Critical of state’s economic track record, Stefanowski says his focus is on making CT more affordable

GOP gubernatorial candidate Bob Stefanowksi is back this fall for a rematch with Gov. Ned Lamont.

Unsurprisingly, while his Democratic opponent paints an upbeat picture of the state’s economy and business climate, Stefanowksi is much more critical of Lamont’s economic track record.

And he’s attacking Lamont on several fronts, including his tax policy. Lamont has touted that he didn’t raise tax rates during his first four years in office, but Stefanowksi points out that the governor did raise new revenues to balance an early $2 billion deficit, including by broadening the 6.35% sales tax and placing a 1% surcharge on prepared meals.

Stefanowksi said he’d roll back those tax hikes and more.

Stefanowksi said his main focus would be on making the state more affordable for businesses and individuals, and getting more people back to work through workforce development efforts.

On Sept. 20, he rolled out a $2 billion tax relief plan that would ease burdens on consumers, small businesses and those who pay property taxes, expand the state’s fuel tax holiday and extend it through 2023, and bolster the cash-starved unemployment trust.

The single-largest chunk of relief — about $800 million — would be aimed at motorists.

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HBJ PHOTO | GREG BORDONARO

GOP gubernatorial candidate Bob Stefanowski at HBJ’s offices in downtown Hartford discussing his vision for the state.

Lamont and legislators have suspended the state’s 25-cents-per-gallon retail gasoline tax since April. That fuel holiday is set to expire on Dec. 1.

Stefanowski would reinstate that as soon as possible after potentially taking office on Jan. 4 and maintain the tax holiday through the 2023 calendar year. Stefanowski’s plan also would suspend the entire diesel fuel tax.

To counter rising property taxes, Stefanowski also proposed allowing families earning less than $400,000 per year — and singles earning less than $200,000 — to deduct up to $10,000 from their taxable state income to reflect municipal property taxes they’ve paid.

Stefanowski projects this would save an estimated $350 million and would be worth roughly $600 annually for many middle-class families.

Like Lamont, Stefanowksi is a businessman, but he comes out of the corporate world. He has an MBA from Cornell and started his career in downtown Hartford working in the Gold Building for accounting and consulting giant PWC.

He is a certified public accountant and financial analyst who also held executive roles at General Electric and UBS. He said that background, particularly leadership skills he learned at GE, make him well-equipped to lead the state and work across party lines.

It will also help him negotiate better deals on behalf of taxpayers, he said, noting that he’d consider plans to privatize certain state functions, like the airports, and also force partners to restructure deals that have gone over budget.

He’s critical, for example, of Eversource and Orsted’s taxpayer-backed upgrade to the State Pier in New London, which has seen its budget jump from $93 million initially to over $236 million.

“I was the CFO at UBS. I was a senior guy at GE,” Stefanowski said. “I’d be sitting these two partners down and say ‘hey listen, we have a problem here, and if you don’t help me get this back on track, I’ll find two new partners.’ ”

Stefanowksi, who is married to his wife Amy and has three daughters, faces an uphill battle, taking on an incumbent Democratic governor in a blue state. A recent Emerson College Polling survey gave Lamont a 10-percentage point lead in the race.

Stefanowksi recently visited HBJ’s offices for a 45-minute interview to discuss why he’s running for governor and what he’d do if he won.

Here’s what he had to say:

Q. Why are you running for governor again?

A. I grew up in New Haven. My father was a clerk in the mailroom at Southern New England Telephone Company and the state has been great to me. I had a great education, great parents, great quality of life and I just don’t think kids have that opportunity today.

I don’t think it’s gotten any better over the last four years with Governor Lamont. Affordability is a real problem and it’s not just taxes, it’s electricity bills, it’s oil, it’s inflation. We’ve got the highest utility costs in the continental U.S., that’s not right, it shouldn’t be that way.

I think with the billions in federal stimulus money we got from the federal government, and a multibillion-dollar surplus, we should be doing more to help people get by.

Q. How would you assess the state’s economy and business climate?

A. Not good. We’re the only economy that hasn’t recovered the jobs lost during the Great Recession. Taxes are the second highest in the U.S. Small business is not happy at all.

One of the things we should do is pay off the unemployment insurance fund debt (which stood at $86 million as of Sept. 14, according to the Department of Labor). Other states have used their COVID-relief money to pay that off. We haven’t, but we should.

And then basic things like finding workers, companies are dying for people with basic engineering, drafting, and computer skills. We need to invest in our trade schools. College is not for everybody, there are great-paying electrician and plumber jobs available.

Q. What are some changes you would make related to tax policy?

A. I want to get rid of nuisance taxes and fees. There are 344 taxes and fees in Connecticut. The bottom 200 collect less than one-quarter of 1% of the total revenue (about $50 million).

