facing a projected budget shortfall of nearly $600 million over the next two years. Most insiders are already operating under the assumption that the number is already well above $1 billion.

It means that the legislature will not have the luxury to consider means to grow the economy without first bringing the budget into balance to properly pay for existing obligations.

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Practical Analysis

With the 2016 legislative elections behind us it appears the state Senate will be evenly divided (18-18) between Democrats and Republicans, giving Lt. Governor Nancy Wyman a key role in breaking ties. In the House of Representatives, Republicans also made gains, picking up eight seats - as of this writing - trimming the Democratic majority to 79-72.

The next session of the legislature will continue to be dominated by debate over the budget and the state's economy. All sides agree that regardless of the on-going dispute over monthly budget deficit projections, Connecticut is facing huge budget shortfalls of $1 billion or more in each of the next two years. A dramatic change in approach is necessary and voters seem to be signaling they want both sides to work together to find solutions.

No Good Choices

The CT Mirror offers a peek at some of the budget cuts being proposed by agency leaders as the Malloy administration begins the process of putting together a budget proposal for the next two years.

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CT Economic Ranking

A state report on the Connecticut economy shows "room for improvement."

The Connecticut Economic Digest puts our state at 38th among the 50 states in terms of the overall economy. With state government struggling to keep annual budgets in balance there is little room for policy changes aimed at improving the overall climate.

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The Real Issue

While elected leaders debate over the size of the projected budget deficit during this campaign season, it is important for Connecticut to keep its eye on the ball. Monthly projections are not as important as the overall fiscal health of the state. All agree the state currently faces budget shortfalls of one billion dollars or more over the next two years.

As the Commission on Economic Competitiveness pointed out in its first report, the fundamentals of the Connecticut budget are so challenging that we could be facing a cycle of deficits and difficult choices on spending and taxes for years to come. Monthly deficit projections need to be accurate, but they are only a symptom of a problem that needs to be addressed from a long term perspective.

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CT Climbs

A new survey from the Milken Institute says Connecticut is improving its position as a place that is able to convert high technology opportunities into new companies with the ability to add jobs.

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