Connecticut’s fiscal crisis is one of the crucial factors holding back business confidence in the state, according to a new survey. Legislators’ and the executive’s inability to grapple with historic deficits may actually be stifling job creation, the one factor that would go further than any other to solve the crisis. WNPR’s Harriet Jones reports.
An audience of business people in New London gathered recently to hear the results of a survey taken in Eastern Connecticut by the Connecticut Business and Industry Association, taking the temperature of the business community as the state begins to come out of recession. The CBIA’s Jason Giulietti:
"Over the next 12 months, there’s a lot of different factors that are going to play into businesses’ ability to make decisions – strategic decisions going forward. So one of the things we tried to quantify was looking at what it is specifically would have an impact on these companies’ decisions."
And the winner is:
"The uncertainty in state fiscal conditions, 78% indicated that was going to have a negative impact on their ability to do business."
And they’re right to be nervous, according to new figures from Moody’s economy.com, which has looked at the percentage change in revenues for state and local government since the 1950s. Those figures were presented by Jeff Blodgett, chief economist for the Connecticut Economic Resource Center.
"We are now at the weakest point that we’ve been by some measure in the last 60 years."
He says it is time for state leaders to recognize that short-term, one-time solutions won’t do any more.
"We have a serious structural issue with public budgets. And I think the state has been known for doing that for years and years and years, looking for any type of expedient solution to get us through the next budget round. It’s time I think to take a serious look at how we raise taxes, how we spend money, and how do we prepare for a new future."
Blodgett says these longterm structural problems were apparent in other kinds of data, even before the current recession.
"Connecticut is the only state in the nation with fewer businesses in 2007 than it had in 1989. The only state with negative business growth. We have to do something there to encourage business growth. Half of all job growth occurs in those businesses that are between one and five years old. Without activity there, without that growth and churn, regions and states are not creating jobs."
State Comptroller Nancy Wyman was on hand to illustrate just how the lack of job creation affects state coffers – she says recent slight improvements in monthly deficit estimates have been due to spending cuts and one-off windfalls, and not any improvement in ongoing receipts.
"Our major tax categories have not increased. This past month we have seen of course a ten million drop in our corporation taxes, we’ve seen that our income tax is off by about 212 million dollars we expect by the end of this year."
Wyman says the current two year budget is supported by about $2 billion in what she calls one-shot deals – and that reliance on non-recurring revenue is giving very little comfort to anyone in Connecticut’s business community that can read a balance sheet.
For WNPR, I'm Harriet Jones.