State defense contractors brace for ‘sequestration’
Once unthinkable, dramatic cuts to the Pentagon's budget that would hurt Connecticut's defense industry are now looking more and more real.
The so-called sequestration could cost the state as many as 42,000 jobs, one study estimates.
Congress has a deadline of March 1 to find billions of dollars in cuts to the federal budget to avoid automatic, across-the-board reductions, half of them to the Pentagon's budget.
The looming cutbacks, on top of reductions to the Pentagon's 2013 budget, have caused defense contractors to retrench, stop hiring or even laying off workers and postponing expansion plans.
"There is a lot of frustration and uncertainty in the market," said Pratt & Whitney spokesman Ray Hernandez.
To plan for a sequester, the Navy plans to postpone $300 million in emergency repairs to the USS Miami, a Groton-based attack submarine that was damaged by suspected arson last year.
The Army plans to cut its helicopter training by 50 percent, so pilots wouldn't be able to fly enough to meet proficiency requirements. Cutbacks at flight schools would also leave the Army short about 500 aircrews for its fleet of helicopters. That could eventually affect Sikorsky's helicopter contracts with the Army.
Paul Jackson, spokesman for Sikorsky, said the company has created "hypothetical models" to cope with a new era of austerity. But he said the helicopter manufacturer is at the mercy of Congress and the Pentagon. "We need to get some real direction," he said.
Sequestration was approved in a 2011 deal to raise the national debt limit. It was designed to be so onerous that lawmakers would rush to replace it with targeted cuts to the federal budget. But that hasn't happened.
Robert Ross, executive director of Connecticut's Office of Military Affairs, said that with sequestration looming, work on certain projects has already stopped at the Naval Submarine Base New London, including the demolition of old buildings and other plans to modernize the plant.
"Things that we would like to get done, can't get done," Ross said.
EAST HARTFORD — A poll of 500 likely state voters by the conservative Yankee Institute placed Gov. Dannel P. Malloy’s approval rating at 54 percent — the highest measured yet. However, the bad news is that voters don’t like his proposed biennial budget (see related story), and only 42 percent of voters polled would vote to re-elect him next year.
The governor’s approval rating was up three points from a year ago, when it was 51 percent, which itself represented a significant improvement from June 2011, in the wake of the tax increases in Malloy’s first budget, when his overall rating was just 42 percent.
Paradoxically, however, just 42 percent of voters say they would vote re-elect Malloy next year, with 39 percent saying they would probably vote for an unnamed Republican opponent. Nineteen percent say they are undecided. The governor’s re-elect rating has dropped five points from a year ago, when it was 47 percent.
Furthermore, voters are deeply skeptical of the governor’s budget proposal. Given basic information about the budget, 54 percent of voter respondents described it as spending too much. Voters oppose its reliance on borrowing by a three-to-one margin, 68-21 percent. They oppose exempting cars from the property tax, 52-34 percent, when informed about the proposal’s impact on municipalities.
A narrow plurality of voters support the budget’s extension of tax increases on power plants, corporations, and insurance premiums, but only by a 44-39-percent margin.
By a 2:1 margin (56-27 percent), voters say Malloy’s First Five/Next Five initiative is a poor use of taxpayer money.
The partisan breakdown of the 500 respondents was 40 percent Democrat, 28 percent Republican and 32 percent independent.
Since 1992, state government spending in Connecticut has jumped 153 percent to more than $20 billion this fiscal year.
How did we get here? The state's population grew just nine percent over the same period. We've not seen any job growth in those two decades. Household median income certainly hasn't matched that pace.
And at the same time, the state’s budget deficit is ballooning, even with record tax hikes two years ago.
Five budget items account for much of this unchecked spending growth. State employee retiree health benefits jumped 981 percent over the last 20 years, while pension costs climbed 583 percent. Costs for servicing state borrowing increased 204 percent, Medicaid spending rose 180 percent, and corrections spending was up 178 percent.
By contrast, spending on education experienced the largest decline of any budget item over the last 20 years. Infrastructure investments also suffered. And the state's debt has more than doubled, climbing 142 percent.
The Connecticut Business & Industry Association (CBIA) recently released a report, Turning the Tide: Fiscal Policy Changes, Best Practices and Ideas That Work, that clearly illustrates how the state’s spending policies are as much to blame for the state’s current budget woes as the slow economic recovery.
