Taking a page from the Donald Trump playbook, Republican gubernatorial nominee Bob Stefanowski believes that the state needs a businessman to get Connecticut’s economy back on track.
The New Haven native, who today lives in Madison, has an impressive business resume. He spent 13 years at General Electric, rising to president and CEO of GE Commercial & Industrial Finance in 2003 and becoming president and CEO of GE Telecom, Media & Technology Finance the following year. He takes credit for turning the latter from a $100 million loss to profitability in two years.
In 2008 his career took him from Norwalk to London, where he served as chairman and managing partner, North America and Asia at 3i Private Equity Group.
In 2011, he was named chief financial officer at UBS Investment Bank in London, where he grew net income to over $1 billion; improved the bank’s return on equity from 2.4 percent to 28.7 percent; and introduced zero-based budgeting techniques — something he’s said he’ll also do as governor — to reduce its operating costs by $700 million.
From 2014 to 2017, Stefanowski served as CEO of Dollar Financial Group in London and Philadelphia, where his accomplishments included a restructure of the business that grew profit from $40 million to $145 million in two years.
Entering politics after a long career in another field can be a daunting prospect. The last person to serve as Connecticut governor with no previous government experience was educator, literary critic and author Wilbur Cross, who was elected in 1930 after retiring from Yale.
But Stefanowski is confident that he has the solutions to Connecticut’s problems. Chief among those is his promise to eliminate Connecticut’s state income tax over eight years; phasing out the corporate income tax and business entity tax over two years; eliminating ; and embracing zero-based budgeting to reduce spending.
The Business Journal’s Kevin Zimmerman sat down with Stefanowski at his campaign headquarters in Branford on Oct. 4 to discuss those plans and a number of other issues. In the first of two parts, the candidate talks about his plan to eliminate the income tax, increasing the state’s reliance on the private sector to help Connecticut’s economy and why he’s opposed to highway tolls.
First off: Why do you want the governorship?
“I just got fed up with Dan Malloy and his economic policies. And (Democrat candidate) Ned Lamont’s economic policies are identical to Malloy’s.
“This state has been terrific for me. I grew up in New Haven and went to public schools, and I graduated from Fairfield University in 1984. I met my wife (Amy) here. We have three daughters, (aged) 24, 19 and 15. I hope they don’t have to leave the state to be successful.”
Can you talk about your proposal to eliminate the state income tax? Your opponent and others have said that the resulting loss of revenues would be catastrophic.
“We don’t have a revenue problem in this state — we have a spending problem. The reason so many people are leaving the state is because of higher taxes. (According to a of people moving to/from states in 2017, 53 percent left Connecticut while 43 percent moved in.) It’s one thing if people feel bad about the state, just don’t like it, but it’s taxes that are the reason.
“We have 169 cities and towns and I’ve been to almost every one of them. People like to be here and they want to be proud of being here. We have a great location, great schools, great people, diverse industries. Most of those who leave do so because they can’t afford to be here. That’s something we can fix. I honestly think we can do it. Another four years of higher taxes and tolls are not going to do it.”
But how do you grow revenue by cutting taxes?
“Look at the effect of reducing the sales tax on boats (revised down from 6.35 percent to 2.99 percent) — that’s helped triple sales and proves that revenue goes up if you cut taxes. Tax rate cuts do not necessarily mean less revenue.
“On the cost side, you’re looking now at a $40 billion biennial budget. I know I can find a 5-10 percent reduction, which means $1-2 billion in savings we can use to fund the tax cut. I want to get the economy moving, bring jobs back and get our people back. That’s what closing the budget deficit will do.”
How would you go about retaining companies that are looking to leave the state and attracting new businesses?
“Malloy plays defense, not offense — he waits for them to leave and then tries to bribe them to stay. We need to create a lower-cost environment by reducing the corporate tax, which is higher than it is in Massachusetts and Rhode Island.
“In addition, our regulatory burden is excessive. And there’s no predictability — most companies want to see predictability about the economy and tax rates. We don’t have that right now.
“I’ll also work with our trade schools. There are a lot of industries in our state that can’t find the people for the jobs they have — basic engineers and so on. I’ll encourage our high school students to look at trade schools as a possibility.”
There have been reports that your former opponent in the primaries, Danbury Mayor Mark Boughton, has provided you with a “template” for eliminating the income tax and reorganizing state government. Can you comment on that?
“I’m very happy to say that several of the (Republicans) who ran are involved with our campaign — David Walker, Mark Boughton, David Stemerman have all been very helpful. They’re on a committee that meets with me once a week to talk about the issues — including lowering taxes.”
The Boughton plan reportedly would include eliminating some state agencies. Which ones would you get rid of?
“When I was CFO at UBS, I implemented zero-based budgeting, where you start with a blank piece of paper and start to fill it with what you really need to have. I suspect there are agencies that we don’t need. I don’t have a specific list, but there are too many agencies, too much spending, too many people (in government).
“Privatization is something we should be looking at. You look at the DMV. Ned wants to spend another $25 million to give it another shot. Why not look at a private/public partnership? The private sector does better than the public sector nine times out of 10.
“That’s what this race comes down to: Big government. Reduce government, lower taxes, put more investment into the private sector.”
What else could the private sector help with?
Many in your party claim that the 2017 State Employees Bargaining Agent Coalition (SEBAC) agreement is a bad deal — that it costs too much money and plays a significant role in the deficit problem. Senate Republican President Pro Tempore Len Fasano and state House Minority Leader Themis Klarides voted against the agreement. You’ve said you’d like to reopen discussions with the union.
“Those are people who want to be secure in their retirement and right now they don’t have that. I’d pursue a fair compromise and look to come up with ways to fix the problem. That could involve an early buyout option, investing in a 401(k) and taking another look at the contract. Ignoring the problem is not doing anyone any favors.”
One option to generate revenue for the state that’s been touted by Mr. Lamont and a number of other Democrats is bringing electronic tolls to the state’s highways. You disagree?
“I’m not for another tax, which is what that is. We can’t just put tolls on our borders without having to refund tens of millions of dollars.” (In 1983, Connecticut entered an agreement with the federal government by which it receives $3 for every dollar it spends on its highways, provided that no tolls are instituted at the state’s borders. Sen. Fasano told the Business Journal that if the state does build borderline tolls, it would be required to pay back “every dollar we’ve received since 1984” to the federal government.) “So what you end up with is congestion pricing and 85 tolls along I-95. We need to get our taxes moving in another direction.”
In the concluding part of our interview with Stefanowski next week, the candidate discusses how he would improve the state’s infrastructure, where he stands on the legalization of the recreational use of marijuana and where he agrees with his opponent Ned Lamont and with Gov. Dannel Malloy.