Aetna Sends Message

Aetna confirmed Thursday that it is moving its corporate headquarters to New York City and provided the exact address. The move was not unexpected and had been telegraphed weeks ago.

The company said its continued presence in Hartford will depend a lot on the state of the Connecticut economy and whether the legislature can produce something that looks like a sustainable path forward. Coming less than two years after the decision by General Electric to relocate its headquarters to Boston, the Aetna move is an undeniable signal from the state's business community that state government needs to change its approach.

Aetna also revealed details of economic incentives it received from the city and the state of New York, further confirming that bidding for jobs is a multi-state contest.

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Meanwhile, the state heads into the holiday weekend - and more importantly - the new fiscal year without a budget in place.

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All or Nothing?

The legislature will not vote on a new state budget this week, meaning Connecticut will roll into the new fiscal year on Saturday with no budget in place for the next two years.

There has been talk of a mini-budget that would cover 90 days, but the House Speaker is against the idea, apparently believing extending the deadline will only delay hard decisions.

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New Revenues

Some insiders are suggesting this year's special legislative session on the budget could extend past Labor Day.

All sides appear to be far apart. Governor Malloy is attempting to lead by pushing forward with his own budget plans absent one approved by the full legislature.

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Big Week

In Hartford and Washington major decisions are being made this week with the potential to dramatically impact Connecticut over the long term.

Beginning today(Monday) lawmakers in Hartford begin a final effort to assemble a two-year budget package with the hope of voting on it by the end of the week. Negotiations are taking place against a backdrop of a budget shortfall of as much as $5 billion. There is a reluctance to raise taxes and a reluctance to do anything that may be perceived as hurting the state's business climate, but there is also a realization that cutting the budget by $5 billion, over two years, is politically difficult. As is often the case, the most vulnerable citizens in the state face the biggest risk as decisions are being made.

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Meanwhile, in Washington, D.C., the Senate is trying to vote before the July 4th recess on healthcare reform. The outcome of the debate could affect nearly every Connecticut resident on a personal level, but it may also have a strong affect on the state's economy which still includes thousands of insurance industry related jobs.

Manufacturing Improvements

Connecticut is facing a boom in defense manufacturing in the coming years, but a recent CT21 policy brief shows the state needs to do more to make sure the workforce can meet the expected need.

A new study shows some signs of improvement in the readiness of Connecticut's manufacturing workforce.

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Budget Principles

Governor Malloy and legislative leaders have agreed to try to come to terms on a budget agreement by June 29th. Legislative caucuses will meet today(Thursday) in an effort to build consensus. Another meeting between lawmakers and the governor is scheduled for Monday. The schedule essentially leaves four days between the next meeting of top state leaders and a possible budget vote.

The timetable seems impossible to meet, and with that as background, Governor Malloy took the step Wednesday to release the principles under which he will operate the - without a budget - if the legislature fails to act by June 30.

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Malloy says he will release details of his emergency budget sometime next week, before June 30th, so that everyone knows how he will run the state in the absence of a legislatively approved fiscal plan.

Pressure for Taxes Builds

With budget negotiations between the governor and legislative leaders moving slowly, various interest groups are using the open field to advocate for tax increases to fund popular programs at current levels.

Cities and towns, social service providers, and transportation advocates have pushed, since the end of the regular session, for increased sales taxes and the consideration of tolls to fund highway improvements. While Democrats are refusing to take tax increases off the table, Republicans are taking a hard line against new taxes and Governor Malloy says he views new taxes as a last resort.

The cry for higher taxes to avoid spending cuts underlines the difficulty lawmakers have in breaking budget tradition even in the face of lagging economic indicators.

Non-Profits Make Case

Connecticut non-profit social service providers are once again making the case that the state can reduce costs and improve results by placing a greater reliance on the private provider community. Once again, they face resistance from a legislature struggling to balance the budget.

Previous CT21 studies, and other policy reviews, have consistently concluded greater use of community based social services yield better results at lower cost.

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Bad Options

Keith Phaneuf of the Connecticut Mirror, a recognized expert on the Connecticut state budget, has a bleak preview of what to expect if lawmakers are unable to come to agreement on a budget by June 30th.

Most political observers put the odds of an agreement by the end of the month at less than 50-50.

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Regionalization

In the search for cost savings at the state and local level more observers of Connecticut government are calling for regionalization.

This is an approach long supported by CT21 research.

