Stefanowski wants to pay for road improvements in short intervals

By Scott Benjamin

Bob Stefanowski, the 2018 Republican nominee for governor, says the GOP state Senate plan to rebuild Connecticut's infrastructure is viable, but he would prefer a "three to five year" proposal instead of 10 years at $18 billion.

"Make it a shorter term program and prioritize," added the businessman, who Sacred Heart University Government Department Chairman Gary Rose has called the "face of the Republican Party" in Connecticut following his narrow defeat last year.

The Republican Senate plan, unveiled November 14, calls for taking $1.5 billion from the $2.7 billion rainy day fund and transfer that to pay off pension obligations, which according to the 2018 report of the state Commission on Fiscal Stability and Economic Competitiveness were only 29 percent funded after years of neglect.

State Senate Minority Leader Len Fasano (R-North Haven) has said the funds freed up from the pension obligations could be placed into the transportation fund.

Connecticut has been plagued by an ailing transportation system where the congestion is so severe that real estate agents won't show homes to prospective customers in Stamford during the rush hour on Interstate-95, according to Gov. Ned Lamont (D-Greenwich). The governor also is seeking to reduce travel times for the trains, particularly those going to New York's Grand Central.

Patch.com has reported that the monies in the rainy day fund currently earn a two percent interest rate and would increase to 6.9 percent once they are in the pension system. Lamont has called the program "risky," according to CTNewsJunkie, but hasn't taken a position on it apparently because of concerns about maintaining a higher rainy day fund.

"A small portion of it makes sense to pay down long term, which is a much higher rate," said Stefanowski. "But we need to save enough in the rainy day fund to protect against a possible recession. I'm not sure the right number for the rainy day fund money."

The Senate Republicans have called for a re-establishment of the state Transportation Strategy Board to establish priorities.

Some of the other funding will come from federal low-interest loans that Lamont has sought over the recent months.

Stefanowski said that both Lamont and the Senate Republicans "may be too optimistic" in anticipating $4.7 billion in low-interest federal loans with flexible payments considering the polarization in Washington.

In early November, Lamont introduced a $21.3 billion package that would include 14 toll gantries that would be connected to assist bridges in those designated areas. The tolls were to be taken down after 10 years, according to the governor.

Connecticut has not had a major transportation infrastructure program since the mid-1980s after former Gov. William O'Neill (D-East Hampton) signed one following the collapse of the Mianus River Bridge in Greenwich.

State Comptroller Kevin Lembo (D-Guilford) has urged legislators during his nine years in office to increase payments to rainy day fund so that the state can more easily weather a recession and also get a higher bond rating so it can save costs when borrowing.

Municipal leaders, such as Brookfield Democratic First Selectman Steve Dunn, have said that since the 2008 financial crisis the rating agencies are giving AAA bond ratings, the highest rating possible, mostly to municipalities that have a fund balance near 15 percent. He has said some years ago you could get the second highest rating, AA2, with a fund balance of about 10 percent.

According to news reports, Lembo and Melissa McCaw, the secretary of the Office of Management & Budget – the governor's budget arm – also have indicated that the rainy day fund needs to be funded to a higher rate.

"You have to protect the rainy day fund in case there is a disruption in the economy," said Stefanowski, who was leading in the last Sacred Heart/Great Blue Research poll that was distributed before the election. He lost to Lamont by about 44,000 votes. Independent candidate Oz Griebel of Hartford, the former head of the MetroHartford Alliance, placed a distant third.

CT Hearst has reported that Lamont couldn't generate sufficient support for tolls because of fears that some Democrats would lose their re-election bids if they supported tolls.

However, 42 states now have tolls, including nearby Massachusetts, which features the Route 128 corridor - considered to be one of the top innovation hubs in the country.

The parameters have changed. The 2015 commission appointed by former Gov. Dannel Malloy (D-Essex) and chaired by former state Rep. Cameron Staples (D-New Haven) produced a 30-year, $100 billion proposal, far larger than the proposals now under consideration.

