An economist told a business audience Friday that Connecticut’s economy is doing well in a “topline sense,” but that its overall health is more of a mixed bag.
Nick Perna, Webster Bank’s economic advisor, said jobs in Connecticut are up almost 2 percent over last year, which is about the same as the nation as a whole.
“So in a sense, we’re keeping up with the country,” Perna told hundreds of business executives gathered Friday at the Connecticut Business and Industry Association’s Economic Summit and Outlook.
And while Connecticut has recovered all of its private sector jobs, it has not recovered all of its government sector jobs, which includes the two tribal casinos.
According to the latest report from the Connecticut Labor Department, Connecticut has recovered 105,700 positions, or 88.8 percent of the 119,000 seasonally adjusted total nonfarm jobs that were lost in the state during the recession. The state needs to reach the 1,713,000 job level to enter a full, nonfarm employment expansionary phase. That means the state will need to add 13,300 nonfarm jobs.
So while the state continues to recover jobs, Perna pointed out that the state still has “this whole GE thing hanging over our heads.”
General Electric, which has been headquartered in Fairfield for 40 years, announced this summer that it was looking to relocate because Connecticut’s tax structure was not competitive.
“GE is a major employer in the state,” GE CEO Jeffrey Immelt wrote in a letter to his employees this summer. “We purchase $14 billion in goods and services from Connecticut companies. Despite this, we have had a tough past decade in Connecticut. Our taxes have been raised five times since 2011, while support for our strategies has been uneven. I believe we should pay our fair share and that all of us should give back to our communities. But, we can compare Connecticut with other states where small and large businesses have a better environment to thrive and compete.”
GE postponed an announcement about its relocation plans last month, but are expected to make a decision soon.
Perna said he thinks what happens with GE is a “gamebreaker.”
“If GE goes out, it is a very serious punch to the gut,” Perna said.
Connecticut Business and Industry Association President and CEO Joseph Brennan said GE’s relocation effort has been so public it would be a “big deal” if they decide to leave.
“GE is going to thrive. They are going to thrive in Connecticut or somewhere else,” Brennan said.
Perna said the state would be smart to support the companies and businesses that are in the state already.
“What we don’t do is we don’t pay respect and attention to the huge number of businesses and people who are in the state already,” Perna said to a round of applause.
He said that’s why GE is considering moving is because the legislature levies taxes “that nail the people who are already here.” He said it would be a “lot cheaper, I’m absolutely sure, to spend the time and the money to keep them in the state than it is to go chasing people to come into the state.”
Perna said he thinks they have to come up with a better budgeting process than currently exists in Connecticut.
Spencer Cain, who now owns Cain Associates but for many years was the head of budgeting for the legislature’s Office of Fiscal Analysis, agreed.
He said process of how the budget is built is something that needs to be looked at by the General Assembly.
“I think it’s very important to help solve some of these serious fiscal problems that we face,” Cain said during a later panel.
Office of Policy and Management Secretary Ben Barnes pointed out that the budgeting process the legislature uses makes it seem like the state intends to increase spending 6 to 7 percent a year, when spending growth has been around 2 or 3 percent.
He said the problem with Connecticut is when a program gets into the budget “it stays there” even if there’s no longer a need for it.
“We need to take a look at a new way for how we develop a budget,” Barnes said.
He said the hysteria about “the gloomy outlook is overstated.”