SHU professor insists state should reduce individual taxes

By Scott Benjamin

FAIRFIELD – Gary Rose, who has been writing books on the state’s politics for a generation, says “until taxation is addressed in Connecticut” it will continue to be plagued by an economy that hasn’t recaptured all of the jobs that were lost in the 2008 Great Recession.

“I think the taxation on individual people is the key,” said Rose, the chairman of the Government Department at Sacred Heart University and the author of “Connecticut In Crisis” (Academica Press, 281 Pages), which was published this summer.

The book, which was partly developed through the work of research assistant Bridget Hughes, covers the 2018 gubernatorial campaign and policies that need to be addressed to improve a state with vacant storefronts, a lack of applicants for advanced manufacturing jobs and declining school enrollments.

Rose recommended reductions in the state sales tax and state income tax.

The sales tax currently stands at 6.35 percent, although there are fewer exemptions as a result of the budget that took effect on July 1. The income tax ranges from 3 to 6.99 percent.

The state Commission on Fiscal Stability and Economic Growth in its March 2018 report called for a reduction in the top income tax rate from 6.99 percent to 5.75 percent and “similar or greater cuts in the lower brackets” and no income tax for people making $10,000 or less. However, the commission recommended offsetting some of the lost revenue from the income tax with an increase in the sales tax from 6.35 percent to 7.25 percent.

CT Mirror budget reporter Keith Phaneuf told a Wilton League of Women Voters forum in April that “most state agencies are being kept flat” in spending in the $43.8 billion package.

Rose said to reduce the sales tax and income tax, “You have to cut down on the size of government. The growth of government has gotten out of control.”

He praised former Gov. Dannel Malloy (D-Essex) for slashing the full-time state work force by 13.1 percent during his eight years in office.

“It wasn’t cut enough,” Rose said in an interview. “More needs to be done.”

Brookfield Patch reported in July of last year that Gov. Ned Lamont (D-Greenwich), who was then campaigning for the Democratic primary nomination, said, “I’m not interested in layoffs.” He said he would have to do “a forensic analysis” before eliminating any jobs through attrition.

Rose said he is pleased that Lamont wants to trim $700 million a year from state borrowing through a “debt diet,” having held only two meetings of the state Bond Commission since he took office in January. Usually there are monthly meetings.

However, he said the governor needs to be able to withstand pressure to fund legislators’ pet projects.

“So far, so good,” Rose said of the debt diet. “I don’t want to judge it on one legislative session.”

On a related topic, he said he expects that as has been the practice in the recent years, the wealthier municipalities in Connecticut will continue to get further reductions in state aid.

“They can afford it,” Rose said.

Rose said he believes it will be difficult to make changes in the near future to a pension system for the state employees that is “crowding out” potential spending in other areas.

He said that state Comptroller Kevin Lembo (D-Guilford) told him that there had been “a long pattern of neglect with the pension liabilities.”

Phaneuf has said that every year from 1939 to 2010 state government structurally short changed the pension system for the state employees.

He added, “85 percent of the costs on state employee fringe benefits are related to sins of the past.”

According the last year’s Fiscal Stability Commission report the pensions are only 29 percent funded. The Volcker Alliance, chaired by former Federal Reserve Board Chairman Paul Volcker, gave Connecticut a grade of ‘D’ on its legacy costs.

Lamont did reach an agreement with the state collective bargaining units to save $460 million in the current two-year budget cycle through restructuring the long-term costs in the pensions and providing incentives for the state workers to select less costly providers for their health care coverage

CT Hearst political editor Ken Dixon wrote in September of last year that about 16,000 new employees should be on less-expensive pension plans “in the next few years.”

Patch.com reported last year that Larry Dorman, the public affairs coordinator for AFSCME Council 4 – which represents about 15,000 state employees – said a report from a consultant to the state Office of Policy & Management – the governor’s budget arm – stated that the 2017 agreement with the state employee collective bargaining units will save taxpayers $24 billion over 20 years. He added that the state employees have made concessions numerous times since the early 2000s.

However, the current pay freeze for the state employees will expire June 30. The no-layoffs clause is in place until June 2021. The fringe benefits package was extended two years ago until 2027.

Considering all those factors, Rose said short of invoking the 11^th Amendment of the United States Constitution – which would “protect the state against accumulated debt” - he doesn’t expect any major alterations in the pension system in the short term.

“I don’t see much happening to straighten this out,” he said.

Former Republican gubernatorial contender David Stemerman of Greenwich has said unless they make their pension systems solvent, he expects that Connecticut, New Jersey and Illinois will be “racing” to try to invoke the 11^th Amendment.