Critics, such as Darien Republican First Selectman Jayme Stevenson, who ran for the Republican nomination for lieutenant governor last year, told Brookfield Patch that the program was a wish list that lacked priorities.

This last February Lamont called for tolling across the state with at least 50 gantries. After there was insufficient support for that package, he and his team reduced the scope to a 10-year package with 14 gantries that would have their revenues largely tied to nearby bridges. The governor estimated that as had been the case with his earlier program that about 40 percent of the revenue would come from out of state.

"Part of the problem was that no one actually thought that those toll gantries would come down after 10 years," Stefanowski said in a phone interview of Lamont's most recent plan. "Governments don't stop revenue streams."

It appears that Lamont is not an instinctive politician.

State Rep. Bob Godfrey (D-110) of Danbury, who was initially elected in 1988 to the General Assembly, told Danbury Patch in September that Lamont has not developed a one-on-one rapport with members of the General Assembly.

He "is a little naïve" and "a little bit cavalier," the veteran lawmaker said. He added that he has had the worst relations with the General Assembly of any of the six governors that he has served under.

Stefanowski, who lives in Madison, was a featured speaker at some of the No Tolls rallies earlier this year. He said voters were resistant to paying another levy in a highly taxed state.

On another subject, he criticized Lamont for not tackling the pension system that was structurally underfunded from 1939 through 2010. It was one of the signature issues of the 2018 campaign.

He said the governor at least should use his leverage next year when the salary freeze for state employees is about to end to negotiate further concessions.

However, Larry Dorman, the public affairs coordinator for AFSCME Council 4 in Connecticut, which represents about 15,000 state employees, told Greenwich Patch last year that the agreement signed in 2017 with the collective bargaining units will save the state $24 billion between 2017 and 2037.

The state employees have no-layoff provisions through June 2021.

Republicans expect Stefanowski to again seek the party's gubernatorial nomination in 2022. He was not nominated at the GOP convention in 2018 and petitioned his way to the ballot and then captured a five-way GOP primary in August.

Stefanowski, who was ahead by two points in the last Sacred Heart/Great Blue Research poll, now sits on two corporate boards, does consulting and makes appearances at events for Republican candidates.

He said Lamont's debt diet of holding fewer state Bond Commission meetings in an effort to lower annual borrowing by $700 million a year is "a good idea."

But Stefanowski said the governor has used it as "a political weapon" to try to generate more support from them for other policy initiatives.

He said the time has come for Lamont to "make a decision on the municipal aid, because [those towns and cities] need money for road maintenance," he said regarding the governor's decision not to appropriate funds that usually are approved by this point in the calendar year.

On the proposed merger between Raytheon and United Technologies, Stefanowski said, "I think that United Technologies may gradually leave the state."

The federal government is expected to rule on the plan during the first half of 2020, according to news reports. The Hartford Courant has reported that at minimum 100 highly paid corporate executives would leave Connecticut for the new headquarters in Boston.

CTNewsJunkie has reported that Lamont has said he has been assured that the manufacturing operations for Francis Pratt & Amos Whitney in East Hartford will remain in Connecticut and employees will be added over time.

Malloy reached an agreement with United Technologies to keep the operations here for at least the next 20 years.

However, United Technologies has indicated that it will sell its non-defense companies – Carrier air conditioners and Otis elevators, both of which are based in Farmington.

"It's tough, because Connecticut's property taxes are the highest in the country," Stefanowski said.

Stefanowski acknowledged that the State And Local Tax (SALT) provisions in the 2017 Trump tax reform have hurt the housing market in the wealthier parts of Connecticut, as homeowners can now only deduct up $10,000 on their state and local taxes.

For example, the Urban-Brookings Tax Policy Center estimated that for the top one percent of wage earners the SALT features would in 2018 only amount to one-tenth of the deduction that they had received in 2017.

