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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Retirement Plans

Even though states like Connecticut are facing difficult choices about funding their own state employee retirement plans, nearly half are moving forward with plans to offer retirement accounts to private sector employees, according to the latest research from Pew.

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Transit Future

According to the Connecticut Mirror, there is a split in Connecticut government circles about how best to proceed with plans to modernize passenger rail service in the northeast. One group favors a shoreline train route between Boston and New York and another, led by Governor Malloy, favors an inland route through Hartford and passing near Storrs.

The debate obviously has policy and budget implications.

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Borrowing Reform

The Connecticut Office of the Treasurer continues to push for some common sense reforms in the manner in which the state borrows money for capital projects.

Among the ideas; ending the practice of using some borrowing to pay for operating costs and paying cash for some capital projects.

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Smart Manufacturing Investment

By Scott Bates

At a time when Connecticut is seeing an increase in job opportunities in the manufacturing field the Connecticut State Colleges and Universities (CSCU) system has smartly added new advanced manufacturing programs. These programs will be instrumental in expanding the changing manufacturing sector.

No More Layoffs?

In delivering budget reduction options to the governor's budget office, state agency leaders are arguing they can make the cost cutting goals without further layoffs.

Twenty-six state agency leaders are making the claim according to a report in the Connecticut Mirror.

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Reforming Juvenile Justice

The Connecticut Department of Children and Families is considering juvenile justice reforms that align with best practices often recommended by CT21.

The plan forecasts a move toward fewer and smaller locked facilities and a greater reliance on the private sector to provide services to those youth who do not require locked facilities. It is believed this approach can lead to better outcomes at lower cost to taxpayers.

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Room for Improvement

Despite the mixed results of Governor Malloy's efforts to reform the state's criminal justice system during the last legislative session, there is still evidence more can be done to reduce costs by understanding how to reduce prison and jail incarceration rates.

Statistics show the state is spending more than it needs to - as a matter of policy and sound management principles - on pre-trial detention.

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Troubled Picture

The Office of Policy and Management has submitted its final report on the just completed fiscal year and the deficit numbers show continuing unfavorable trends.

Revenues from both income and corporation taxes are down. If the trend continues it means more difficult spending decisions will await the next legislature when it convenes in January.

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Transportation Funding

The Malloy administration is investing in a study to determine the best way to begin taxing drivers based on how many miles they drive.

This as talk at the capital suggests the re-introduction of highway tolls may be a major issue in the next legislative session. Governor Malloy has made no secret of the fact that he believes Connecticut needs a more stable revenue stream to fund transportation improvements. He and others have also acknowledged that changes in the way people are using their cars, electric cars, cars that get better gas mileage, and increased use of public transportation are all factors making the gasoline tax less reliable.

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Capital Spending in Comparison

According to a new report, Connecticut and the rest of the New England states, trail much of the rest of the country when it comes to spending on capital projects. This might come as a surprise to many who have been critical of the Malloy administration for borrowing too much.

A report from the Connecticut Mirror notes that several of Connecticut's New England neighbors have been living under self-imposed borrowing caps for the past several years and that may be a contributing factor in the rankings.

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Consolidation Recommended

A study done for the Connecticut Healthcare Cabinet is recommending the creation of a new state agency that would take control of many healthcare management functions currently spread throughout state government.

The idea is far from the point of implementation, but certainly provides policy-makers something to consider and may also raise questions about the need to re-align other agencies of state government to better address the issues of today.

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The Borrowing Issue

At the same time state agencies are being asked to cut spending in anticipation of several more years of declining tax revenues, Connecticut continues to put the cost of more capital projects on the credit card.

At a Bond Commission meeting scheduled for Tuesday, nearly $200 million in borrowing is scheduled for approval bringing the total this year to more than $2 billion. Some observers are predicting the use of borrowing will be a major issue in this fall's legislative campaigns.

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