In reelection bid, Lamont touts fiscal stability, closer ties to business community, workforce development

It’s a rematch in this year’s gubernatorial race, with incumbent and Democratic Gov. Ned Lamont taking on Republican challenger Bob Stefanowski.

A new player in the field is independent candidate Robert Hotaling, who is an executive from Webster Bank.

Lamont will likely hold the advantage going into Election Day. The most recent Quinnipiac University poll on the race in May, gave Lamont an eight-point lead.

Lamont’s first four years in office have been a tale of several stories. His first year was headlined by tackling a $2-billion budget deficit (which he boasts handling without increasing tax rates, although he did raise new revenues, including by broadening the 6.35% sales tax and placing a 1% surcharge on prepared meals) and his failed and somewhat unpopular push for highway tolls.

Then COVID-19 hit and dominated his attention. Lamont received generally high marks from Connecticut residents for his decision to implement strict lockdown measures in the early half of 2020, and for his move about one year later to ease restrictions and reopen the economy, ahead of most other blue states.

His administration also helped shepherd an emergency grant program for small businesses and encouraged companies to apply for federal resources like the Paycheck Protection Program.

Lamont said he’s running for re-election because he’s got plenty of unfinished work, particularly on bolstering the state’s economy, where he says workforce development is his top priority.

“The state has come a long way in the last four years,” Lamont said in a recent interview. “I think people feel more confident about the state, reflected in us slowly getting our fiscal house in order. I think it’s reflected in getting people back to work. And what you need to do in the next four years is really make sure people are trained for the jobs that are out there and make sure that we invest the resources we have now, some from the budget surplus, some from the Feds, in a way that makes a difference for the state 25 years from now.”

Lamont said one of his key accomplishments has been overseeing budget stability. The state reported a $4.3-billion surplus in fiscal 2021 and has a $3.3 billion rainy day fund. By the end of this year, the state will have also paid down over $5 billion in long-term pension debt.

Lamont has also restructured the state’s business recruitment efforts with the launch of AdvanceCT, which has had some key wins with new companies moving to Connecticut. The administration has also retooled the state’s business incentives strategy, moving away from large upfront tax breaks and grants to an earn-as-you-grow system focused on rewarding companies after they add jobs in the state.

Still, Connecticut’s economy faces significant headwinds coming out of the pandemic. The state continues to contend with high taxes and costs, including the highest electricity prices in the mainland U.S., aging and congested transportation infrastructure and, perhaps most notably, a scarcity of workers, which, while not unique to Connecticut, is all the more concerning here considering how many jobs (about 105,000) are currently left unfilled.

While the unemployment rate is low, at 3.7%, and the state has consistently added jobs over the past year, it has still only recovered 86.1% of the 289,400 jobs lost during the pandemic’s two-month peak in March and April 2020. Nationally, July of this year marked the full recovery of all jobs lost during the pandemic.

Lamont recently spoke to HBJ in an hour-long interview to reflect on his first four years in office and what he hopes to achieve if he wins a second term.

Here’s what he had to say:

Q. What have been your biggest accomplishments in terms of improving the state’s economy and business climate?

A. I think Department of Economic and Community Development Commissioner David Lehman has been the best economic development person this state’s ever had.

And the No. 1 thing we had to do was get a relationship with the business community. It was somewhere between no relationship and a negative relationship.

That’s part of the reason we launched AdvanceCT, the state’s business recruitment arm, to get on the same boat with the business community and start rowing in the same direction. I think that lowered the temperature.

I think getting through that first year $2-billion deficit without raising tax rates was a big deal. I think it gave people some confidence this was a fresh start for the state.

Q. Your administration has largely shifted away from giving large, upfront incentives to companies that move to Connecticut or add jobs here, to more of an earn-as-you-grow program that provides tax breaks to companies after they’ve added jobs. What’s been the impact of that strategy shift and is there a risk it makes us less competitive as we compete for companies with many lower-cost states?

A. It hasn’t made us less competitive so far. We’ve had several businesses move to the state, big businesses and small businesses, during my first term. But more importantly, the policy shift treats your existing companies fairly.

Companies were getting pissed off under the old model, saying ‘How come you’re offering these guys tens of millions of dollars in incentives to move here. I’ve been a good employer here in the state of Connecticut. And they’re using that money you gave them to take my employees.’

I wanted to turn that on its head and make sure that our existing businesses know we’re there for them.

Also, we’ve really shifted our focus to investing in workforce development and doing everything we can to make sure companies have the workforce they need.

Q. In terms of companies that have moved here during your first term, what are some of the biggest wins in your mind?

A. The first was Infosys coming to Hartford. That was before I became governor, but I did that with Indra Nooyi (former PepsiCo CEO and former co-chair of AdvanceCT’s board). And that was when Hartford was potentially filing for bankruptcy.

