Bipartisan talks on closing Connecticut’s budget deficit have begun. Gov. Dannel Malloy has proposed state employee layoffs and business tax cuts. Republicans, for their part, have been arguing for state employee labor concessions.
But both sides are tinkering around the edges.
Everyone agrees the crisis will continue until and unless the economy turns around. So why not focus on fixing our economy? Current proposals will only make things worse. At this rate, we’ll be back at the bargaining table next year.
According to the Department of Labor, unemployment in Connecticut has fallen in recent months to 5.1 percent. But unemployment in our major cities — Bridgeport, Hartford, and New Haven — remains at over 8 percent. These cities, and smaller ones like New Britain, New London, Norwich, and Waterbury, have unused capacity and the infrastructure in place to support new businesses.
To fix the economy, we must focus on our cities. Connecticut’s cities have room to grow, and unlike many of their surrounding suburbs, welcome new development and new residents.
Connecticut’s cities and its current budget crisis are connected. As long as our cities, historically the center of industry, are struggling, our state will rely too heavily on the financial industry in Fairfield County for tax revenue. During good economic times, like the Wall Street boom of the early 2000’s, this works out fine. But the Great Recession shows us the danger. Whenever a financial crisis hits, we are left with a budget crisis too.
To help our cities create jobs, Connecticut must reform property taxes. It’s no coincidence that unemployment is highest in our cities where property taxes are highest. Economists at the Federal Reserve Bank of Boston have confirmed that the burden on our cities from the property tax is an economic fact. (Their study is here.) That’s why Speaker Brendan Sharkey and Senate President Martin Looney’s budget, an historic first attempt to rectify the property tax imbalance, was a step forward.
Instead of continuing to reform property taxes, Gov. Malloy and the Republicans want to move backward.
Cuts to the state workforce will put more pressure on local municipalities to pick up the slack. The towns hit hardest will be the same cities that are struggling the most and have the highest taxes already.
Meanwhile, tax cuts for business will help prosperous towns like Greenwich and Westport where both taxes and unemployment are below the state average and where residents reject new developments that could spur growth.
Anyone who lives here can see there are “two Connecticuts” without reference to the dire statistics. The inequality is easy to see. What’s harder to see is that the pain felt in Bridgeport, Hartford, New Haven, and elsewhere is the source of our negative business climate.
Without the votes from these cities, Gov. Malloy would not be in office. Without their economic revival, he will be unable to end this crisis. But to begin that revival, he must change course and support property tax reform.