David Lehman, the commissioner of the Connecticut Department of Economic and Commercial Development (DECD), recently addressed members of the Greenwich Chamber of Commerce about the steps being taken by the state to secure and improve its economic future.
Lehman began by establishing his position as a fellow Greenwich resident, noting that he has lived in the city for the past 13 years while thanking the attendees for providing him with the shortest commute he has had since he started working for Gov. Ned Lamont. Lehman also recalled his 20 years commuting to New York City while working on Wall Street and recounted cold calling the Lamont administration for work in 2019 because the newly elected governor reminded him of Mike Bloomberg.
“I was in the city when Mike Bloomberg was mayor,”Lehman recalled telling the Lamont team. “He was a centrist, a pragmatist, someone that was really focused on outcomes. Now, three-and-a-half years later, here I am. It’s been a great experience working in state government, working with the governor.”
Lehman said the state government has a focus on recruiting downstate private sector talent in order to “have a very diverse group of people around the table providing perspectives and opinions as we try to tackle some of the challenges of the state.”
For Fiscal Year 2022, Lehman reported an anticipated budget surplus of $1.3 billion.
“And that was for the fourth consecutive year,”he noted. “To pull the lens back a little bit over the past four years, you’ve got close to $9 billion in surpluses. So, this is not just a one-year phenomenon. It’s gradually increased and there’s a budget surplus that’s actually forecast for the next fiscal year of roughly half a billion dollars.”
Lehman cited the Lamont administration’s $600 million in tax cuts and noted the governor made covering state spending a core part of his agenda.
“If you look at this empirically, in this state it’s not a Democrat or Republican thing, but politicians historically have done spending and deferred how that spending is going to be paid for,”he stated. “One of the governor’s focuses has been to make sure that any tax steps are sustainable, not something we need to continually give and take away.”
The funds the state has raised have gone primarily to two places, according to Lehman. Part of it has been funneled into a $3.3 billion Rainy Day Fund, which is capped at 15% of the state’s annual budget. As a result, Lehman said the Rainy Day Fund is now best-in-class and rated A, while funds over the cap have gone toward paying down the state’s pension liabilities. He added that almost $6 billion in supplemental payments have been made in the past three years, cutting into a pension, which has not been fully funded since the 1940s.
Lehman made the case that there will be real savings for taxpayers as a result of pension payments.
“It obviously reduces debt for the state and taxpayers, but it actually also frees up money,”he said. “It lowers the required amortization payment each year in the budget. That $3 to $4 billion is now reduced by half a billion dollars a year that can be used for services like childcare, healthcare, or could bused for tax relief in the future.”
Lehman also pointed to the state’s overall bond rating, saying that all the major credit rating agencies put the state at AA- or AA, which he said was a significant improvement from previous years.
The bulk of the questions for Lehman from the audience concerned the pension annuity income exemption, and Lehman emphasized that the emphasis was on helping middle-class families, but he allowed that it would be worth examining the possibility of exempting the pension incomes of higher earners up to that point as well.
Traffic concerns were also raised, but Lehman explained that many for highways in the state, particularly at bottlenecks along I-95, there simply was not room for additional expansion. Instead, Lehman said the state is interested in promoting both transit-oriented development and promoting the use of the already heavily subsidized train networks, which are still only at 60% of their pre-Covid capacity.
Lehman concluded by painting a bright future for the state, partially driven by increases in tech sector jobs. He stated Connecticut presents a strong offering for companies because of its widespread access to broadband, infrastructure and predictable tax structure, all categories that he expects to improve in coming years. The hang-up, however, is in housing.
“When big companies say, ”˜I want to grow in Connecticut, but I hear it’s tough to build there,’ it puts me on my back feet,”he said. “Places like Texas and Florida, they’re growing rapidly. They’re welcoming that growth, that development, and that does mean housing. So, we need to figure out a balance here where we can grow in places like Stamford and New Haven, and Greenwich for that matter. I think that’s really critical for a dynamic economy as opposed to one that’s just the status quo.”
