Harding Says State Pension Crisis Must Be Resolved

By Scott Benjamin

State Rep. Steve Harding (R-107) of Brookfield praises Gov. Dannel Malloy (D-Stamford) for putting more money toward Connecticut’s pension obligations but says the governor and the General Assembly need to acquire significant concessions from the public employee collective bargaining units to avert an unprecedented fiscal crisis.

There are about $32 billion in pensions that need to be paid for between now and 2030. CT Mirror has reported that the state’s annual payments to the pension funds would have to climb from the current $1.6 billion annually to $6 billion a year by the mid-2030s. The fund reportedly was only 42 percent funded when Malloy took office.

Brookfield First Selectman Steve Dunn, a Democrat, said at the municipal level 80 percent pension funding is considered “stellar.” He said last month that his town was at 95 percent.

Over generations, state officials reportedly have neglected to provide adequate funding. The current contribution is about twice what was being put forth five years ago during Malloy’s first year in office.

Harding acknowledged that has been a step in the right direction, but said the recent agreement between the governor and the bargaining units only extends some of the payments to the fund to a later date to slightly lessen the yearly impact over the long run.

He said structural changes are needed, such as an increase on the payments by employees currently in the system from the current 0-2 percent to the national average for state employees of 6-7 percent. He added that new hires should be placed in a 401-style plan. The current defined benefits package is rare to find at a major private sector company.

“It would behoove the unions to reach these agreements now while the Democrats still have power,” Harding said, referring to the possibility that the Republicans, who made significant gains in the General Assembly in 2016, might capture the governorship and both chambers of the Legislature in the 2018 election. The GOP and the Democrats each hold 18 seats in the Senate and the Democrats control the House by just a 79-72 margin. It’s been 20 years since the Republicans controlled either chamber.

State Senate Republican Leader Len Fasano (R-North Haven) said this fall that the public employee bargaining units have the Democrats in a “hammerlock.” However, state Rep. Bob Godfrey (D-110) of Danbury said the collective bargaining units have “leverage” with legislators, but no more than some other interest groups at the state Capitol.

If the GOP takes control of the governorship and both the state House and Senate, it would be the first time since early 1975 when Tom Meskill (R-New Britain) was governor. The House Speaker at the time was Fran Collins, the longtime Brookfield resident who served as the town’s land-use attorney for decades.

“Stronger efforts must be made to reach out to the unions,” Harding said in an interview, noting that there are projections that the state could face as high as a $4 billion revenue shortfall over the two year cycle that starts in July. That is even larger than the $3.5 billion gap that Malloy faced when he took office in 2011. Despite actions to mitigate shortfalls there have regularly been budget deficits since Malloy began his second term early last year.

Regardless, Harding said no matter how dire the economic circumstances, he will not support tax increases during the upcoming session, which will start January 4. He said the tax hikes of 2011 and 2015 have driven some residents out of the state.

On a related topic, Harding said he is a “strong supporter” of approving a revised constitutional spending cap to help control the state budget. However, a commission studying the cap couldn’t reach a consensus following extensive deliberations on the subject. Any proposal would have to be approved by at least 75 percent of the legislators, which may be unlikely during the current session. Harding said the pension funding should be included under the cap and not be a separate item.

The Boston Globe reported earlier this month that Massachusetts has overtaken Connecticut as the economic kingpin of six-state New England. The analysis stated that the depths of Connecticut’s downturn could be best measured by its declining housing market. The Globe wrote that four of the 17 American metro areas with lower real estate prices compared to 2010 are in Connecticut.

“The real estate market is a significant driver across the state,” Harding said. “It has a negative impact on other areas. But I still believe a majority of [the weak economy] has to do with the poor business climate that we have.”

U.S. Rep. Jim Himes (D-4) of Greenwich has said that if you have negative equity in your home it’s unlikely that you will be buying a new car or other major consumer purchase.

Harding acknowledged that Brookfield’s real estate market has declined, in part, because after “a significant boom in the ‘70s. ‘80s and ‘90s as the town transitioned from a farming community to a suburb and that growth potential is no longer there. I think that transformation is complete.”

Some residents have said for at least 20 years that there is little build-able land left in Brookfield. “Even though there is growth in some aspects, some people think we’re actually past how many residents we should have,” Harding explained.

Critics have said Connecticut’s economic troubles have been partly due to its inability to add innovation hub jobs and it takes too long for businesses to get environmental regulatory permits. Economics commentator Larry Kudlow of Redding, who was an informal advisor to President-elect Donald Trump during the campaign, has said the state should reduce its business taxes.

Harding also said he believes Trump’s goal to cut individual and business taxes would aid Connecticut, particularly its financial services sector in the Stamford area. The president-elect has indicated that he wants a program similar to the three-year across-the-board package that former President Ronald Reagan signed in 1981.

The state representative said that due to the fiscal crisis, he doubts there will be much action on an ad-hoc committee report on how to fund $100 billion to improve Connecticut’s transportation infrastructure. The aging roads have been considered another reason for Connecticut’s weak economic growth.

Harding said that the defense industry remains robust in Connecticut and after acquiring new contracts there is potential for job growth over the next few years. The state also has recently added jobs in television production at ESPN in Bristol and NBC Sports in Stamford, a trend that Harding believes will continue.

However, the legislator said he doubts that former U.S. Sen. Joe Lieberman’s (D-Stamford) 2006 prediction that by the early 2030s fuel cell technology would become Connecticut’s largest economic sector will come to fruition. In 2010, UTC Power in South Windsor, considered the granddaddy of research in the field, lost its contract with NASA after 44 years. The company has since been sold to interests in Oregon. Fuel Cell Energy, with plants in Danbury and Torrington, has started three factory shifts for the first time in 2013 after, among other things, getting major contracts with the city of Bridgeport and the U.S. Navy. However, it announced earlier this month that it was laying off about 96 workers.

In the district, the legislator said he is working with Danbury Mayor Mark Boughton, a Republican, to secure state grants for some innovation projects in the downtown area. Harding said in Brookfield he is still trying to bet revisions made in the state Affordable Housing Act, which offers developers the opportunity to circumvent municipal zoning laws on some projects. The legislator said that is particularly important with the development of the 198-acre Town District Center near the Four Corners intersection of Federal Road. He said he also is attempting to secure money to upgrade the Bethel train station.

Harding captured the seat in a special election in February of last year over former Brookfield Democratic Selectman and Board of Finance member Howard Lasser. The seat had been held for nearly 16 years by Brookfield Republican David Scribner. Harding was unopposed in November for a second term. Since being established in 1966, a Republican has held the seat for all but two years.