Kostin: The summer of our discontent

Submitted by Laura Kostin, Democratic candidate for State rep 151st District, August 5, 2018

The case for a course correction in Connecticut’s economy is pretty solid.  The financial markets are performing strongly and unemployment is historically low, yet our state is lagging behind in a period of stunning national gains.  Indeed, the rising tide hasn’t lifted all boats, especially here at home.

The U.S. economy added 157,000 jobs in July and the unemployment rate fell to 3.9% from 4%. However, here in Connecticut, our unemployment rate remains higher at 4.4% in June, according to the the most recent data from the Bureau of Labor Statistics.  Our state economy was 49th out of 50 in 2017.  In the first quarter, it grew 1.6%, compared with 2.0% nationally. Growth is surely preferable to contraction.  But we (rightfully) want more.

So, what is the solution to what ails us?

Recent trends don’t seem tipped in our favor on the jobs front.  According to the Regional Planning Association, the tri-state area suburbs were the job engines of our regional economy from 1975-2005.  But starting in 2005, that trend reversed and New York City emerged as the region’s job creator. Connecticut’s job growth in 2017 was abysmal.

According to our current Governor, the state of our transportation infrastructure is the number one complaint he hears from businesses leery to come here. Indeed, companies are seeking to base themselves in more inter-connected, accessible and dynamic ecosystems, where there’s easy access to talent.  GE’s CFO infamously said he wanted a place where he could walk out his door and visit startups, but in Fairfield, he couldn’t walk out his door and get a sandwich.  He called it a “morgue.”

The statistics are sad. We’re 46th in the nation for rail, more than half our roads are in “poor” condition and we have over 300 structurally deficient bridges.   What CEO would want to plop a business in the middle of that? We are a place where you can’t move goods or people efficiently and that’s unacceptable.

The current debate has been myopic, tolls vs no tolls.  The Regional Planning Association calls for tolling in it’s most recent “plan” as a way to “manage traffic and generate revenue.” The Commission on Fiscal Stability was created by our Legislature to help chart a course out of our economic malaise. It made a series of wide-ranging recommendations on how to revive our economy, including the “creation of tolls on major highways” which it called “an inevitability.”  According to a AAA poll in January, only 47% of residents support tolls. While tolling isn’t a terribly popular idea, (I mean, who WANTS to pay tolls?) experts seem to agree that they’re one of many tools at our disposal to secure a dedicated revenue stream that would be directed into a lockbox. A lockbox initiative will be on the ballot in November.

The Commission also made a very compelling case for cutting income taxes across virtually all brackets and eliminating the estate tax.  These are ideas whose time has clearly come, though it also prescribes some bitter pills like raising the gas tax (which was cut to 25 cents per gallon in 1997) and increasing the sales tax less than 1%. I’d prefer no increase the sales tax given inflation is on the rise. Consumer prices were up nearly 3% year over year in June, according to the Labor Department. Striping out volatile food and energy costs, so-called core consumer prices were up 2.3%.  We’re already paying more some goods, so why force families who are barely getting by to shoulder more of a burden?

Proposed pension reform solutions also make up a significant portion of the report, including diverting lottery funds for a defined period to reduce unfunded liabilities. Other suggestions include tying cost of living adjustments (COLA’s) to investment performance and a shift away from defined benefit plans for new hires and non-vested employees.  It’s hard to argue against these measures, when the path we’re on is so unsustainable.

A newly formed Pension Stability Commission met last week for the first time to discuss ways to further mitigate pension costs, including a legacy obligation trust model.  This is one of the more innovative solutions proposed to address the state’s pension crisis.

The Commission’s work isn’t widely known, according to one poll 73% of respondents didn’t know about it and another 15% were not sure IF they knew about it.  But everyone should be reading it.  It’s the most thorough blueprint I’ve seen to address so many of the problems we face as a state.

Change is hard. Anyone who says growth can be achieved by cutting costs and raising no new revenue for our basic needs is lying.  There’s no having it both ways. There are solutions to our problems, though they may not always be easy or politically expedient.

There needs to be willingness to take an diversified approach to make our state more competitive or we’ll continue to miss opportunities to move forward.