What the report also makes very clear is that it’s time to adopt the type of comprehensive policy changes needed to control spending, develop fiscal discipline, and make government more efficient. There’s no better economic development strategy available to the state.
To be fair, Gov. Malloy's administration has tackled some of these issues over the last two years. Nonetheless, the challenges we face as a state demand a broad set of high-reward spending reforms that will help government become more efficient, effective and accountable.
The recommendations outlined in the CBIA report, including a number developed by the Connecticut Institute for the 21st Century and others adopted as best practices in a number of states, address five key areas of state government spending:
• Continuing to streamline state government — Recommendations include the adoption of lean techniques and other efficiency strategies, using performance-based budgeting in all state agencies and programs, upgrading the state’s information technology system, and modifying union rules to allow redeployment of employees based on priorities.
• Re-balance long-term health care — Proposals include providing home-based care when appropriate, shifting more Medicaid recipients to high-quality community-based programs, expanding the use of nonprofit agencies for services, and staffing increases for the state’s fraud prevention and control units.
• Reform the correction system — The report calls for an expansion of nonprofit programs, reforming corrections officer job classifications and work rules, implementing Connecticut Sentencing Commission recidivism reduction recommendations, overhauling medical retirement benefits, and engaging the business community in re-entry programs.
• Modify state employee retiree benefits — Major reforms include capping annual pension payouts at $100,000, eliminating the use of overtime in calculating pensions, increasing medical co-pays for future retirees, raising the retirement age from 62 to 65, and eliminating post-retirement medical coverage for new employees while switching them to 401(k)-style retirement plans.
• Expand use of quality nonprofit agencies — Proposals include requiring state agencies to use results-based accountability for assessing existing programs and services, streamlining current contracting procedures and cutting red tape, and allowing health and human services clients to more readily access community or home-based care.
Other states successfully implemented a number of the recommendations contained in the report, resulting in billions of dollars in savings and greater accountability to taxpayers.
Rhode Island, for instance, just raised the retirement age for state employees and increased employee pension contributions. Those actions should save taxpayers an estimated $3 billion over the next ten years.
In Illinois, reforms to that state’s Medicaid program, including switching recipients into managed care and monitoring eligibility requirements, will save over $2.5 billion.
By making the tough decisions needed to address our fiscal challenges, lawmakers will renew business confidence in Connecticut, giving employers the confidence to invest, grow and create jobs here.
If we continue to spend beyond our means, we’re putting our economic health at risk. We have an opportunity to turn the tide and restore sound fiscal practices and a healthy economy to Connecticut.
Nearly 500 small businesses benefit from new initiative
HARTFORD — What does it take for a state agency to produce dozens of happy small-business owners in Connecticut, a state not known as business-friendly? Quick service and responsive employees help — and $67.2 million in no-cost or low-cost capital certainly doesn't hurt.
On January 3, about 30 small business owners praised the administration of Gov. Dannel P. Malloy for doing what banks had refused in the past year: providing capital to expand in a weak economy.
There was Virginia P'an of Yumi EcoSolutions, a maker of biodegradable products that replace plastics. She said a $250,000 loan and $100,000 grant are allowing her small Norwalk company to supply national retailers like Williams Sonoma.
Marcia LeFemina of Pennsylvania Globe Gaslight, a North Branford manufacturer, called her company the "poster child" for economic development as a beneficiary of a $100,000 grant and help hiring ex-offenders and others.
Their companies were among 494 small businesses receiving financial assistance in the first year of the Small Business Express program, a product of the bipartisan special session on jobs in 2011.
Through the end of 2012, the program had made $27.5 million in grants and $39.7 million in loans, with another $38 million tentatively set to go to another 271 businesses.
Under the Malloy administration, the Department of Economic & Community Development (DECD) and its commissioner, Catherine Smith, have won strong reviews as a customer-friendly state agency.
The governor was told that the DECD rapidly walked the businesses through an application process that was painless, at least until the lawyers got involved. Several business owners called the closing process cumbersome and expensive.
Smith said the department was working on simplifying the closing procedure.
Smith said her department required only a one-page business plan, but some applicants could not show sufficient cash flow to qualify for a state loan. Others owed back taxes to state or local governments.
To qualify, companies must have been registered to conduct business for at least 12 months and they must be in good standing with all state agencies, particularly the Department of Revenue Services.
