Dunn Wants State Budget Completed By March 1

By Scott Benjamin

BROOKFIELD – First Selectman Steve Dunn says he supports a proposal for the General Assembly and the governor to approve the state budget by March 1 so that municipalities would know how much aid they would receive before their local budgets go to referendum in the spring.

State Sen. Mike McLachlan (R-24) of Danbury offered the legislation earlier this year as municipal leaders saw that they might see a reduction in assistance since the state faces a projected$5.1 billion budget deficit for the next two-year cycle. The legislators and Gov. Dannel Malloy (D-Stamford) are still at odds over the proposed spending packages, with the governor saying that he would veto the Republican or the Democratic plans.

It appears that the negotiations might stretch well beyond the June 30 deadline - the last day of the current fiscal year.

Dunn, a Democrat, says he believes that overall Malloy, who will not seek a third term next year, has done a good job. But he objected to the governor’s budget proposal of this last February, which would redistribute Education Cost Sharing funds and additionally place one-third of the burden for the teacher pensions on the municipalities.

The first selectman, who is a retired vice president for J.P Morgan Chase, says the state needs to reduce its spending in a “way that hurts the least amount of people.”

“There’s a place for unions in this country,” Dunn declared. But he contends that the collective bargaining units probably have too much sway at the State Capitol since “they spend a lot of money electing people.”

He said there are state workers who retire in the mid-50s because they can earn more money per year in retirement than if they continued working.

Dunn said he has spoken with someone “close to the negotiations” between the Malloy Administration and the state employee collective bargaining units, who has said that the actual concessions for the next two years will amount to $600 million instead of projected $1.5 billion.

The rank and file state employees are currently voting on the proposed package, which was announced this spring.

State Rep. Steve Harding (R-107) of Brookfield has said about $246 million in labor concessions from the 2011 shared sacrifice package were never realized by the state collective bargaining units.

State Rep. Bob Godfrey (D-110) of Danbury, who was first elected in 1988, has said that the state employee collective bargaining units have always been willing to help the state when asked to make concessions. He opposes the Republican proposal that would restrict arbitration and triple the state employees’ pension contributions.

Regarding Connecticut’s economy, Dunn said following the 2008 recession, investment banks, such as the prominent ones in Stamford, took “a huge hit” and he doesn’t think they will recapture the activity that they had before the subprime mortgage crisis.

“The rewards are great, but there also are risks,” the first selectman explained.

Dunn said banks have been stymied following the 2010 approval of the Dodd-Frank financial reforms – named after former U.S. Sen. Chris Dodd (D-East Haddam) and former U.S. Rep. Barney Frank (D-Mass.). He said at J.P. Morgan Chase the number of staffers devoted to compliance had increased from 300 to 2,000.

Former Greenwich Democratic First Selectman Roger Pearson has said the prime cause of the 2008 fiscal crisis was the 1999 repeal of the Glass-Steagall Act, which was signed by former Democratic President Bill Clinton. The legislation, which was enacted in the mid-1930s during the depression, separated the banks’ investment and commercial portfolios.

If Glass-Steagall had been effective for more than 60 years and the 1999 repeal allowed banks to become overleveraged, then wouldn’t it have been better to just reinstate Glass-Steagall following the financial crisis instead of developing Dodd-Frank?

“I don’t disagree with what you’re saying,” Dunn declared.

Dunn said he believes that Greenwich will remain a prominent area for hedge fund investors, partly because of its proximity to Manhattan and the quality of its schools.

On another topic, he said he supports a proposal by University of Connecticut economist Fred Carstensen to have the university establish an aerospace engineering hub. Dunn said that would generate business connected to work being done at Pratt & Whitney in East Harford and Igor Sikorsky Aircraft in Stratford.

Also, Dunn said he can't confirm that the next great recession will result from college student loan debt, as Trumbull First Selectman Tim Herbst, a candidate for the Republican gubernatorial nomination, recently indicated. However, Dunn did say that it is “going to be a major problem with people paying off college loans until they are 50.”

Herbst, who was first elected in 2009, has said the economy will collapse because the government is giving loans to students who won’t be able to pay them back, which will create a bubble similar to the subprime mortgage crisis.

Dunn emphasized that you can’t renege on your obligations, just as you can’t on your federal taxes.

“You can go bankrupt and you still owe the student loan,” he said.

Dunn added, “Since that is the case, why are you charging students these egregious interest rates. They sometimes range between 16 and 18 percent.”

“You are guaranteed that you are going to get the money back if the student is alive,” said Dunn, who indicated the rate should be between three and a half and four percent.

Additionally, he said there are fewer, good job opportunities for recent college graduates.

“A lot of students are graduating from good, four-year colleges and they are effectively underemployed even though they’re working full-time,” said Dunn. “They are taking jobs just over the minimum wage.”

He said companies also are less willing to hire talented graduates with degrees in English, Philosophy and History and put them into their training programs.

“That’s the difficulty with this transition to a service economy,” Dunn said. “Do you need a college degree to do a lot of these jobs?”

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