It’s things like a hypnotist registration fee or interior design license fee. I’m not saying people don’t have to be licensed, but why are we collecting money for that?

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HBJ PHOTO | Greg Bordonaro

Bob Stefanowski during an interview at the Hartford Business Journal's office at 100 Allyn St.

I’m going to instruct my Department of Revenue Services, on day one, to stop collecting 200 of these nuisance taxes. Let the other side of the aisle sue me for not collecting a tax for a hypnotist fee.

We also rolled out some things that I think Governor Lamont should have done in April, for example, lower the sales tax, give people some relief from inflation.

There’s a truck user highway tax coming into effect January 1, which should be rolled back. The trucking companies aren’t going to absorb that, they’re going to pass it down to their customers. (The tractor-trailer highway user fee was pushed by Lamont and is estimated to generate $90 million to $100 million in new annual revenue.)

Lamont slapped a 1% surcharge on food — we should be getting rid of that.

Q. Lamont and the legislature agreed to dedicate most of last fiscal year’s $4.3 billion surplus to pay down the state’s massive long-term pension debt. That only made a small dent in the state’s $40 billion or so in pension liabilities. How would you deal with the state’s unfunded pension debt?

A. We have to protect people’s pensions. Whether they’re lucrative or not, people paid into them for their whole life. I think we should be doing something on an optional basis to potentially restructure.

Maybe people could, on an optional basis, take 90% of their accumulative benefit and put it in a 401(k) plan so they can participate in some of the market upside.

Certainly going forward, we can’t be offering the same plan that we’ve offered historically.

But it’s not just pension debt. It’s the overall debt. Governor Lamont said he wanted to go on a debt diet. Now he goes to the Bond Commission and he’s running around handing out gifts every single day. (In July, the state Bond Commission approved more than $850 million in financing, including more than $60 million for dozens of projects in lawmakers’ home districts, according to the CT Mirror.)

We need to be more fiscally disciplined and use zero-based budgeting. I know it’s going to be harder in the government sector, but I used it at UBS. You start with a blank piece of paper and build a budget from there every year.

Q. Four years ago, there was a lot of talk related to your desire to eliminate the income tax. What’s your stance on the income tax this time?

A. We should get it down over time. My plan last campaign was to get the income tax down over 10 years, then it got misplayed that I was going to get rid of it. We should get it down over time to be more competitive with our surrounding states.

But it’s more than just income taxes, it’s property taxes too, and we need to get those down.

Q. What are your thoughts on business incentives and how the state should use them?

A. We shouldn’t be giving upfront giveaways. If it’s a reduced tax rate over time, or if it’s a bonus for getting people in-state employment, or if it’s agreeing to stay here for longer, particularly with respect to midsize businesses, then I’m OK with it.

We need to remain competitive because I talk to companies and they all have five, six states making them offers to move there.

Most of these businesses don’t want to leave, but they’re forced to because they look at the cost here and you can’t make an economic argument to stay here.

So, I don’t have to give a 20-year tax holiday like Florida does, but I need to do things like pay off the unemployment loan and get businesses a better skilled workforce and hopefully reduce the state business tax rate a little bit.

Q. What’s your assessment of the labor shortage and how would your administration tackle it?

A. I think the issue started when we were paying people more to stay home then go to work. You pay somebody more to stay home, they are going to stay home.

And then I think we don’t have the appropriate match between skills that businesses want and what’s coming out of schools. I remember having metal shop and woodworking in high school. Let’s get the high schools to start to introduce these these skill sets.

I believe in investing in trade schools. College isn’t for everybody. I’d like to open a couple more trade schools and expand capacity.

Part of it is also having vibrant cities so people want to stay here. You’ve got to provide affordability so that kids, younger people can live here, and you got to provide the appropriate training.

Q. There is a lot of empty office space in downtown Hartford and in other towns in Greater Hartford. What should a city like Hartford do with all this empty office space, and does the state have a role to play in helping bring the city back to life post-pandemic?

A. I guess Mayor Bronin is talking about turning it all into residential, but if there are no jobs, people aren’t gonna want to live here.

One of the things that Connecticut has is we used to be the insurance capital of the world. You go over to New London, there’s a lot of defense there. You go down to Fairfield County and it’s a lot of hedge funds, financial services. In New Haven there’s life sciences.

I think we should be capitalizing on those industry clusters to create some tax policies to bring these businesses and jobs in.

Look at what Boston did. When GE moved to Boston, part of the decision was related to taxes, but part of it was access to that workforce. We’ve got terrific universities that could be creating a Silicon Valley-type environment.

