If you could draw Connecticut as a person, she might look like an aging aristocrat, shabby but still trying to look posh in her tatty fur coat and grandmother’s pearls, unwilling to accept that the fortune’s all been spent.
If this is the 2015 version of Connecticut, let’s reinvent ourselves in 2016. There are reasons to hope we can make this shift, but also reasons to worry.
Reason to worry: Jobs.
Connecticut still has not recovered all of the jobs it lost during the 2007-09 recession. The nation as a whole reached full recovery by the middle of 2014.
While this is reason enough for concern, even more worrisome is that our labor force is shrinking. The number of people employed or looking for work in Connecticut has declined every month since May. From November 2014 to November 2015, we had a net loss of 3,000 people.
Are they aging out? Moving away? The answer is likely that both of these things are happening, while at the same time we are attracting fewer new people and jobs to the state.
Demographics matter. Just ask Japan, which has experienced economic stagnation for years. Connecticut and Japan have several things in common — both have aging populations and low birth rates, and both have economic policies hostile to entrepreneurship and growth. It will be easier for Connecticut to reverse these trends than Japan, but we should heed the warning signs.
Reason to hope: We’re paying closer attention to state labor negotiations.
Compared to other states, Connecticut is in the middle of the pack when it comes to the number of public employees per resident.
Where we differ is in how much we pay our state employees. Connecticut offers the most expensive compensation packages in the country, and we feel it in every aspect of state government. It makes taking care of our roads more expensive, it makes social service delivery more expensive, and it certainly means our taxes have to be higher to compensate.
Because the cost of pay and benefits for state employees is growing faster than the growth in tax collections, Connecticut is now experiencing the “crowding out” phenomenon: Lawmakers are both cutting state services and increasing taxes.
This year, the administration is negotiating 12 out of 13 state employee union contracts. Once negotiated, these contracts most likely won’t just fly through the legislature like they have in years passed. This is a good thing.
Reason to worry: The housing market.
Remember that aging population? Now that more and more retirees are moving out of their homes, Connecticut’s housing market has been flooded with houses for sale. While the number of home sales has picked up in recent months, home prices continue to drop.
Home values dropped 2.1 percent from October 2014 to October 2015. The New Haven Register reported a 14.4 percent decrease in median home price today compared to nine years ago.
This is not a sign of a healthy, growing economy. Our punishingly high property taxes also contribute to this problem.
Reason to hope: The pushback against the 2015 tax hikes.
When lawmakers convened for the one-day special session in December, they all seemed a little skittish.
No wonder. After fighting to the bitter end over the second largest package of tax hikes in state history that were enacted during the regular legislative session that ended in June, they all then had to return home and look their constituents in the eye.
Not that many of them did — it seemed like there were far fewer town halls held by Democratic lawmakers than there were in years past.
The people of Connecticut are sick and tired of tax hikes with nothing to show for them. Maybe — a big maybe — if we had higher taxes but also the best public services money could buy, maybe we’d understand. That isn’t happening. Our DMV is an absolute mess, tuition at public colleges is going up far faster than people can afford to pay, and our infrastructure is old and insufficient.
Now we’re told that in 2016, Gov. Dannel P. Malloy wants to come back and ask for higher taxes — or tolls — to pay for his transportation plan? Our gas tax is already among the nation’s highest. It’ll be interesting to watch him try to sell another tax increase to frustrated residents.
Trust is earned, and our state government hasn’t done much to show us they know how to spend our money wisely.
Reason to worry and hope: GE’s decision to stay or go.
It seems promising that GE put off its decision about whether to stay in Connecticut or move to another state. Maybe the administration’s last-ditch efforts made up for earlier gaffes.
Maybe GE’s leadership decided to ignore the hubris in House Majority Leader Joe Aresimowicz’s comments about the tax increases meaning one less “weekend on the yacht” for the state’s residents.
In some ways the damage has been done. GE publicly declaring its intentions to look for another home signaled to businesses large and small that Connecticut is not a good place to do business.
And having to create even more carve-outs in our Swiss cheese corporate tax system to try to convince GE to stay is a shame.
When GE’s leaders made good on their promise to look elsewhere after state lawmakers ignored their legitimate concerns over a massive tax increase on businesses included in last year’s state budget, it was a sobering and necessary wake-up call.
So 2015 wasn’t Connecticut’s best year, but there are — hopefully — better days ahead.
Suzanne Bates is the policy director for the Yankee Institute for Public Policy. She lives in South Windsor with her family. Follow her on Twitter @suzebates.
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