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Will Connecticut's Government Stall Economic Rebound?
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Business New Haven
5/12/2003
By: BNH
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Driven by growth in the defense industries, an expanding education industry, a steady increase in tourism and a slowly recovering tech and industrial sector, Connecticut's economy is likely to begin turning convincingly upward over the next several months.
Long forgotten and much maligned, Connecticut's defense contractors are seeing steady increases in funding across a broad product line of high-tech weaponry and gadgetry that so recently affirmed why American defense technology is the envy of the world.
The glass will likely remain only half-full, however, at least for some Pratt & Whitney workers: A reduction in two F/A22 jets in the current defense budget will likely cost 80 production jobs on the line that produces the F119 engines that power the Raptor.
Proof that even in the worst VC market in a decade, the technology sector can still finance a good idea can be found on page eight of this edition, as New Haven-based Rib-X Therapeutics completed a $63.5 million round of financing for a total of more than $73 million within the past 14 months.
However, we doubt that a recovering economy will translate into much good news for the state's budget problems. Like many others, we expect state and municipal tax revenues to continue to fall below expectations, and costs to continue to exceed budget projections. Unlike private industry, Connecticut's state and municipal governments continue to avoid the changes necessary to correct spending assumptions that were based on a "bubble" economy.
Nothing short of a radical overhaul are likely to address the problems created by an outsized and overcompensated public sector. The continued failure to address health-care costs, particularly for the baby-boomer generation, further assures that absent the politically unpopular taxing of benefits, Connecticut will continue to see sub-par revenue gains.
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