Deficit Debate

As the election approaches, the administration of Governor Malloy and Republican legislators are taking part in a very public spat over the size of the state's projected budget deficit. All sides know the state is facing substantial shortfalls for the foreseeable future, so the real focus of debate should not be on the size of the problem, but how to address it long term.

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Substantial Headwinds

The departure of General Electric and budget strains being felt at the local and state level continue to hamper the outlook for the Connecticut economy. This as the governor and legislature engage in an on-going debate over the size of the projected budget deficit.

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Deficit Numbers

A week of argument over the size of the projected state budget deficit largely misses the point.

The facts are; nearly everyone at the state capitol views the current state budget as being more than $1billion out of balance this year with a gap of about the same margin in the following fiscal year. Privately, lawmakers will say they expect the gap to be even than that.

It all means that regardless of the monthly projections, the state is still facing financial challenges and a new approach focused on trimming spending and building a tax structure to support agreed on spending levels is needed.

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Early Signs, Continued Turmoil

The Malloy administration is asking its agency leaders to put together budget proposals for the next two years that contemplate cuts of as much as 10%.

This is an early sign that the administration expects a period of continued high demand for government services with no revenue source strong enough to consistently meet that demand.

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Better Policies Needed

In its weekly editorial, the Hartford Business Journal lauds the state for securing long-term employment at Sikorsky, but argues "corporate welfare" is not the best policy when it comes to sustaining economic growth.

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CT Scores on Energy Efficiency

A new report from American Council for An Energy-Efficient Economy says Connecticut is doing well in the category.

Connecticut, with its first in the nation Green Bank, got very high scores for use of government policy to influence energy efficiency and ranked number five overall across all categories.

ACEEE says Connecticut government leadership "is committed" to improving the state's economy through the promotion and practice of new energy policies.

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Manufacturing Workers Needed

Despite strong efforts to provide programs to train students with the skills necessary for modern manufacturing, some leaders in the sector say Connecticut manufacturers are not finding enough millennial generation employees to fill out their payrolls.

The issue was discussed at a forum put on by UConn in Wallingford earlier this week.

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Digital Government

The Center for Digital Government says Connecticut is doing a better job using technology to deliver government services. The group gives Connecticut a B+ grade in an area that can help drive down costs while improving efficiencies.

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Efficiency Task Force

Nearly a year after it was authorized, a government efficiency task force created by the legislature now has all its members in place and can begin work.

The task force is supposed to study how government services are delivered and determine whether there are more efficient ways to do so with an aim toward saving money.

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Economic Growth Not Cuts Alone

By Chip Beckett

It is time to consider specifics when discussing regionalism and the Connecticut economy.

Our state, and the Hartford region in particular, is in an especially unhappy mood. Residents expect government services, but feel they are often of poor quality. Taxpayers feel stretched financially, but there is always a concern government may ask for more. As a state, we have lagged socially, culturally, and economically for a generation. We are among the slowest growing regions in the country according to a recent report called MetroHartford Progress Points from the Hartford Foundation for Public Giving. The only way to break the cycle is to grow our economy by creating jobs.

CT Debt Burden

A new study out this week says Connecticut is one of dozens of states with a debt burden higher than the state's ability to pay. It means that if Connecticut were to attempt to pay off its debt it would cost each of us almost $50,000.

The study can be used as argument for taking steps to control debt specifically and the cost of government in general.

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Still Fighting on Spending Cap

Twenty-five years on, Connecticut is still struggling to define the terms of a constitutional cap on spending approved by the voters in a referendum.

At a recent meeting of the Spending Cap commission, Jim Smith, CEO of Webster Bank, said defining the terms of the cap and living within spending constraints is a key to a robust economic recovery. Smith says lack of confidence in state government's ability to control spending is holding Connecticut back.

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Good and Not So Good

The latest report from the U.S. Census Bureau says Connecticut has among the lowest poverty rates in the country with a rising median income. At the same time there is evidence the Connecticut economy is not good for recent graduates with more than 40% of 18-34 year olds still living at home with their parents.

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Appeal for Solutions

The state will appeal a controversial decision announced last week by a Superior Court judge that declared Connecticut's system of school funding "irrational."

Despite the appeal, the expensive challenge of school funding has now been put front and center on the legislative agenda for next year. In announcing the state appeal, Attorney General George Jepsen said the legal battle should not prevent the legislature from addressing the legitimate issues concerning how to pay for public education in Connecticut.

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Highly Cited

The annual survey of members by the Connecticut Business and Industry Association includes some positive indicators and some troubling findings.

The report, released at the end of last week, says business profitability is up in Connecticut, but at the same time more than 25% of business owners say they are at least considering moving some operations out of state and nine in ten think state government is doing nothing to help make Connecticut a better place to do business.

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More Spending Pressure

Although the court ruling did not specifically set new spending levels, a superior court decision on a major school funding case will put new pressure on the legislature in the coming session.

The court ruled the state's system of funding local schools is "irrational" and ordered a fix by early next year. Municipal leaders, who feel the state often short changes cities and towns on education funding are celebrating the decision.

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New Report Low Wage Jobs

A new report from Connecticut Voices for Children supports some of the recent findings of the Connecticut Commission on Economic Competitiveness.

Low wage jobs are increasing in Connecticut and high wage jobs are decreasing. Setting aside the obvious effects on families, this is a trend that also has a direct effect on the ability of state government to provide services since low wage workers pay fewer or no taxes.

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Private Providers

With the state relying increasingly on private sector providers of social services - a policy promoted by CT21 - some advocates are arguing that taking the responsibility away from state employees may save the state money, but it is not necessarily in the best interest of people who need care.

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Debating First Five

Although always controversial, Governor Malloy is defending his administration's First Five program designed to provide incentives to companies that bring or in some cases commit to retaining jobs in Connecticut.

Some argue it is corporate welfare, but Malloy strongly contends it's what states have to do to compete in the national marketplace for big employers.

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CT Unemploy Rate Drops

The labor department reports the Connecticut jobless rate dropped to 5.7% in July. According to statistics, 1,700 jobs were added to the economy.

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Overtime Costs Down

The Office of Fiscal Analysis is reporting that state overtime costs were reduced dramatically in 2016.

The cost reductions were achieved after CT21 identified better management of the use of overtime in a number of state agencies as a broad target for state government cost cutting efforts. As expected, some of the best results came in the Department of Correction.

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Poorly Poised?

According to a new report from Standard & Poors, Connecticut may be "poorly poised" to endure if a recession occurs in 2017.

S&P says low budget reserves, high costs and over-reliance on taxing the wealthy all contribute to Connecticut's weak position.

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Team Work Needed

The Hartford Business Journal editorializes this week on the need for state government and the private sector to work together to build the Connecticut economy of the future.

And the HBJ says most of the responsibility lies with business, because government simply lacks the resources to turn things around on its own.

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Deficit Improvement

In the grand scheme it is a small movement, but the projected state budget deficit for the fiscal year just ended has improved slightly from a month ago.

According to the state comptroller's office, the 2016 deficit stands at $279 million, down about $36 million from last month. A final certification is expected in September.

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