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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Budget Battle

The governor and legislative Democrats and Republicans have publicly shared some of their plans for balancing the next two year budget.

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CT21 Reforms Could Save Millions

The Connecticut Institute for the 21st Century is offering a new analysis of its previous policy reform suggestions as the legislature grapples with the current budget crisis. Updated data 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.

Signs of Hope

There is little good budget news coming out of the state capitol this week, but there are signs that the dwindling lack of options is forcing the governor and lawmakers to consider approaching this year's challenge with long-term reform in mind.

Thursday, the bi-partisan leadership of the House pledged to work together to think in terms of "years [ahead] and future generations" when it comes to crafting the next two-year budget and Governor Malloy pledged not to resort to borrowing to close the $5 billion budget gap. If that thinking holds - it may afford Connecticut an opportunity to take a first step toward a more sustainable budget process and a stronger economic footing.

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Options Limited

A plan by Governor Malloy to close the gap in this fiscal year's budget takes many options off the table - including use of the Rainy Day Fund - as lawmakers try to tackle the challenges presented by budget shortfalls in the next two years.

With less than a month to go in the current legislative session work has barely begun on addressing a potential budget imbalance of $5 billion or more.

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Good and Bad News

Another economic ranking lists Connecticut as one of the worst places to do business, this according to Stamford based Chief Executive Magazine. But the same ranking says among Connecticut's attributes are quality of life and the quality of the workforce.

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Deadline Pressure

Facing a shortfall of more than $5 billion over two years, state lawmakers are moving into the final weeks of this year's legislative session with no clear direction about how to close the gap.

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Economic Survey

A new survey of 500 Connecticut residents on the economic mood of the state shows both positive outlook and worrisome concern.

In general, respondents to the poll see reason for optimism, but also hold the view more needs to be done to make the state more friendly to job growth.

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Rail Investment

While the state legislature focuses on the next two year budget, decisions being made over the next five weeks could have long term implications when it comes to where and how Connecticut chooses to invest in infrastructure improvements.

A new report issued by the transportation department suggests spending millions to update freight rail in central Connecticut could have benefits for the regional economy.

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Budget Options Dwindling

Governor Dannel Malloy is warning of more than 4,000 state employee layoffs if state employee unions can't help him find $700 million in savings in the next two year budget. Talks are continuing, but Malloy warned unions Tuesday that there needs to be a sign of progress soon. The governor has proven in the past he is willing to resort to layoffs when necessary.

Meanwhile, the Speaker of the House is signaling a need for tax increases. With a budget shortfall topping $4 billion the speaker says it would be almost impossible to balance the budget without added revenue.

The legislature is scheduled to adjourn June 7th, but on-time completion of a budget is looking less likely with each passing day.

Full Time Legislature?

The influential Hartford Business Journal editorial page says last week's dysfunction at the state capitol on budget matters shows it is time to move toward a full-time legislature in Connecticut. The paper argues part-time lawmakers simply don't have the expertise it takes to run our state government.

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Mini Analysis

Next week Governor Malloy and legislative leaders from both parties are scheduled to sit down to talk about an expanding state budget crisis.

This is not the usual end of session bargaining to bring the year's budget debate to a close. The meeting comes as income tax revenues to the state are falling unpredictably and the projected budget shortfall for the next two years is flooding over $4 billion. This week the legislature's Appropriations Committee failed to come to an agreement on a spending plan, Republicans offered a plan that appears to be out of balance, the Finance Committee agreed to the seemingly unrealistic goal of no new taxes and the governor's budget office ordered a hiring freeze.

Governor Malloy's own budget proposal, three months after its unveiling, is also out of balance based on the latest revenue figures.

All this is happening as the race for governor begins to take shape and the margins in the House and Senate suggest Republicans have an opportunity to actually win control of the legislature in the next round of elections.

To solve the current budget crisis lawmakers and the governor will have to make politically unpopular decisions, which will almost certainly include spending cuts and tax increases. While a June 7th resolution seems unlikely, delaying a final deal until later this year - in special session - will not make the choices any easier. It is possible the magnitude of the problem may force many lawmakers to vote for a budget deal they don't like and then decide not to seek re-election. 

Tax Summit

It is the time of year when the governor and legislative leaders would normally meet to begin final negotiations on the budget, but eroding tax revenues have prompted a call from the governor for an emergency, bi-partisan summit.

Falling tax receipts are putting new pressure on an already difficult situation.

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