A couple of weeks ago, I (and about 30 other financial related professionals) was invited to sit down with the Governor of Connecticut, Ned Lamont, to talk about the financial health of the state. I was rather surprised when I got the email invite from one of his senior advisors. The senior advisor had found me on a google search, as I am currently the President of the Financial Planning Association CT Valley Chapter (this is our trade organization throughout the state comprised mostly of CFP’s and financial planners).
In addition to Governor Lamont, David Lehman, the Economic Advisor and Commissioner of Economic Development for the State of Connecticut, was going to be there as well. The purpose of the meeting was to engage in a dialogue with the Governor and other industry colleagues about the Connecticut economy, the Governor’s focus on fiscal stability, and an opportunity to share our perspective with Governor Lamont as well as ask questions. What a great opportunity to hear from the Governor and be able to voice my thoughts and opinions, especially since I hear from a lot of you on how you feel about Connecticut.
The Governor started off by saying that the media was not invited to this roundtable discussion as he wanted people to be able to voice their honest opinions and have frank discussions with him. I was a little nervous at first as I heard some prior grumblings that the Governor does not like financial planners because “we usually recommend that our clients leave the state when they retire”, which in all fairness does happen quite a bit. I must admit that I went into the meeting with some trepidation. After all, Connecticut does not have a good track record when it comes to spending…..and taxes!
The Governor acknowledged that he knows there is a lot of negativity with state government and why people are fed up and leaving the state – especially when it is much cheaper to live elsewhere. He told us that he does listen to the news and sees the rankings where CT is for highest taxes and low job growth. Some of the keys points that he mentioned was:
- The State of Connecticut fixed costs in the budget are 30% (pensions, healthcare, and bonding). Most states are around 15%, so CT is already at a disadvantage.
- The Teacher’s Retirement Board pension is in better shape, funding wise, compared to state employee pensions (roughly 45% versus 35% funded)
- Within 3-5 years 30% of state workers will retire. They plan on outsourcing those jobs that they can to the private sector using a combination of both private/public partnerships.
- In 2023 he wants to start phasing out the CT Estate and Gift tax to match the federal government. CT is the only state with a state gift tax, and it is responsible for less than 1% of the revenues, so “why have that black eye on the state when it does not bring in that much in revenues”. He really wanted to get it done this past session but did not have enough Republican support to help him.
- He wants to focus on keeping young people in the state and having good quality jobs and that United Technologies, Electric Boat, Sikorski, CVS Aetna, and Alexion are a good start). We have smart educated people in the state, and he wants to keep them here. In the college world, 80% of Stamford University graduates stay in that Palo Alto area in CA versus only 10% of Yale students stay in Connecticut. He wants to fix that.
- He wants CT to be more technology driven so that a lot can be done online (like DMV for an example and not have to wait in line). He is all about lowering expenses and stop the spending, especially the bonding that drives him crazy.
- He feels that the key to Connecticut’s success is transportation and upgrading our existing infrastructure and travel. Connecticut is a gateway between Boston and NYC and feels that we can get people to live here and commute if the environment for transportation is good.
He also shared the good things that Connecticut does, as our state is near the top for education and healthcare compared to most the states – which I do agree with. Other items they shared are that compared to the other 50 states:
- Connecticut is #5 in education grades K-121
- Connecticut is #7 for the safest state to live 2
- Connecticut is #3 for healthcare treatment 3
- Connecticut is #6 for Natural Environment 4
He knows that this is not a quick fix and will take some time and there is not a lot he can do to stop the mass exodus from leaving now. It is his number one priority to get the state’s spending under control and make it a place people want to live and work. He discussed how other states have county-based services and how CT is at a disadvantage. For example, we have 136 Boards of Education, 136 Superintendents, 136 municipal health plans, etc. States outside of New England have consolidated and cut costs by having 1 per county, versus 20+ per county.
I asked the Governor if he looks to other state’s successes, as I am one that does not like to recreate the wheel, and listed fiscally responsible states like FL, SC, NC, TN, and Texas to name a few. They have very little income (or no) tax and property tax as most their revenues are derived from sales and excise tax. Those states, specially Texas, have done groundbreaking things with public/private partnerships and have kept costs low for their residents. He did agree with me and that he has looked at those but told me CT has shifted more to a “services-based economy over the past couple of decades and that taxing strictly consumption/purchases would not cover the budget.
All in all, I felt that the Governor does have a plan and it is important to him to have Connecticut succeed. They want to create jobs and provide a good quality of life. He desperately wants the state to control its spending and not have a blank checkbook. Like I said, there are a lot of pros to live in the state. As of now, there are also some cons with your cost of property taxes and state income taxes. I do feel better after that meeting that over the next decade, those pros will outweigh the cons and that this state is heading in the right direction.