Certainly down in lower Fairfield County, there’s four or five major financial technology companies that have moved here. Digital Currency Group, (which is relocating its headquarters from New York City to Stamford), is one of the most important fintech companies in the world, and that was a big win.

Philip Morris International is a fortune 100 company that moved to Stamford. The UBS building in Stamford was empty when I took office and now it’s fully leased.

I think you’ll see probably 40 life sciences companies in New Haven. You remember, Alexion was gonna leave, but now they’ve doubled down in New Haven because they see value in the growing bioscience sector there.

Hartford, I got to watch carefully. People who work for the insurance companies can work from anywhere. It used to be you were worried about a Steve Cohen (the billionaire hedge fund manager and current owner of the New York Mets) saying ‘I’m out of here, I’m moving to Delray Beach, Florida.’

But now it’s the $150,000-a-year employee who says ‘I love working at Travelers, but I don’t have to do it from here do I?’

The commercial side is not growing quickly in Hartford, but the residential is booming. So the number of young people moving into Hartford is growing.

Q. UnitedHealthcare and Prudential recently announced major downsizings in downtown Hartford. Many other companies in the city are planning to reduce their office footprints. What’s going to happen with all the empty office space in Hartford and elsewhere in Connecticut as employers continue to embrace hybrid and remote work?

A. In Hartford right now we have three or four commercial buildings converting to residential. I think that makes a lot of sense.

I think you’ll see a lot of life sciences development in New Haven. I think you’ll see a lot of lab space growing there. I think you’ll continue to see a lot of development of distribution centers.

But, would I be a big investor in a new office building? Not right now.

Q. Does the state need to put more money into Hartford to convince landlords to convert some Class A office towers into new uses, like apartments?

A. We’ve done a lot through providing funding through Capital Region Development Authority, which has helped finance many of the apartment buildings in Hartford, and we’ll continue to, but we are trying to get a little bit away from the subsidy game.

Q. How do you think the remote/hybrid work phenomenon will impact CT’s economy overall and our ability to attract talent across industries?

A. I think it plays to our strengths. In 2021 we had tens of thousands of new families moving into the state. I think part of that was people coming from New York City, a great place to visit but people may not want to live there.

Q. There were 105,000 job openings in Connecticut at the end of June. What’s your assessment of the labor shortage and how has your administration been trying to address it?

A. Workforce development has been one of my main focus areas. Early on I raised up the Office of Workforce Strategy and appointed Garrett Moran and Kelli-Marie Vallieres to lead it.

I created the chief manufacturing officer position (currently held by Paul Lavoie) and appointed Kelli-Marie to lead the new Connecticut Workforce Unit, which is in charge of developing a statewide plan to promote workforce development.

We’ve made the biggest investment in workforce development in the history of the state, and we did it early. There is a real need for it.

If I can’t get Electric Boat 1,000 new people a year, the Navy’s gonna say we’ll build (submarines) somewhere else.

We are addressing workforce in two ways. We’re trying to get people who don’t have the skills, the skills they need. And then it’s getting our workforce participation up.

And a key part of that is ensuring we have adequate day care and child care, which we made a big investment in.

Q. How much has your administration invested in workforce development? Are there any initiatives that you’re really bullish about having an impact?

A. We have about a $100 million initiative in workforce.

One of the things I’ve tried to do is change the nature of credentialing. And sometimes experience is just as good as a credential, especially when I need people in the workforce now.

We announced a month or so ago, our certified nursing assistant program because there’s a shortage of nurses. Rather than two-and-a-half years, it’s a one-year program, and then you go out and you start learning while you’re earning.

The credentialing courses we’ve been putting together aren’t being put together by us, they are being put together based on what companies say they need and they help us put together the curriculum.

Q. Can you point to a significant economic development policy you’ve launched that’s benefited small businesses?

A. We’ve got the $75 million Connecticut Small Business Boost Fund program, a public-private partnership that provides low-interest loans to small businesses and nonprofits. I’ve got the banks all lined up, they are going to match our $75 million.

It provides loans of up to $500,000 with a 4.5% interest rate, which is low in this day and age. That gives you the opportunity to grow and expand.

For the larger companies I am more focused on investment in workforce development and making sure they have the employees they need to grow.

Q. You received some criticism over minimum wage increases and the paid family medical leave law. How would you assess their impact on the business community and climate?

A. I think on the minimum wage the progressives wanted me to raise it to $15 overnight. Some conservatives wanted to get rid of the minimum wage. We phased in the $15 minimum wage over five years.

I don’t think you could hire for $8 or $10 an hour anymore, so I think it was the right thing. I think it gave people some security. It helps me get people back into the workforce.

I feel the same way about paid family medical leave, but unlike other states, I don’t have small business paying for it.