Q. Downtown Hartford businesses have been frustrated by the fact that state workers are now allowed to work remotely for as many as four days per week. Is that a policy you’d seek to change?

A. No, not right now. What we should do is assess the efficiency of how it’s working. And I’ve seen employees that, the more flexibility you give them the harder they work. If the productivity stays where it is, and people can do it working remotely, I’m okay with that.

As a manager, I always promoted flexibility, but you have to hold people accountable.

Q. Population growth has been relatively stagnant in CT for decades and the root cause of many of our fiscal issues. What policies do you propose to grow the population and help keep more young college graduates in the state?

A. For the people leaving, I hear a lot of it when I’m out on the campaign trail. It’s the person who just retired on a fixed income.

They don’t want to leave their friends and family but they simply can’t afford to live here. And then to make it worse, they live down in South Carolina, they get a house three times the size with a quarter of the property tax.

So, for that part of the population, I fundamentally believe it’s affordability.

For younger people, it’s also affordability. It’s being able to afford to live here with reasonable rents, it’s having activities for younger kids, particularly in the city so that they have something to do and then a career path.

Q. You mentioned energy costs are a big factor in the cost of living in Connecticut. How would you address the state’s high energy costs?

A. I think we should disband the Public Utilities Regulatory Authority, (which regulates utility and telecommunications companies). Its got three people right now, including appointments by the governor. We should make it a six-person committee with real teeth, with a couple of consumers and business owners on there.

Eversource right now is paid a guaranteed rate of return regardless of performance. Put them on a pay-for-performance basis. If they have a good year, they get paid, if they don’t, they don’t.

We have the highest cost in the continental U.S. We have to look at a variety of answers.

I am for clean energy, but it’s got to be balanced. It can’t be put in overnight where your energy costs go up 15 times. We can’t be doing stuff like a TCI tax that the governor wanted to put in. (The Transportation and Climate Initiative was a regional cap-and-trade plan to raise money to address climate change by reducing motor vehicle pollution. It didn’t garner enough state legislative support to pass.)

What we should be looking at is technology of the future like green hydrogen. That’s another place to bring some business in. Green hydrogen is going to be the answer. You split water into hydrogen and oxygen and there are zero emissions.

Q. What about transportation? What would be your key initiatives there?

A. I think we’ve got to bring in the private sector and focus on public-private partnerships. And it’s not to create toll roads, but look at what they’ve done in Florida with Alligator Alley. You want to get in that lane and pay and go fast, that’s fine. You don’t want to pay a toll, you go over here.

There’s tons of private equity money out there. Why are we so reluctant to tap into it? But again, you need somebody at the top who knows what they’re doing so they don’t get taken advantage of. Because private equity will come in and rip off your shirt, if you let them.

Q. So, when you say public-private partnerships, what would be an example?

A. The Carlyle Group invested in the I-95 rest areas. That went pretty well and we didn’t have to put up any capital. We could be using somebody to help us with the highways, airports. How many airports have been privatized across the world? We’re probably one of the few that is still state owned.

As you know, you gotta be careful with private equity but you structure a deal where you can both make a reasonable amount of money. The XL Center, when I was close to winning last time, I had a bunch of people approach me about buying that, or doing a sale leaseback, or getting some equity to make some investment. But we got to be willing to do things differently.

Q. What about a potential private investor coming in, taking a piece of a highway and making it a toll road. Is that something you’d be open to?

A. As long as there is access to non-toll roads. If they want to put in a high-speed lane that you have to pay for, fine. I don’t believe in tolls in general, it’s another tax.

They’ll say that a lot of it comes from out of state, but I don’t believe it. If you could find a way to just tax out-of-state travelers I’d consider it.

Q. Should Bradley Airport be privatized?

A. I would look at it. I’d look at New Haven. I’d look at Sikorsky, maybe there’s some consolidation we should be doing.

A CT Mirror report was used in this story.

Q. If elected, you’d probably be working with a legislative body that is a majority or supermajority Democrat. How would you be able to get your priorities accomplished?

A. I’m hoping Republicans pick up seats. State Rep. Laura Devlin (R-Fairfield), one of the many reasons I picked her as my lieutenant governor running mate, is she’s been up there for eight years, she’s got a good reputation and she knows how the building works.

I think the other thing is a lot of the stuff we’re gonna be promoting is common sense. And I think you got to be able to deal with different types of people. I’m not good at everything, but I’m good at leadership. GE trained us on leadership, working with different groups of people, motivating them, having the right commissioners.

You got to get people who are pro business and also protect the interests of the state. Those commissioner jobs are mini CEO jobs and I’m going to hold those people accountable. We’re going to be doing a staff meeting every Monday morning, and I’ll be asking, ‘What did you do to make the DMV more efficient this week?’