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On Feb. 20, Connecticut’s newly elected Gov. Ned Lamont SOM ’80 will unveil his budget proposal to the Connecticut General Assembly for the next fiscal year, as the state’s economic growth flounders at the bottom of the U.S. Bureau of Economic Analysis state rankings.

During elections, Lamont focused his campaign around his savviness in business, drawing on his experience as a successful telecommunications company owner with immense personal wealth. He appointed former Hartford Chief Financial Officer Melissa McCaw as the secretary of the Office of Personnel and Management, who oversaw Hartford’s finances as the city verged on bankruptcy before a state bailout in spring 2018. After the budget is proposed, it will advance to the Finance and Appropriations committees of the Connecticut General Assembly before a full vote — which will likely take place before the legislative session ends in early June.

“[The budget] is an immensely complex issue,” said University of Connecticut economics professor Fred Carstensen GRD ’76. “We have somewhere between a $1.5 and $2 billion deficit — and part of the reason for that is that we have a very dysfunctional revenue system.”

Despite having one of the lowest poverty rates and one of the highest median incomes in the country, Connecticut was only one of three states that did not report an increase in real gross domestic product growth in 2017, according to the Bureau of Economic Analysis.

A consensus revenue report from Jan. 15 noted that the Office of Personnel and Management and the Office of Fiscal Analysis estimate a general fund revenue total of $19.5 billion for the fiscal year 2019 — compared to estimates of $18.1 billion, $18.3 billion and $18.1 billion for the next three years. The report also estimates annual revenues of around $1.8 billion for the special transportation fund.

Carstensen attributed Connecticut’s revenue-raising difficulties to its complex sales tax system — which exempts various goods from taxation — and to the lack of flexibility in the tax code, which heavily relies on sales and income tax, while other states also depend on revenue streams like tolls.

During his State of the State address on inauguration day, Lamont outlined his priorities and vision for the budget.

“We cannot afford to let the next four years be defined by a fiscal crisis. The fate of our great state is on a knife’s edge,” Lamont said on Jan. 9. “Let’s fix this damn budget, once and for all!”

He also expanded upon four goals to promote economic revitalization — building an “all-digital government,” investing in urban centers by attracting top talent and companies, improving infrastructure and better preparing the workforce for high-quality jobs.

In spite of the state’s economic turmoil, state Sen. James Maroney ’96, D-Milford, predicted that the budget would likely take “small steps in the right direction” to stabilize the revenue stream, rather than make radical changes. In an interview with the News, Maroney said it is unlikely the governor will propose a major overhaul of the state’s sales tax system or a significant increase in taxes to fix the state’s financial woes.

In the coming months, the General Assembly and the governor’s office will seek to avoid another budget negotiation like the 2017 deadlock. In 2017, legislators from both parties eventually locked former Gov. Dannel Malloy out of the negotiations before reaching a deal following a 123-day budget impasse, the longest in state history.

Sacred Heart University political science professor Gary Rose attributed many of the difficulties that Lamont faces in crafting a budget to the fact that Malloy — facing significant obstacles — did not adequately reform the state’s pension liability, entitlement and Medicaid programs, which make up around half of the budget.

“Ned Lamont has to pick up the pieces left by his predecessor,” Rose said.

In his inauguration speech, Lamont stressed the potential of Connecticut’s workforce and the state’s appeal to companies considering moves.

“We do not have silicon, we don’t have natural gas, but we have always had the best educated, best trained, most productive, most inventive workforce in the world,” Lamont said in his address. “Companies roam the globe looking for talent. Look no further, you can stop right here.”

Carstensen said that the state can better attract companies offering well-paying jobs by improving transportation infrastructure and encouraging collaboration between the private sector and educational institutions like Yale and the University of Connecticut.

In 2016, Connecticut’s GDP was $230 billion.

Nathalie Bussemaker | nathalie.bussemaker@yale.edu