A new report says Gov. Dannel P. Malloy should be commended for his efforts to address the state”™s fiscal outlook and economic development policies, but that his work hasn”™t gone far enough.
Released by the Comeback America Initiative (CAI) and the Connecticut Center for Economic Analysis (CCEA), the report, “Connecticut at Risk,” recommends the state take a more aggressive stance on reducing its debt load and pursuing more long-term policies for economic growth.
“Connecticut is a great state, but it faces serious and financial economic challenges,” said David M. Walker, CAI CEO. “It needs to make a number of transformative reforms in order to create a better future.”
CAI, based in Bridgeport, is a nonprofit, nonpartisan organization that promotes fiscal and sustainable responsibility in order to solve fiscal imbalances in federal, state and local governments. The CCEA is an economic research entity at the University of Connecticut. Researchers from the two entities jointly released the study to advance public budgetary discussions at the state level.
According to the report, general fund spending as a percentage of gross domestic product has been higher than most other states. In 2011, when spending was 7.8 percent of the gross state product, Connecticut ranked among the top three highest-spending states.
Walker said he questions whether residents are getting an appropriate value for their money when the state has been underperforming for more than two decades, especially in job growth.
“It”™s the only state in the union that has fewer jobs than in the 1990s,” Walker said.
Focusing on solutions to Connecticut”™s sluggish performance, the report makes several recommendations, the first of which focuses on the state”™s unfunded state employee pensions and retiree health care obligations.
Per taxpayer, Connecticut owes about $37,700 in unfunded liabilities, according to the report. Malloy and the Connecticut Legislature have adopted governmental accounting standards, restored rainy day funds and took steps to negotiate employee contracts to reduce its unfunded liabilities. However, authors of the report argue the state needs to take more aggressive action.
“These steps were much too modest and came at the price of a four-year no-layoff commitment to state employees,” the report says. “Given the seriousness of the problem, the state cannot wait until the next round of contract negotiations on retiree benefits in 2022 to begin developing its options.”
Walker said he believes the state needs to conduct a comparative study of its employee benefits to other employers and study available options to address the problem.
“I think it would show that it”™s much more generous and needs to be restructured,” Walker said. “Fairness is a two-way street. I think you have to be fair to the employees and the taxpayers who pay the bill.”
The report also commended Malloy for his economic development policies such as First Five, but said his initiatives have been based on temporary incentive approaches when a range of structural problems still exists. Authors say the state needs to improve its roads and power sources, update its regulations when it comes to technological advancements, adopt tax code reforms and continue education initiatives to strengthen the workforce pipeline.
“What the state needs to do is step back and recognize that it”™s got to restructure its promises that it”™s made,” Walker said. “Because it”™s made a lot it can”™t keep.”
