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In This Issue:
From Paddi's Desk
CT Agency Corner
Municipal Roundup
Inside Scoop
This Day in CT History
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Numbers, Numbers, Numbers
Next Wednesday, Feb 8th the whole tribe at the state capitol will be convening to hear the Governor announce during a joint session of the general assembly his complete vision for Connecticut for the next two years through the use of numbers – and there will be a lot of them! The budget process in CT is pretty straightforward - every two years the governor proposes his ideas and recommendations and the legislature can accept it as is (which doesn’t happen very often) or they can take what they like and dismantle what they don’t like. Or, they can overhaul the entire framework and substitute their vision. During the last two years of former Governor Dan Malloy's administration, the legislature picked the latter option and Democrats joined forces with the Republican caucus and crafted a document that at the time was historical for not only the process it took to get it approved, but for some of the items that were transformed to curb the financial disaster that CT seemed to face year after year. They put in place some significant safeguards which are paying dividends now. These safeguards include paying down the state employee retirement debt, introducing a tighter calculation for saving surplus money in the state's rainy day fund, and also assisting with a more structured methodology of predicting the “out years” impact on the 2-year budget before they approve and send it to the governor.
In 2019 a new guy came to town - Governor Lamont - and he got to work rightsizing state government. His first step was to bring in some savvy outsiders who knew how to organize and structure a more efficient and operational sound collection of state agencies which allowed him in 2021 to establish some hard metrics for the state government to follow. This proved to be the right strategy just in time to position Connecticut for its current situation. His proposal brought the usually split legislature together and invested the most local aid to cities and towns in state history, he spent money on investing in the human services infrastructure and kept the income and sales taxes flat for two years. In addition, he closed a $3.7 billion deficit he inherited from past budgets.
CT now has a $4.3 billion surplus for the fiscal year that closed June 30. This is unprecedented in state history, equaling one-fifth of the last budget's entire General Fund, and is 30% larger than the maximum budget reserve allowed by state law. Of course, we had a little pandemic that poured tons of federal funds into Connecticut to shore up our economy. But, the changes made in 2017 did what they were designed to do – protect Connecticut in case of a downturn.
So, as Wednesday comes around there will be a lot of “high-fiving” going on as Governor Lamont gives his budget report and unveils his plan for our next two years. As is tradition, he’s been teasing folks with a combination of new initiatives. This includes some fixes to certain circumstances that were created by the 2-year pandemic as well as promising tax cuts to many of the middle-class income residents. With not knowing all the details, many are wondering how the Republicans will respond since much of the governor-announced plans plays into their regular “playbook”. Where will they go as far as additional tax cuts – sales tax, more aggressive income tax cuts, or another creative way to entice business not only from leaving but relocating to Connecticut?
With less than 120 days until adjournment, there will be plenty of ups and downs and ins and outs before the final document is sent off to the governor. With a July 1st startup for the next year's fiscal year there will be little time to dilly dally so let’s get it started. Can’t wait for Wednesday – let the games begin!
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CT Colleges and Universities on a Mission to Reduce Expenses
Whether it be through attrition or other cost cutting mechanisms, the Connecticut State College and University System (CSCU) has been trying to identify the most appropriate ways to reduce costs while also not fracturing the services side enjoyed by students across 17 of the system’s schools.
Here is a “by the numbers” evaluation on where the system currently stands and what could be considered next:
- CSCU increased fiscal year 2022-23 tuition and mandatory fees for full-time community college students who pay out of pocket by $112 per semester and for state universities and Charter Oak students by $291 per semester. While on its face this does not seem like a big increase, keep in mind the community college system beginning in the next academic year will start to offer six credits for free for all students in the state. This was made possible by a law that passed in 2019 and was championed by former State Senator Will Haskell (D-Westport).
- Overall, it’s anticipated that the CSCU system is expecting a more than $250 million budget gap due in large part from benefit increases (including salary) and a dramatic decline in revenue due to the pandemic.
- CSCU is in the process of working on saving money from consolidating 12 of the state’s community colleges into one network. They are hoping to help with the high level of administrative costs associated with each of these schools having a president and C-suite university officials.
- The one-time revenue solutions provided by the federal government kept the CSCU systems afloat with very minimal deficits, but now the close to $300M provided through ARPA will not be available in the long-term and more difficult decisions will need to be addressed by the full board.
