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A high-profile commission aimed at solving Connecticut's fiscal crisis and improving the state's economy on Wednesday released a second round of recommendations to curb the state's multibillion-dollar deficit and jumpstart growth.

The 14-member Commission on Fiscal Stability and Economic Growth, launched through last year's bipartisan adopted budget, is co-chaired by former Women's Health USA CEO Robert Patricelli and former Webster Bank CEO James Smith, who flirted with a run for governor this spring.

State lawmakers did not act on the recommendations the commission made in March, but certain items were referred for further study. Progressive Democrats in the General Assembly shot down many proposals in the first report, arguing it lacked support for poor cities and education, among other problems.

Patricelli and Smith detailed the new recommendations, billed as "Report 2.0", Wednesday afternoon at the state Capitol building. The commission developed the report despite it no longer operating under the state.

The CEO-led commission on Wednesday layed out six priority items for the General Assembly to consider in the upcoming legislative session.

They include: reducing the state deficit by at least $1 billion through cutting state spending and improving revenue collection; freezing wage and benefits increases for state workers; and enacting revenue neutral tax reform.

The report also calls for new transportation investments, including tolls, increasing science, technology, engineering and mathematics (STEM) funding, and reorganizing municipal revenues and spending.

The co-chairs said the first report served as a "springboard for serious discussion of the daunting fiscal and economic situation" facing Connecticut. The latest installment, they said, has evolved, with fewer, and more focused recommendations. A chief concern, they said, is balancing the upcoming biennial budget.

But there are many, growing fixed costs adding difficulty to constructing a budget. Debt payments, Medicaid and state employee retirement benefits alone are growing by 6 percent each year and will make up 53 percent of Connecticut's budget by fiscal year 2020, the commission said. They are also increasing the state's deficit by over $500 million annually.

Meantime, debt and unfunded liabilities have ballooned to more than $100 billion, based on a 6 percent investment return rate. Plus, Connecticut's economy has been shrinking, according to Gross State Product, which fell by 9.1 percent over the last decade, the commission said.

"We must avoid being lulled into complacency by the recent good news of growth in tax receipts and signs of some improvement in the state's economy," Patricelli and Smith said. "Despite these positive developments Connecticut's fiscal condition is not sound, our tax system and infrastructure are not competitive, and our economy remains weak."

Under the 33-page report, the commission is recommending the following:

• Reduce Connecticut's deficit by at least $1 billion through spending cuts and creating new revenues, without increasing taxes. This will be accomplished by hiring outside consultants and private-sector resources.
• Push off wage and benefits hikes for state workers over the next two years, and increase employee contributions to their pension plans to national medians, and "face up to unfunded retiree liabilities."
• Re-align Connecticut's tax system on a revenue neutral basis to boost economic growth. This would be done by lowering taxes on businesses and individuals and expanding the sales tax base rather than by increasing rates.
• Prioritize transportation improvements to stimulate economic growth and reduce congestion and improve safety. This includes implementing an electronic tolling system on state interstate highways and major expressways.
• Fund a new program providing 4,000 STEM scholarships each year through public and private four-year colleges and universities. This would be done by using bond funds of $80 million per year at full implementation.
• Prioritize state municipal funding on cities and towns that need it most.

The commission members are listed here.

DOWNLOAD PDFs

View the commission's latest report here

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