A new report from the Connecticut Center of Economic Analysis posits that the state should invest the approximately $10 billion it is due from the federal government in its economy, rather than in state and municipal budgets.
As a result, according to “The American Rescue Plan and Connecticut”™s Economic Future,” the state would increase employment by 30,000 jobs and annual household income by $2.6 billion by 2024. State and local revenues in aggregate would gain nearly $1.5 billion from 2021 to 2024.
“If instead recipients push those federal dollars under the mattress, it will do nothing for the economy,” wrote CCEA Director Fred Carstensen and Senior Research Fellow Peter Gunther. “It will not lead to creation of new jobs, additional household income, and that vital growth in aggregate demand.”
Instead, Carstensen and Gunther argue that the state should use the ARP funds for investments in transportation and information technology infrastructure, data processing, technology, job training and education.
To address budgetary shortfalls, they said, Connecticut should tap into its record $3 billion-plus rainy day fund. “Complementary spending delivers billions more than preserving the rainy day fund, no matter how you measure it,” they wrote.
The ARP will provide nearly $6 billion to state, municipal and regional governments as well as to local school districts, while about $4 billion will be used for stimulus checks and expanded unemployment benefits.
