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Rewriting
the Book
Spending restraint marked Weicker budgets, report says
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Business New Haven
12/4/1995
By: BNH
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Higher tax burdens and budget stability were the hallmarks of state budgets under the administration of former Gov. Lowell P. Weicker Jr., but there was a surprising measure of spending control. So says the Connecticut Policy & Economic Council's (CPEC) Annual Report on the State of Connecticut, released last month, which details state budgetary trends for fiscal years 1992 through 1995.
According to CPEC President John J. Carson, “Although total state spending increased significantly during the period (almost 29 percent), it is also the case that excessive spending was confined to three hitherto intractable areas: health care for the uninsured or underinsured, debt payments and prisons, and spending for the rest of the budget was cut back or only modestly increased.”
The report notes that the legislature and the administration of Gov. John G. Rowland have begun to grapple with these high-growth areas in the current biennial budget through such initiatives as enrolling welfare recipients in managed health-care networks, reduced binding and privatizing some prison services.
“If these and other reforms take hold over the Rowland term,” Carson says, “the state will finally complete the downsizing started in the previous administration.” If the budgeted growth rates of three to four percent are adhered to, according to CPEC, spending would fall within projected increases in aggregate personal income for the first time in a decade (see chart).
Despite the perceived positives of the Weicker years, CPEC nevertheless notes that current state tax burdens have reached their highest-ever levels and are more out of line with other states than at any time previously. That, says Carson, is the price corporate and individual taxpayers paid for budgetary stability during Weicker's term.
“Connecticut must make the reduction of the tax burden on residents and businesses a top priority if we are to get the economy moving again,” Carson says. “The question remains: Will the lower taxes promised during the Rowland years come at the price of increased state and local fiscal instability, and if so, would this necessarily be a bad thing?”
When Winning Isn't the Only Thing
UConn program aims to train managers for non-profits
From high schools to graduate schools, academia's quest to prepare young people for the world of business and management stretches back nearly a century in America (see page 17). Now the University of Connecticut has designed a new curriculum to advance the understanding of a hitherto little-studied realm of business endeavor: the management of non-profit organizations.
UConn's Advanced Certificate Program in Nonprofit Management, recently created by the school's Institute of Public and Urban Affairs and Institute of Public Service (IPS), consists of seven courses for current and future managers of non-profit organizations.
Courses are held weekday evenings for the benefit of those already in the work force. Program instructors hold graduate degrees and have experience in the non-profit sector.
Program courses include the required “Managing Nonprofit Organizations in the 21st Century” and elective offerings including “Financial Management of Nonprofit Organizations,” “Fundraising, Grant and Proposal Writing,” “Marketing and Strategic Planning,” “Nonprofit Organizations and the Law,” “Human Resource Management in the Nonprofit Sector” and “Leadership and Effective Management.”
The program combines graduate-level coursework and experiential learning to provide managers with practical information to improve skills, abilities and information potential managers need to succeed. The only prerequisite is a bachelor's degree from an accredited college or university. Also, students who earn the certificate may qualify for a waiver of up to 18 credit hours towards a Master of Public Affairs (MPA) degree from UConn.
Information about the program is available from UConn's Institute of Public Service or by calling 800-486-2828.
Ignorance
Is Bliss?
Family-owned firms confident of future, but may lack key information
Family-owned businesses in Connecticut anticipate increased revenues and additional hiring over the next five years, according to an Arthur Andersen survey of family businesses with revenues in excess of $1 million. On the downside, those same firms express reservations about competition, regulatory burdens and recession.
The national survey, sponsored by Arthur Andersen's Center for Family Business and conducted during June with Kennesaw (Ga.) State College and Loyola University/Chicago, included nearly 3,900 family firms. Of those, 33 were in Connecticut, with median company characteristics being 40 years old, employing 60 workers and with annual revenues of about $8 million.
Of these, 88 percent expected their revenues to rise of the next five years, and 49 percent expected to hire additional workers over the same period. The biggest threats to their business' survival, they said, was competition, health-care costs and succession planning.
