MALLOY’S AWKWARD EXIT

For a record-setting 123-day period in 2017, the state government left Connecticut residents and municipalities without a state budget, as Malloy and legislators in the Connecticut General Assembly were unable to reach a final budget agreement by the time the previous budget expired in June. Negotiations dragged on for months until both Democrats and Republicans decided to lock Malloy out of the budget talks and eventually passed a veto-proof budget.

Although residents were relieved to finally have some certainty, the budget nevertheless made significant cuts. The University of Connecticut, for example, lost $130 million in funding over the course of two years.

“It’s better than the worst-case scenario, but it’s still going to be difficult,” University of Connecticut Deputy Spokesperson Tom Breen told the News days after the budget passed.

The political crisis prompted by the state’s poor fiscal performance had almost caused Malloy to lose his reelection bid against Republican opponent Tom Foley in 2014.

But the painful eight-month budget process was the final nail in the coffin. Malloy left office in a state of disgrace, with fewer than 15 percent of voters expressing approval for the governor, according to an October 2018 joint survey by Sacred Heart University and Hearst Connecticut Media. At the same time, President Donald Trump’s approval rating in the state was more than double at 35 percent.

Connecticut has long been one of the bluest states in the nation. Hillary Clinton easily carried the state in the 2016 presidential election, garnering 54 percent of the vote compared to 40 percent for Trump. The state also voted Democrat in the six previous presidential elections.

With Trump as the Republican boogeyman on the right and Malloy as the Democratic nightmare on the left, the stage was set for a contentious gubernatorial race.

A NEW AGE?

Enter Ned Lamont and Bob Stefanowski.

In an election year marked by historic numbers of women and people of color running for office, Lamont and Stefanowski stood out for their traditionality. Both men are white, middle-aged and exceptionally well-off. Stefanowski and his wife reported $9.7 million in income in 2017, while Lamont and his wife reported $18 million in income in the past five years, according to tax returns they released before the election.

These numbers are no coincidence. Both candidates drew on their experience as successful businessmen — Stefanowski as a former General Electric executive, Lamont as a telecommunications tycoon — as evidence that they had the necessary economic insight and business acumen to turn the state around.

Lamont started off strong in the polls, holding a 53 to 37 percent lead over Stefanowski in an August 2018 Quinnipiac University poll. But his once clear path to victory became increasingly convoluted as Bob Stefanowski doubled down on his anti-taxes platform, dubbing his opponent, “New Tax Ned.”

By October, most major polls showed the two candidates neck and neck. On a nail-biting election night with unprecedented voter participation for midterm election, Stefanowski held the lead until early in the morning. But Lamont cinched a narrow victory in the end thanks to wide Democratic margins in Connecticut’s cities.

In his inaugural address, Lamont pledged to reinvent Connecticut.

“For generations, Connecticut was the most entrepreneurial, inventive, and fast-growing state loaded with amazing opportunities. And we still can be,” Lamont said in his speech. “I will not allow the next four years to be defined by a fiscal crisis. Together we will craft an honestly balanced budget which does not borrow from the future, but invests in the future.”

That night, as Lamont’s awkward-yet-endearing dancing at his inaugural ball made local headlines, Connecticut voters asked themselves: Will he really be able to follow through with these promises?

As Lamont heads toward his hundredth day in office next week, a preliminary answer to the question is starting to form.

The first clues came at Lamont’s presentation of his budget proposal on Feb. 20.

The budget, which is projected to generate $19.3 billion in fiscal year 2020, eliminated several sales tax exemptions and made changes to health care prices for state workers, among other changes.

Many Democratic legislators applauded the practicality of the budget and Lamont’s support for progressive policies like increasing the minimum wage to $15 per hour and a paid family and medical leave program.

But municipalities have expressed concern about a lack of municipal funding from the state as the services required of them increase.

Grotheer expressed hope that the final budget would include sufficient funding for the payment in lieu of taxes program, or PILOT. The program gives municipalities funding to make up for the loss of revenue due to real estate exempted from property taxes.

In theory, this funding should cover around 45 percent of lost revenue, but state funding for the program has dropped steadily over the past decade. In the most recent fiscal year, municipalities made back only 14 percent of the funds they could not collect.

In fiscal year 2018, municipal aid including funding for PILOT totaled around $356 million, which Lamont proposed to cut down to $325 million in 2020 and $328 million in 2021.

The proposed budget has come under fire for its changes to education funding. Lamont proposed that municipalities cover 25 percent of teacher pension obligations, which Lavielle said would cause further increases in property taxes.

Union officials similarly opposed the change in teacher pension obligations.

“We’ve already made clear we’re not willing to shift more risk onto the backs of retired state employees, which threatens to pick the pockets of seniors living on fixed incomes,” AFT Connecticut President Jan Hochadel said in a statement on the day Lamont presented his budget proposal.

Lamont has received the most flack for his plan to institute tolls on Connecticut highways — a turnaround from his stance during the campaign. The administration has justified the proposal by pointing out that an estimated 40 percent of vehicles on Connecticut highways come from out of state.

Lavielle emphasized that Lamont’s budget is just a proposal and that the approval budget is still far from over.

“So far we’re not seeing a proposal that would [fix the economy,]” Lavielle said. “Essentially the budget that he has proposed … is all based on new taxes.”

Lamont’s economic policy extends beyond the confines of the budget. The governor has brought a host of top private-sector executives into his administration, including Lehman — a former partner at Goldman Sachs — as well as former PepsiCo CEO and chairman Indra Nooyi SOM ’80 and former Webster Bank CEO and current chairman Jim Smith as co-chairs of the Connecticut Economic Resource Center.

These administrators are tasked with reversing the outflux of businesses from the state. Lehman emphasized the importance of “proactive recruitment” of companies that does not rely solely on the bilateral deals of tax breaks and direct state aid to big companies that characterized Malloy’s economic policy.

Lehman pointed out that Connecticut is not suffering from a lack of jobs but rather from a lack of qualified and educated employees. Although the number of jobs in Connecticut has increased over the past few years, jobs coming into the state pay significantly less than the jobs that are leaving, according to Carstensen

As a result, Lehman said that Lamont’s new strategy will revolve around drawing in skilled, educated employees and the companies hoping to hire them by playing to Connecticut’s strengths, from its great schools and beaches, to its proximity to metropolitan centers like New York City, to its potential for greater collaboration between universities and businesses.

To improve Connecticut’s infrastructure, the state hopes to implement what Gov. Lamont has dubbed his “30-30-30” plan, which would invest significantly in the state’s rail system to decrease train travel times to 30 minutes between three pairs of cities: Hartford and New Haven, New Haven and Stamford, and Stamford and New York City.

If the plan succeeds, commuters would be able to reach New York City from New Haven in 60 minutes, which Lehman called a “game changer.” The journey on Metro-North currently takes about two hours one-way.

But the number one priority for Lehman is addressing the problem of Connecticut’s cities and their inability to retain young talent. He hopes Connecticut will be able to at least double the size of its four biggest cities: Bridgeport, Hartford, New Haven and Stamford.

“One of the keys toward the success of the Connecticut of tomorrow is [growing] our cities,” Lehman said.