State officials say the program has "impacted" more than 6,300 jobs, with 1,738 to be created and 4,616 to be retained as a result of the financial assistance, which has leveraged about $40 million in private investments.
This story was originally published on CTMirror.com, where a longer version of it may be read.
Annual awards to be conferred Jan. 30
MILFORD — The Milford Chamber of Commerce will host its 58th annual Awards of Distinction and Annual Luncheon January 30 at Grassy Hill Country Club in Orange. During the event, winners of the chamber’s Awards of Distinction will be cited.
The 15 recipients are being honored for service to the Milford Chamber of Commerce, greater Milford’s business community, and the community at large. They include:
• Businessperson of the Year — Seamus Warakomski of Tri-City Heating & Cooling.
• Human Service Award — Former Milford schoolteacher and administrator Raymond G. Vitali.
• Public Sector Award — Milford City Attorney Jonathan D. Berchem.
• Community Service Award — 12345 Kids Count of Milford Inc.
• Corporate Award — Subway World Headquarters.
• Milford Chamber Director of the Year — Attorney Vincent J. Averaimo of Kapusta, Otzel & Averaimo.
• Ambassador of the Year — Steve M. Cooper, S.M. Cooper Photographic Artist.
• Lifetime Achievement Award — Gary Johnson, United Way of Milford.
• Milford Progress Inc. Economic Development Award — Milford I-95 Service Plazas.
• Milford Chamber ‘Green’ Award — Schick Wilkinson Sword.
• Friends of the Chamber — Dewey Forbes, Sales Marketing Associates & Greyson Schwing, Antelope Web.
• Small Business of the Year (fewer than 50 employees) — Orange Ale House & Grille.
• Health & Wellness Council — Traci O’Brien, Anthem Blue Cross & Blue Shield of Connecticut.
• Business Image Award — Bridge House Restaurant.
Like it or not, get ready to pay tolls on our interstates and parkways. Transportation officials in Hartford say there’s just no other way to raise badly needed money for overdue infrastructure repairs. Tolls may not be popular, but neither are collapsing bridges.
In the last decade’s debate on highway tolling, here are the five biggest lies that opponents have used to stall the return of highway tolls:
1. The federal government won’t let us — Also known as “We’ll have to return millions in federal funding.” Not true, as U.S. Department of Transportation officials told us at a South Western Regional Planning Agency-sponsored meeting in Westport years ago. The federal government regularly allows tolls to be used as traffic-mitigation and revenue-raising tools.
2. Our highways should be free — So should ice cream and doughnuts. Nothing is free, including the cost of repairing I-95 and removing snow from the Merritt. Gasoline taxes come nowhere near to raising the needed revenue. Driving is a privilege, not a right. It should come with a cost.
3. Tolls will slow traffic — It’s not 1965 anymore. Tolling doesn’t require highway-wide barriers with booths and gates. Just look at the New Jersey Turnpike or Garden State Parkway, where barrier-free tolls using EZPass allow you to pay at 55 mph.
4. Tollbooths cause accidents — See No. 3 above. This happened once, 29 years ago, in Milford, and was used as an excuse to end tolling in the state. If toll barriers are unsafe, why don’t fiery truck crashes happen daily at the hundreds of other toll barriers around the U.S.?
5. Highway tolls will divert traffic to local roads — This may be true, for about the first week. If people would rather drive for free on the Boston Post Road than pay 50 cents to save an hour by taking I-95, let ‘em. Few drivers are that cheap, or stupid.
Trust me, I know about tolls and tollbooths. I spent three summers in college working as a toll collector on the Tappan Zee Bridge. Back then the toll was only 50 cents to cross the mighty Hudson, but people still didn’t like paying it. (Today the toll is $5.)
Connecticut pioneered toll roads as early as the late 18th century. But today our state is facing billions in overdue bridge and highway repairs. And federal aid for transportation may be cut by a third. So why are we in this current mess? Who’s to blame? Us!
We’re the ones who stupidly pushed Connecticut lawmakers to cut the gas tax 14 cents a gallon in 1997. And we’re the ones making it political suicide for legislators today to say they support tolls, even though they know tolls are inevitable.
Pick your poison: “free” driving on pothole-filled highways with collapsing bridges — or pay a few bucks for a safe, speedy ride.
I vote for the tolls.