Phaneuf said invoking the 11^th Amendment is “very unlikely” since a recent report indicated that Connecticut ranks first per capita in the United States in personal income.

As for economic growth, Rose said, “The Pentagon budget will largely determine it with so many defense-related industries.”

Lockheed Martin makes helicopters at Igor Sikorsky in Stratford and with state incentives plans to add 8,000 jobs by 2032.

The aerospace airplane engine operation at Francis Pratt and Amos Whitney in East Hartford is currently operated by United Technologies, which is, pending federal government approval, going to merge with Raytheon Technologies in the first half of next year. News reports have indicated that Pratt and Whitney will add 8,000 positions over the next decade through state incentives.

Additionally, General Dynamics manufactures submarines at Electric Boat in Groton and under an agreement signed during Malloy’s tenure plans to add 18,000 jobs by 2030.

There are scores of subcontractors in the state that do work for the major defense plants.

Regarding the campaign, Rose said Lamont was a better candidate in 2018 than in his 2010 gubernatorial bid – when he lost to Malloy in the primary – and in 2006 when he was defeated by former U .S. Sen. Joe Lieberman of Stamford in the general election after he upset Lieberman in the primary.

The professor said the most determining factors in the governor’s 45,000–vote victory over Bob Stefanowski of Madison, a former executive at General Electric and UBS, were negative reaction to the policies of Republican President Donald Trump; how the Fight Back CT organization, organized by U.S. Sen. Chris Murphy (D-Cheshire) harnessed the opposition to Trump though phone banks and canvassing; and support for Lamont among suburban women.

“After the election, I heard from a lot of people that Stefanowski was the wrong guy to run against Lamont,” said Rose, who disagreed.

“Overall, I think he ran a good campaign,” he said. “His television commercials were quite good. I thought he was quite good in the debates. He stayed on message very effectively.”

Rose said he thought that Stefanowski should have made more public appearances in the early stages of the general election campaign when he receded from view.

Democratic political consultant Roy Occhiogrosso, who managed Malloy’s 2010 campaign, said on Channel 8- WTNH-New Haven’s Capital Report shortly after last summer’s GOP primary that he couldn’t believe that the Republicans had nominated in Stefanowski another businessman without elected government experience.

Tom Foley of Greenwich, with a similar resume, had lost the 2010 and 2014 gubernatorial elections, and WWE President Linda McMahon of Greenwich, who later headed the Small Business Administration in the Trump Administration, had failed in two bids for the U.S. Senate.

Rose said, generally speaking, the Republicans in Connecticut “like having people from the private sector” running for major offices. He said they believe they have the skills “to solve problems.”

He noted that they nominated Greenwich businessman Brook Johnson for the U.S. Senate in 1992 and Darien fashion executive Jack Orchulli for the U.S. Senate in 2004. The party’s state fund-raising dinner is named after Prescott Bush of Greenwich, who went from Wall Street to the U.S. Senate in 1952.

“I’m not of the opinion that a resume confined to the private sector is a liability,” said Rose.

He said Stefanowski and McMahon performed well in the debates and in interacting with voters, although Foley seemed to “less prepared” in those venues.

Rose said their defeats in races that seemed winnable were largely due to the Democrats’ superior voter outreach.

On independent gubernatorial candidate Oz Griebel of Hartford, who garnered just four percent of the vote, the professor said, “Oz’s problem was that he did not present a third alternative. He sounded in many ways like Lamont.”

“When you’re a third party alternative, you really need to have something that is really distinct about your candidacy,” said Rose.

Griebel, the former head of the MetroHartford Alliance is assembling discussion sessions for this fall on such topics as open primaries that would include unaffiliated voters.

“I believe that party affiliation should mean something,” Rose said regarding open primaries.

“But as a strategist: The Republicans might want to do that,” he continued. “Their party has shrunk to where it’s 21 percent of the electorate. For strategy, it makes perfect sense.”

During a recent appearance with Rose on the “After Hours” segment on the Capitol Report, former state Senate Minority Leader and gubernatorial contender John McKinney (R-Fairfield) noted that such suburbs as Guilford, Glastonbury and Simsbury are trending more Democratic.

Rose said, “The women’s vote used to be evenly divided. Now the women’s vote is on the Democratic side and so much of it has to do with national issues, which have been translated into state and even local politics.”

He said there also is a growing Hispanic population in Connecticut.

Regarding the reaction to “Connecticut In Crisis,” Rose said Lamont left a voice-mail message thanking him for sending him a copy and Stefanowski sent a note stating that it “was very balanced.” Stemerman also has offered praise.

After writing the book, the professor said his chief concern is that, “Connecticut doesn’t seem of offer as much as it once did.”