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Independent Living - Strong Choice

Previous CT21 research concludes the state of Connecticut can improve outcomes and reduce costs by investing more in independent living settings. These programs follow an approach to social services that emphasize government money "following the person" rather than blindly funding traditional programs that may not produce the best results in all cases.

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The Budget Is Next

Now the hard part.

The 2017 regular session of the legislature has adjourned, but now lawmakers are heading into a special session, that might be described as an emergency session, to come to terms with a budget that is as much as $5 billion out of balance. Based on a Senate debate Wednesday night, it appears Republicans are seeking to make dramatic changes in state government's traditional relationship with state employee labor unions.

If that is the case, it could extend the budget debate beyond the current deadline of June 30th.

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Business Confidence Up - Slightly

The latest CBIA/Farmington Bank business confidence survey suggests business leaders in Connecticut are feeling a bit better about the strength of their own businesses, if not the state of Connecticut's economy overall.

Slightly more than one-third of those responding say they expect "improved conditions" over the coming quarter. Others suggest they are waiting to see how the state budget situation resolves itself.

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One Student Writes

Writing in the National Review, a Yale University student offers a bleak assessment of Connecticut's fiscal and cultural place in time.

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Final Push

The legislature is pushing toward its Wednesday midnight deadline, but its work is no where near done.

An evenly divided state Senate is making it very difficult for Democrats to push their policy agenda and narrow margins in both chambers of the legislature mean there is little progress to report on the state budget. In fact, at the end of last week, legislative leaders said their new working deadline for a budget agreement is June 30 - the end of the current fiscal year. The budget disagreement and last week's news that Aetna plans to move its headquarters out of Hartford, is playing into a national narrative that is defining the state as a poor place to do business.

Changing the Law

In a move that may say more about the future than the immediate challenge at hand, legislative Republicans have proposed changing the law to produce long term savings on state labor costs.

The proposal was immediately rejected by Democrats and state employee unions, but as is often the case, now that the issue has been put on the table it is unlikely to be removed until portions of the idea are implemented.

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New Concerns

An unconfirmed report suggesting Aetna is considering moving its headquarters from Hartford to New York City is sending shockwaves through the state capitol as lawmakers try to develop a budget for the next two years.

There is concern about job loss, but there is also concern that the departure of General Electric to Boston and this possible move by Aetna, tells a bigger story about how the business community views Connecticut as a place to set up shop. Lawmakers tend to develop budgets based on short-term political calculus. A move by a Connecticut stalwart like Aetna would indicate corporate worry about long-term stability.

Finals

The legislature is rushing toward a scheduled adjournment next Wednesday, but it is not clear lawmakers will finish their work on the state budget by then.

In recent years, the legislature has looked at June 30, the last day of the fiscal year, as the real deadline for getting a budget together. The wrangling over state spending and tax policy comes as the business community continues to send signals, directly and by openly looking toward other jurisdictions, that Connecticut needs to commit to a long-term fiscal policy that provides consistency.

Union Deal

The Malloy administration and state employee unions have come to an agreement on a concession package both sides say can save the state approximately $1.5 billion over the next two years. It still must be approved by union rank and file.

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Turning Point?

Governor Malloy and state employee unions are reportedly close to a tentative deal that could dramatically reduce the size of the budget shortfall the state faces over the next two years. But questions remain over whether accepting proposed union concessions now come at too high a price. Some are concerned part of the agreement locks the state in to a contract it may not be able to afford long-term.

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CT21 Cites Savings Potential

The Connecticut Institute for the 21st Century is offering updated data which shows there is still the potential to reduce costs by up to $2 billion, over the next five years, if previously proposed reforms from CT21 are fully implemented across state government.

Jobless Rate

Top economists in Connecticut are warning that April's uptick in the unemployment rate should be taken as a warning sign by state lawmakers. Connecticut continues to lag the region in job creation and that may be a sign of deeper fundamental problems that begin with state policies that are seen as unstable by many in the business community.

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Negotiations Underway

With less than four weeks to go in the regular legislative session, Governor Malloy is reviewing budget proposals presented to him by legislative leaders. At the same time, Malloy is engaged in last minute negotiations to extract concessions from state employee labor unions.

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Why GE Moved

An important interview has been published by the Wall St. Journal for those still trying to understand the business decision by General Electric to move its headquarters from Fairfield to Boston. More than any other development in recent years, the GE move is still cited by many as a major event that had an outsized impact on perceptions of Connecticut.

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