I’ve got employees paying for it. It’s an insurance plan. Again, the big guys already do it. I think we did it right and it allows me to say Connecticut is a family-friendly state.

Q. The business community overwhelmingly opposed the captive audience bill that banned mandatory company meetings on certain issues, including labor issues. Why did you support and sign that bill?

A. I don’t want an employer proselytizing. If you want to talk to me about the job I’m doing, obviously, you could do that and that’s appropriate. But don’t proselytize on non-business items. I understand that it’s an issue that set some people’s hair on fire, but I’m okay with it.

Q. Pre-COVID you received a lot of criticism for your pursuit of highway tolls. Is that something you would consider in your next four years? Do we have adequate funding for transportation?

A. I don’t think there will be a need for tolls. The high price of gasoline has solved some of the transportation fund issues to the degree that we were able to suspend the 25-cent-per-gallon excise tax on gasoline (through Nov. 30).

We did pass the highway user fee (in 2021, which imposes a new mileage-based fee on tractor-trailer trucks using Connecticut highways.) That will be good for about $90 million to $100 million a year in new revenue starting in January.

A lot of people say you don’t need any more money for transportation because you’re getting all the free money from President Biden’s infrastructure bill. But that’s just nonsense.

I’m getting more money from the Feds, about $500 million more a year, but I have to match that up 20% to 30% and some of the funds are competitive grants that you have to match. So, I’m going to have to do an extra $100 million to $150 million over and above what we’re already spending on transportation.

We’re trying to balance that out over the next five years and see what our needs are.

Right now we have about $500 million in the transportation fund. I know we’re in good shape for the next year. I don’t think we are going to have to raise more money for the transportation fund.

But we’re going to invest in rail service and take probably 45 minutes off of a trip from Boston to New York. And we’re going to take some of these 100-year-old bridges and repair them.

Q. CT enjoyed a $4.3-billion budget surplus in fiscal 2021 and currently has a $3.3-billion rainy day fund, but still has long-term debt and pension issues. How will you ensure CT has fiscal stability moving into the next four years and beyond that?

A. Don’t let the politicians spend it all away, including the right and the left.

Republicans want to use the rainy day fund to pay for transportation. And I said that’s not what we said the rainy day fund is for. Having a full rainy day fund has allowed us to pay down over $5 billion in pension obligations.

On the other side of the aisle, Democrats, they’ve got a lot of spending plans, all of which take money away from paying down pensions and other obligations we’ve got.

But I think people have a pretty good idea that I’m the guy who is not going to raise your tax rates. who likes our rainy day fund, because our revenue streams are very volatile.

Q. What do you see as the biggest growth opportunities in Connecticut from an industry perspective?

A. I think our economy is transforming in a big way. I mean our anchor tenants, which is advanced manufacturing, anchored by the defense industry, are strong and getting stronger.

And by the way, they’re pretty recession proof. New Haven was a little irrelevant, no offense, during the computer science, social media and tech revolution, but they’re right at the heart of the future in terms of life sciences and biotech.

I’m a big believer in what New London’s doing outside of defense, in terms of developing the State Pier and growing wind energy.

Stamford and Norwalk’s growth is coming from fintech.

Q. What about the XL center in Hartford? Construction is underway to add a sports-betting facility, but do you see a big investment to modernize XL Center in your second term?

A. Yeah, but not by myself. I want somebody coming in alongside me who knows what they’re doing. I’m not just going to be the guy saying ‘Here it is. Here’s the taxpayer money.’

We’re talking to some potential partners that actually know how to manage an XL Center, a potential partner that has event venues in other parts of the country and can actually attract acts and events.

I think the facility is really important, it brings the region to life. But I’m not going to invest in it alone, I need a partner. (Los Angeles-based Oak View Group recently took over as manager of the XL Center and could be a joint partner/investor in a refurbished XL Center, HBJ previously reported.)

Q. How do you think the rollout is going for the recreational cannabis market?

A. I think it’s going slowly, but I’d rather go slowly and do it right then rush into something. We’ve got a lot of interest, starting with the cultivators.

My deal was, if we’re going to do it, we’re going to do it right, in a tightly-regulated market. I don’t want to surrender cannabis to the underground or black market. I think that’s dangerous.

Q. There’s been some criticism that the state’s cannabis program is not going far enough in terms of the social equity component. How do you respond to that criticism?

Fifty percent of the licenses are reserved for those who come from underserved communities or communities that were disproportionately impacted by the war on drugs.

I gotta get the right balance. I mean, some guys are putting up all the money. You want to make sure you have a partner there that knows what they’re doing. That requires some training and some controls. I think we’ll get it right.

Q. Do you anticipate the market will launch by the end of this year?

A. Yeah I do, by late in the year if I have to guess.