NORWALK, CT — Comptroller Kevin Lembo knew he was playing to a tough crowd when he agreed to talk to a group of Connecticut business leaders about the state of the state’s economy.
So, Lembo pulled no punches and gave it straight to the members of Imagine Connecticut, a group that describes its mission as putting the state in the Top 10 for job creation in 10 years.
Lembo said the state needs to get out of crisis management mode, because “that doesn’t work.”
As the state’s fiscal guardian, Lembo said Connecticut has to “rethink every single thing we do.” And then “we also need to keep our word.”
“We can’t continue to change our tax code in a moment of crisis — which we always do,” Lembo, who has been mentioned as one of the top Democrats contemplating a gubernatorial bid in 2018, said.
The problem with passing laws approving new taxes during fiscally bleak times, Lembo said, is that the tax revenues projected are never realized, and that digs the state into an even deeper hole of red ink.
As part of the 2015 budget Lembo was able to get lawmakers to approve a provision that would prevent spending an increase in revenues. Instead, it directs a certain portion of that increased revenue to Connecticut’s budget reserve fund so the state is prepared for future economic downturns. But the provision has an effective date of 2020, meaning the state won’t require itself to set aside the money until then.
“Three-quarters of a loaf is better than none at all,” Lembo said.
There’s also the problem where certain areas of the budget — like state employee pension obligations — continue to grow and crowd out other spending.
Right now those pension obligations are growing by $100 million a year and will top off at $3.4 billion in 2020 if nothing is done, Lembo said. To make matters more difficult, benefit design is locked in with the labor unions until 2022.
“This thing is eating our lunch with every passing year,” Lembo said.
He said his plan to level the impact is currently being discussed by labor and the Malloy administration.
As far as economic development is concerned, Lembo, a member of the Bond Commission, said that between 2011 and 2015 Connecticut is spending about $400 more per capita on direct economic development activity. Massachusetts and Rhode Island are spending about 25 percent of that, but their gross state products are a full point ahead of Connecticut.
“That’s an indicator that something’s not working,” Lembo said.
Imagine Connecticut member and well-known Fairfield County real estate owner Robert Scinto told Lembo state officials need to wake up.
“We have a serious problem in Connecticut,” Scinto said. “I have 335 tenants and not one tenant over the last four years has asked for more space.”
He said about 30 percent of them want less space (than they currently rent).
Scinto said he can’t pack up and move his business.
Asked by a member of the audience what three things state leaders can do to dig Connecticut out of its current fiscal mess, Lembo answered: “Consistency, reinvention, and engagement.”
The state comptroller went on to explain that state leaders need to not change policy, to find new avenues of business commerce to explore, and to engage in more conversations with business leaders about how to generate a more attractive business climate in Connecticut.
“None of this can’t be fixed,” Lembo said. “We’re not all idiots,” he added, referring to politicians at the state capitol. But, he said, “my time is better spent talking with you than at the capitol.”
Lembo gave credit to Gov. Dannel P. Malloy for holding spending fairly flat over the past six years in a post-recessionary period where the state has yet to fully recover. He said most of the $82 million deficit the state is currently running is related to its failure to hit its revenue projections.
Steve Obsitnik, co-founder of Imagine Connecticut, said that while invigorating the state’s business economy is its core goal, what shouldn’t be forgotten is that a stronger business climate will also help the people who live in Connecticut.
Obsitnik was a 2012 Republican candidate for the U.S. House 4th Congressional District. He lost the general election to Democrat incumbent Jim Himes.
“I was talking to this ninth-grader the other day” about Imagine Connecticut, Obsitnik told those in the audience.
He said she imagined leaving Connecticut.
“It was like a dagger,” Obsitnik said.
He said he wants to imagine Connecticut as a top-10 job creator state.
“We have to fight so when our kids are graduating from high school or college here that they aren’t exported to California or Texas for a cool job,” Obsitnik said.
Also speaking at the meeting was Connecticut Business & Industry Association President Joe Brennan.
Brennan, whose organization spent about $400,000 on 14 election campaigns this year, said policymakers still lack a sense of urgency.
“If we don’t have economic growth we are all doomed,” Brennan said. “We keep fighting over shrinking dollars.”