The latter may play a key role since nearly one in three CEOs (32 percent) of the Connecticut companies surveyed planned to retire over the coming five years, with an additional 29 percent planning semi-retirement. Even so, nearly half the firms (47 percent) had yet to designate a successor. Says Philip G. Kupperman, Hartford's associate director of the Arthur Andersen Center for Family Business, “This could indicate a fundamental crisis surfacing soon in the economy, as businesses struggle with inadequately planned management and ownership succession throughout the next decade.”
Additional survey findings: Nearly half (46 percent) of family businesses have strategic plans, but that information is not always shared with the company's management. Nearly one-third of these companies say management has little or no knowledge of ownership's strategic plan. “While it's good that so many have strategic plans,” says Kupperman, “businesses should be concerned about implementation due to management's lack of involvement in the process.”
An additional frightening survey result is that 30 percent of family businesses have “little or no understanding” of the amount of estate taxes that will become due upon the death of the senior generation running the business. According to a November 20 story in Business New Haven, federal estate taxes for a $3 million business weigh in at 55 percent.
Removing the 'Remnants of Regulation'
Blumenthal calls on DPUC to cut telehone rates by more than 20 percent
State Attorney General Richard Blumenthal is urging state utility regulators to cut the rates the phone company charges customers for local calls by more than 20 percent because of present and anticipated cost savings associated with competition in the telecommunications industry.
In a November 28 brief to the state's Department of Public Utility Control (DPUC), Blumenthal called for an overall reduction of $175 million, which would cut local rates by $150 million and other non-competitive services by about $25 million.
“Competition enables even greater efficiencies and lower costs for SNET - savings that should benefit consumers,” Blumenthal said. “Removing the remnants of regulation, now insulating SNET from the powerful forces of competition, should mean dollars and cents in consumers' pockets.”
The DPUC is considering the level of price restraints as part of alternative regulation for telephone service, being adopted because of new laws that pave the way for more competition in telephone service.
SNET has countered that the Blumenthal proposal would hurt SNET and the state's economy. The company has instead offered to freeze rates.
Blumenthal said that SNET's proposal would not reduce rates for non-competitive services, and said that concumers who have no choice but to use SNET for those services would pay inflated charges to subsidize SNET services were competition exists.
“Ratepayers should not be compelled to bear the full burden for costs that more appropriately should be paid by shareholders,” said Blumenthal. “Our proposal would spare ratepayers from these burdens and avoid [giving] SNET an unfair advantage in competing with other companies that provide telephone services.”
Good News for Bad Guys
Even G-men find Elm City real estate not to their liking
Several New Haven area building owners recently received Dear John letters from the General Services Administration (GSA) regarding the agency's search for new facilities for the Federal Bureau of Investigation (FBI). Currently the FBI has offices at 150 Court Street and utilizes approximately 35,000 square feet in New Haven. The new location is expected to require more than 60,000 square feet and more than 100 parking spaces. The rub for downtown building owners is that the FBI is willing to relocate far out of either downtown or New Haven itself, going as far afield as Exit 55 off I-95 in Branford, Milford to the west and Hamden to the north.
Salvatore J. Brancati Jr., the city's director of business development, expressed his concern to the GSA when news of its intention to seek properties outside of New Haven was revealed. In a letter to the GSA Brancati wrote: “As an institution, the FBI carries with it a powerful image of federal prestige, public safety and job stability. By remaining in downtown New Haven, the Bureau will send a clear message to the region that it believes in the city and its ability to remain in the prosperous center of southern Connecticut. Conversely, should the FBI relocate to another area, it will surely be looked upon as lack of faith in New Haven as a place in which to operate.”
A. Walter Esdaile, the city's development administrator, says of suburban locations, “That is something we were taking very strong offense to, because I believe there is some federal legislation about federal agencies moving out of inner cities.”
The properties considered and reportedly rejected are in a variety of locations throughout the city, including One Church Street (a former Shawmut Bank building), 640 Chapel Street (a former SNET training center), 900 Chapel Street and 1 Long Wharf Drive. Insiders claim that the unoccupied U.S. Surgical building in North Haven has the inside track. The GSA declines to say what properties are still considered. Says a spokesperson for U.S. Rep. Rosa DeLauro, “The FBI is still telling us they are not moving out of New Haven.” A final decision is expected by February.
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