During legislature's ‘Business Day,’ policymakers debate fiscal guardrails, rainy day fund

HBJ PHOTO | DAVID KRECHEVSKY Sen. Stephen Harding (R-Brookfield), House Speaker Matthew Ritter (D-Hartford) and House Minority Leader Vincent Candelora (R-North Branford) participate in a panel discussion during Connecticut Business Day in Hartford on Tuesday.

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By David Krechevsky

Connecticut Business Day, the annual gathering of business people and legislators hosted Tuesday by the Connecticut Business & Industry Association, offered some key insights into the legislative session.

The event, attended by approximately 350 people, was held just up the street from the Capitol at the Bushnell Center for the Performing Arts.

The day began with opening remarks from Yetta Augur, president of the Cheshire Chamber of Commerce and president of the Connecticut Association of Chamber of Commerce Executives, who expressed support for the Manufacturing Innovation Fund.

She was followed by Chris DiPentima, president and CEO of the CBIA, who said the large turnout demonstrated how engaged the state’s business community is with what happens in the legislature.

DiPentima reiterated CBIA’s priorities for the current session, including “maintaining and protecting the fiscal guardrails implemented in the 2017 bipartisan budget.”

“Those reforms brought much-needed stability after a lost decade of never-ending budget deficits, tax hikes and draconian spending cuts,” he said. “The guardrails have worked as intended, allowing investments to grow our economy in a sustainable fashion.”

He noted that the budget plan proposed by “the legislature’s tax and spending committees a few weeks ago not only weakened the guardrails, but they also hiked taxes by almost $1 billion.”

He said that threatens the growth the state has experienced since the pandemic.

“It's a potential self-inflicted wound with significant negative consequences,” he said.

Comptroller Sean Scanlon followed DiPentima, stating that the budget crisis that resulted in the legislature creating the fiscal guardrails in 2017 have helped to end that crisis.

“In the last seven years, we have turned the finances of the state around,” Scanlon said. “We have had seven consecutive years of ending our fiscal year with a surplus. We have paid off almost $10 billion of our pension debt, and we built up the rainy day fund. … So, from my vantage point as the Comptroller, we have ended the crisis that began to be addressed in 2017.”

Still, he said, the state faces a new crisis, and must spend the next decade working to grow the state by ending the “affordability crisis.”

That issue was also addressed by a panel of legislative leaders that followed Scanlon. The panel included House Speaker Matthew Ritter (D-Hartford), House Minority Leader Vincent Candelora (R-North Branford) and Senate Minority Leader Stephen Harding Jr. (R-Brookfield).

It was moderated by Megan Glander, external affairs manager, U.S. Northeast, for Crown Castle, a Houston-based real estate investment trust and communications infrastructure company with offices in Avon and Cheshire.

While Ritter noted that “we don't hate each other,” it was clear that the legislative leaders did have significant differences with just three weeks left in the current legislative session.

The biggest concerns are the budget and whether the state should alter the fiscal guardrails. Ritter noted that it was Gov. Ned Lamont’s budget that proposed raising the volatility threshold by $300 million to $400 million to fund a childcare trust fund.

“That’s a big sticking point,” Ritter said.

He added that he believes the state should put more money into its “rainy day” fund. The fund currently has about $4.3 billion, and Ritter would like to increase that to $5 billion, in part to protect the state should significant cuts in the federal budget be realized.

“I'm not rooting for failure, I'm not criticizing anybody,” Ritter said. “I'm just telling you, I read the newspaper.”

Candelora said altering the volatility cap requires a three-fifths vote in both chambers, and that Republicans oppose it.

“While we're in decent financial shape right now, we really have to look at this from a sustainability standpoint,” he said, “because I think this next budget year is going to decide if we're looking at tax increases two years from now.”

Harding added that his constituents view the $4 billion in the reserve fund as “over taxation.”

“To some extent, I think that although it's very good, I support it, but to now increase the amount that you are putting into it, we never have a situation where we give the money back,” Harding said.

The legislative panel was followed by Lamont, who said the session has reached “the beginning of the ninth inning of this process.”

He said he is “probably a little more cautious than I was in January,” because of the risk of a recession and because sales tax revenues are down.

“Overall, I think we're in pretty good shape, and if we can reach some compromises in the next few weeks, I think we're well-positioned, depending on what we get from Washington, D.C.,” Lamont said.

He added that he remains “pretty strict” on maintaining the fiscal guardrails.

“We played a lot of games in the early 2000s and we kept playing games with the spending cap,” he said. “We kept raising it, raising it, raising it. Probably that was a bipartisan game they were playing back then. … It was bad.”

“I'm going to do everything in my power to make sure the state does not go through that again,” he added.