He said the state government should consider options to help offset the impact on wealthy residents.

Stefanowski added that Lamont has not followed through on his proposed $400 million package to restore middle class property tax credits that had shrunk under Malloy, his immediate predecessor. Lamont had said he could accomplish that through increased collections at the Department of Revenue Services, reductions in the budget for the Department of Corrections and through implementing sports betting.

CT NewsJunkie columnist Susan Bigelow was skeptical of the proposal in an August 2018 column, stating that, among other things, it would be difficult to make collections in the Department of Revenue Services more efficient and it is hard to estimate the potential revenue from sports betting.

Stefanowski said sports betting would "probably would provide a decent revenue stream."

He said Lamont's decisions to name veteran aerospace executive Colin Cooper as Connecticut's first manufacturing officer and the appointment of a Workforce Council are "fine."

Lamont has said since last year that there are many jobs that are advertised in Connecticut that go unfilled for lack of qualified applicants and that the gap could be addressed through the state technical high schools and community colleges.

However, Stefanowski said he is disappointed that the governor has not become an economic ambassador.

"He hasn't been out in the country trying to recruit new companies," he said. "Lamont should be the state's number one salesperson."

Stefanowski noted that former Florida Gov. Rick Scott, now a U.S. senator, was successful in luring companies from other states to come to Florida.

David Stemerman of Greenwich, who placed third in the Republican gubernatorial primary last year, has told Brookfield Patch that Scott, who formerly worked at a venture capital firm in Stamford and lived in Greenwich, would ask prospective companies where in Florida they wanted to be and promise that the state would design a college curriculum to fit their needs.

Despite its fiscal woes, the 24/7 Wall Street Web site recently ranked Connecticut as the fifth best state to live in – behind Massachusetts, Colorado, New Jersey and Hawaii.

The online Web site pointed to Connecticut's wealth, high life expectancy and educated work force in which more than 39 percent with at least a bachelor's degree compared to about 32 percent nationally.

Stefanowski has maintained all along that Connecticut has the ingredients to succeed, it just needs better governmental actions.

On another topic, Thomas Philippon, the noted professor of Finance at New York University, has written in "The Great Reversal: How America Gave Up On Free Markets" that American have over the last 20 years given up on free markets. He said there has been a monopolization in several markets – particularly the telecoms and the airlines.

Philippon has stated that U.S. corporate profits have soared from six percent of gross domestic product in 1980 to 10 percent in 2017. One percent equals about $210 billion.

The professor stated that major corporations aggressively lobby elected official to protect and expand profit margins. He added that it has resulted in lax anti-trust enforcement.

Washington Post economics columnist Robert Samuelson wrote that "His theory certainly fits the facts: U.S. business concentration has increased, corporate profits have surged and investment has slowed."

"I don't know that it has become more monopolistic," said Stefanowski, who worked on several mergers and acquisitions while at General Electric and UBS and has written two books on that topic.

"I'm a strong believer in free markets," he said.

He said what has altered free markets recently has been the president's trade tariffs with China.

Stefanowski said he is usually against tariffs, but added that the president has used them as negotiating tool against a country that has not fully embraced free trade since it entered in 2001 into Permanent Normal Trade Relations with the United States.

Stefanowski, whose most recent book, "Material Adverse Change" (Wiley Finance, 216 Pages) was published in 2018, says the amount of private equity mergers has grown considerably in recent years.

He wrote that the chief principal in negotiating a merger is to conduct the proper "due diligence" in analyzing it.

However, Stefanowski said that negotiations is not something that has to be learned though a college curriculum or the highly-regarded General Electric training program, since people negotiate daily in their lives.

"It's about what time are you going to be home after school or could you find time to pick me up after work instead of going to your social event," he said of possible examples.

Said Stefanowski, "It is a skill that many people need to develop better, including New Lamont. He hasn't been able to get much done even though his party has majorities in both the House and the Senate."