HARTFORD, CT — Days before leaving his post at the MetroHartford Alliance, R. Nelson ‘Oz’ Griebel told a small group of business leaders, economic development officials, and students that Connecticut might benefit from getting rid of the estate tax and the corporate income tax.
Griebel, who is expected to announce a run for governor this week, floated those ideas at a Hartford Area Business Economist group meeting last week.
The former banking executive — whose last day with the MetroHartford Alliance was Dec. 15 — said the “bones of this state remain very strong.”
But “what is the right tax policy for the state of Connecticut in the aggregate?” Griebel asked.
He suggested that the people the state needs to stay here are the ones who worry about having to pay the estate tax and have the means to live six months and a day in another state. As far as the corporate income tax is concerned, Griebel said eliminating it might give business greater confidence.
“I say that kind of glibly because I don’t know what the impact is,” Griebel admitted.
He said tax policy should be based on what’s going to get these wealthy individuals to stay and businesses to grow.
Connecticut is a vibrant state in terms of education, precision manufacturing, the health and financial services sector, and quality of life, Griebel said. However, he added, the fiscal stability of the state is threatened by the lack of employment and wage growth for the past 20 years.
The state has lost population over the past few years, including some of the top 100 taxpayers, driving down revenue within the current tax structure, which leans heavily on the personal income tax.
He said the state of Connecticut has to work on “reigniting private sector confidence,” but he admitted that it “is easier said than done.”
Griebel said tax policy shouldn’t be driven by how much revenue you can generate.
Getting rid of the 9 percent corporate income tax, which generates about $900 million per year, would go a long way toward sending a business friendly message, according to Griebel, but it might not be something Connecticut can do right away. Eliminating the estate tax, which brings in about $200 million a year, would help retain the few high-income earners who would be subject to that tax. But Griebel didn’t suggest either of these policies would be part of his campaign.
In fact, some in the room were unaware he was considering a run for office.
Borrowing from campaign material he used in 2010, Griebel said the state has to sustain its relationship with the private sector and stop looking at them as the goose that lays the golden egg of revenue. He said the legislature worries too much about the egg, but not the health of the goose.
He said if the goal is to grow the base then they can’t keep raising taxes.
He said the state’s population is only projected to grow to 3.8 million by 2040.
“That’s ridiculous,” Griebel said.
He said the state has to aspire to a much higher number. He said if 50,000 people moved to the state and were earning above average wages, many of the state’s fiscal problems would be solved.
He said there’s still the issue of the unfunded state employee pension liability eating up a larger portion of the budget, but “you would change the whole revenue stream issue” by making the above changes.
While changing the tax policies might get some to stay, he said fixing the state’s transportation system will help convince more employers to come to the state.
Griebel, a member of the first Transportation Strategy Board in 2001, said that 15-member board recommended restoring 15 cents to the gas tax that was cut in the 1990s and phasing it in over five years because every penny represented about $15 million. That meant they were taking roughly $225 million out of the special transportation fund.
The group also recommended tolls and a surcharge on the sales tax to help shore up the special transportation fund, but Griebel recalled that the recommendation was made the same day impeachment hearings started against former Gov. John G. Rowland, and the news got lost.
Democratic Gov. Dannel P. Malloy, who is not seeking re-election, recently commissioned a similar group that reached the same conclusions.
The group concluded that a phase-in of a 14-cent increase in the gas tax over seven years would generate $2 billion over 15 years.
Griebel said in the short-term lawmakers will have to raise the gas tax, which will be “an anathema to many legislators” who will be seeking re-election in November 2018.
While Griebel has a grasp of the issues facing the state, electability could be an issue. He is expected to announce as an independent candidate, which means he wouldn’t necessarily have the backing of either major party.
Griebel ran for the Republican nomination in 2010 and failed to win enough votes in the primary to proceed to the general election. That year, Republicans sent Tom Foley to challenge Malloy, who squeaked out a victory by a little over than 8,000 votes.
Ronald Schurin, associate professor of political science at the University of Connecticut, said that with all the candidates vying for the governor’s office it’s anyone’s guess what will happen.
“This might be a moment of opportunity for an independent,” Schurin said. “The state is in difficulty, the large field has no front-runner — or at least no one who’s set either party on fire — and within the past generation we’ve chosen and independent governor and an independent U.S. Senator, though both of those men attained prominence through the party system. More to the point, within recent years Alaska, Minnesota, and, closer to home, Maine and Rhode Island have elected governors who weren’t major party nominees.”
Griebel is not widely known, but he’s well known in political circles, Schurin said.
“I wouldn’t bet on him becoming the next governor, but stranger things have happened,” Schurin added.
Griebel’s announcement is expected this week.