Webster Bank economist Nick Perna shared an upbeat forecast ”“ at least for the short term ”“ for the state’s economy recently at the annual Connecticut Business & Industry Association Economic Summit and Outlook in Hartford.
Connecticut”™s post-recession recovery, according to Perna, is “not that far behind” the nation”™s: 1.5 percent job growth statewide compared with 2 percent nationally.
Noting that the state added 25,000 jobs in 2014, Perna anticipated gains between 25,000 to 30,000 jobs this year.
But Perna also described Connecticut as being in a “permanent fiscal crisis.”
The state faces a $1.3 billion budget deficit for 2015-16, with a similar shortfall projected for the next fiscal year, he said. “I worry more about 2016,” he told a crowd of 500 business leaders.
“It”™s important to not underestimate the power of a balanced budget ”¦ in terms of what it does for business confidence and public perception,” Perna said.
Perna pointed out that Connecticut”™s income tax revenue system is sensitive to economic cycles and fluctuations. That in itself is not a problem, he said, as long as the state uses that volatility to its advantage. The caveat: “When times are good and revenues are high, we spend,” said Perna.
Perna said Connecticut should solidify its rainy day fund “to smooth out the economic impact when things are bad.” He said that how lawmakers resolve the state’s fiscal issues “will determine our future prospects.”
Event panelists included Donna Galluzzo, president and CEO of Wallingford-based HMS Healthcare Management Solutions Inc.; James Smith, chairman and CEO of Webster Bank; Bonnie Malley, executive vice president and CFO of Hartford-based The Phoenix Cos. Inc.; and Charles Lenore, partner of the law firm Day Pitney LLP, with offices in Greenwich and Stamford.
Legislative issues of interest to the panel included fiscal reform, transportation and government accountability.
Smith noted the state’s long-term liabilities now account for 20 percent of revenues, crowding out critical spending priorities. “We must tackle the growing burden of unfunded liabilities if Connecticut is going to be able to compete strongly,” he said.
Galluzzo, who also chairs CBIA’s board of directors, said the health care sector, particularly bioscience, was “one of the economy’s bright spots.” However, she said the recent decision by a Texas-based health care concern to abandon its acquisition of Waterbury Hospital because of regulatory requirements sent the “wrong message” about the state’s business climate.
Her comments echoed a common theme among panelists that the state must improve its standings in national business climate rankings if it expects to compete.
Day Pitney’s Lenore noted that state tax policies shape the ability of businesses to compete regionally, nationally and globally. He said tax reforms were among the legislative priorities proposed by the CT20x17 partnership, an alliance of more than 70 organizations working to improve Connecticut’s economic rankings.
“Business has a job to do,” Smith said. “We all must be strong advocates for making Connecticut a better place for business and securing our long-term economic prospects.”
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