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March 17, 2020

Lamont admin. in early talks about economic stimulus package

HBJ Photo | Steve Laschever Department of Economic and Community Development Commissioner David Lehman

Gov. Ned Lamont’s economic development team is in talks with state lawmakers about a potential stimulus package, but what gets proposed will likely depend on how long the coronavirus public health scare goes on, a top administration official told Hartford Business Journal.

“We are having conversations with the legislature and it’s on the front burner,” said David Lehman, commissioner of the state Department of Economic and Community Development. “If the economic impact from this is longer and broader than what I think it should be, then everything is on the table, whether that is a new program similar to what was done at the beginning of the Lamont administration where we worked with the banks on a new small business lending fund [for federal workers impacted by the government shutdown] or something else.” 

“The longer economic activity slows down the harder it is to get the economy started,” Lehman added, talking Monday by phone from his Greenwich home. (Lehman, who is also Lamont’s top economic adviser, says he will be working from home some days and be in Hartford others as the COVID-19 pandemic continues to spread throughout the state.)

Lehman said so far he approves of his bosses handling of the outbreak and that an aggressive response is needed to reduce the longer-term economic harm. 

On Monday, Lamont ordered all Connecticut bars and restaurants to halt dine-in services, while movie theaters and gyms were also shuttered. The state’s two tribal casinos also agreed to close their doors beginning at 8 p.m. Tuesday.

“We have to take our medicine quickly to make sure we recover quickly both from a health and economic perspective,” Lehman said. 

Photo | CT Mirror
Gov. Ned Lamont flanked by (from left) Fran Rabinowitz, the leader of the state’s superintendent\s association, Education Commissioner Miguel Cardona, Josh Geballe, his chief executive officer, and his wife Ann Lamont

Lehman said he can’t predict how bad of a hit the economy will take but he doesn’t think it will be as bad as the Great Recession in terms of unemployment. However, the state and nation could see a loss of output equivalent to that time period. 

He said he’s seen estimates of up to a 7% to 8% decline in output, which would be the worst decline since the fourth quarter of 2008, when the financial crisis really began spinning out of control.

“The real question in my mind is the duration of this thing, is it a two to three to four month thing or a six or nine month event,” he said. “It’s my view that this is certainly having a big impact but there is no precedent for this where parts of our economy literally stop. What’s challenging here is that what is right from a public health perspective is counter to the way our economy is set up and works.”

From an economic development perspective Lehman said he’s been focused on three “buckets.”

First, is what the state and his agency can do right now to respond through executive order or without any legislative approval. DECD has already announced a loan forbearance program for any companies that currently have state government loans. The Department of Labor is also making broader use of unemployment insurance benefits and the U.S. Small Business Administration announced on Monday that Connecticut small businesses are now eligible for federal emergency loans of up to $2 million.

Second, is determining what residents and businesses are going to need in the medium term if they don’t get benefits already available to them from the state or federal governments.

Third, is figuring out what to do to stimulate the economy when we are at the tail end of the health crisis.

Lehman said he and other administration officials are in talks with legislative leaders about potential programs, whether they be incentives or tax credits, but nothing is finalized yet largely because the situation is fluid and there is no clear sign of how long the pandemic and downturn will last.

He said he doesn’t want to replicate programs being adopted by the federal government and isn’t sure if a small business loan program will be needed. He said the SBA will be able to get its disaster loans out more quickly. Also, banks in the state have money to lend to small businesses, unlike during the last financial crisis, when lending ground to a halt. 

“This is not a financial crisis,” he said. “Banks have a lot of liquidity.”

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