On taxes and unemployment insurance debt, Connecticut retailers heard cautious optimism from Gov. Ned Lamont as well as promises from Republican gubernatorial candidate Bob Stefanowski during separate pitches in a Wednesday morning election forum at Hartford’s Bushnell Center.
Both major party candidates addressed an annual gathering of the Connecticut Retail Merchants Association. Each delivered short remarks before taking questions from the retailers and lobbyists.
With just under a month before voters head to the polls to choose the next governor, Lamont, an incumbent enjoying significant leads in recent polls, declined to make campaign promises on future tax cuts. Both men are largely self-funding their campaigns and so far Lamont has spent about $14.8 million and Stefanowski $9.2 million, according to state records.
Stefanowski, a former business executive from Madison running in his second campaign against Lamont, appealed to retailers to gamble on a change of course.
“I mean I hate to be arrogant but this decision on governor should be a 30-second discussion,” Stefanowski, who addressed the audience first, said near the end of his remarks. “Why wouldn’t we at least try something new? I know I’m biased but man, this is not rocket science.”
Speaking to reporters after the event, Lamont said voters had good reason not to endorse Stefanowski’s appeal for change.
“He’s turning the clock back to the last four years,” Lamont said. “‘Hey, we’ve got a rainy day fund, let’s spend it down right now.’ ‘Oh, I know we have an unfunded pension liability but let’s not pay that down now, let’s do that later.’ That’s just what I heard from the previous governors.”
How best to use the state’s projected $2.3 billion budget surplus was a point of contention throughout the morning. During the forum, Lamont was asked whether he would use the surplus to pay down lingering debt incurred by the state to keep the unemployment trust fund solvent during the pandemic. Normally that debt would be paid by businesses through a quarterly tax.
The governor declined to commit to the idea but said that most of the nearly $1 billion the state borrowed had already been paid off. He told retailers he expected the rest to be paid off by the end of this year.
Rather than spending the surplus, Lamont has allowed that money, nearly $6 billion over the last two years, to pay down the state’s unfunded pension liabilities. He said money spent on the long-neglected pension debt provided taxpayers a better return on their investment.
Stefanowski told the group he would use surplus funds to pay off the unemployment debt immediately in an effort to shield businesses from the liability.
“What are we thinking?” Stefanowski said. “You guys are creating jobs, you’re developing the economy of the state, we got $6 billion in the state bank account and we’re assessing you for a COVID loan? I’d pay it off [on] day 1.”
In an interview following the event, Tim Phelan, president of the retail merchant’s group and moderator of the forum, said the unemployment insurance issue was a pressing concern for retailers. Although the two candidates offered different solutions to the problem, Phelan said both approaches would take the strain off business owners.
“It was a contrast, the governor made it sound like ‘Don’t worry about. We got this. It’s going to be paid off in time,’ and Stefanowski said ‘It can’t wait, we gotta pay it right now.’ The sooner that goes away for us, the better. So either approach works,” Phelan said.
As part of his economic plan, Stefanowski has also called for reducing Connecticut’s 6.35% sales tax to 5.99%. Phelan asked the candidate how he would convince the state’s Democratic-controlled legislature to adopt his tax plan.
Stefanowski again pointed back to the state surplus, which he referred to as $6 billion but is actually projected at around $2.3 billion.
“How do you wake up with a $6 billion surplus and not give some of it back when businesses are struggling, when people are struggling?” Stefanowski said. “We’ve got adequate money.”
Lamont took a more cautious approach. When asked about cutting the sales tax, he said he worried about the potential for an economic recession on the horizon.
“I see a third potential crisis coming, that is what looks like what could be a bad recession,” Lamont said. “I want to make sure if we hit the storm and our revenues start slipping as they have in years past, I don’t have to raise taxes and I don’t have to slash education spending and things like that to give people some certainty.”