So what’s the current “ask” of the colleges this session? For the expanded free college program, CSCU is asking the state to invest $386 million over the next seven years. The CSCU 2030 plan has been submitted to the legislature but the first true test will be what the Governor includes in his budget proposal which is set to be released on Wednesday the 8th.
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Education Funding
A lot of the buzz this week in the education policy sphere has been around school funding. Connecticut has consistently ranked low in per-pupil spending compared to other states, and this has had a negative impact on the quality of education in the state. Some advocates have argued that the state's education funding system is complex and outdated, with a significant portion of the funds going towards administrative costs rather than directly benefiting students.
There have been recent efforts by state lawmakers to address the issue of education funding in Connecticut. Lawmakers have proposed to increase education funding by fully funding the state's Education Cost Sharing (ECS) program by 2025, which would be used to support struggling schools and expand early childhood education programs, among other things. The proposal has received support from lawmakers and educators, who recognize the need for increased investment in education in the state. While the 25 cosponsors of the proposal are Democrats, the proposal has bipartisan support according to Education Committee Chair Jeff Currey, with State Representative Tammy Nuccio, a Republican, indicating she had an open mind to support it.
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A Volatile February
As we head into a cold snap to begin February, we find ourselves one week out from the Governor’s Budget presentation. It's a "holiday", but only for those wonks super focused on budgetary line items and the always important volatility cap. The volatility cap is maybe the most important aspect of Connecticut’s budget this coming year. The cap, first imposed in 2017, is intended to calm the tides of unstable revenue streams to reduce our (over)reliance on things like the investment earnings, business filings, and the income tax. The cap requires revenue deposits into the reserve fund for the budget even if there is a deficit. Progressive groups argue this can cause unnecessary cuts to essential programs. Fiscal conservatives generally support such a cap, arguing that it stabilizes our financial ship that could capsize at any time.
On Wednesday, the Speaker of the House, Matt Ritter (D-Hartford) published an op-ed in the Hartford Courant calling legislators to “stand firm” on important financial restrictions like the volatility cap. This June, the 2017 bond covenant expires. Many groups and stakeholders across Connecticut are coming to the legislature in droves to advocate for more financial support from the state. Many legislators are hearing their calls and are indicating initial support for their financial requests in a very important year for our budget. As we head into next week with the Governor presenting his budget and we hear more about specifics from both legislators and the various agencies looking into their financials, look for this month to be full of conversations around our volatile budget. This is a pivotal year for the legislature and the Governor and our team at S&L is ready to track the changes, shifts, and discussions around it.
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February 2: A Building Shaped Like a Boat
On February 2, 1961, the Phoenix Mutual Life Insurance Company unveiled plans for a new corporate headquarters building in downtown Hartford, featuring a bold and revolutionary elliptical design unlike anything the city — or the world, for that matter — had seen before.
Designed by the famous modernist architect Max Abramovitz, the new Phoenix Mutual Life Insurance Building was an absolute showstopper at the time of its reveal: A 13-story, 225 foot long, glass building that would sit a stone’s throw away from the Connecticut River. The most stunning aspect of the design, however, was its unique, two-sided, “elliptic lenticular cylinder” shape, the first of its kind ever built in the world. The building, which resembled a giant glass canoe, quickly became known as “the Boat Building.”
The rapidly expanding insurance giant’s February announcement was welcome news to city leaders, who had weathered a steady exodus of residents and corporate tenants to the suburbs over the last decade. Since Phoenix owned a plot of attractive land in West Hartford, many had assumed the company would build its headquarters there; instead, after an internal poll indicated that most employees preferred to remain in Hartford, Phoenix executives decided to double down on their commitment to the city. Construction of the Boat Building took just over two years, with employees reporting to work in the new Phoenix headquarters for the first time in December 1963. The new Boat Building helped create momentum for the nearby Constitution Plaza urban renewal project, and over fifty years later, remains one of the most striking and unique features of the Hartford city skyline. In 2005, it was added to the National Register of Historic Places.
To view the full story on the CT Historian's website, click here.
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Sullivan & LeShane, Inc.
www.ctlobby.com | (860) 560-0000
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