UCONN Economists: more borrowing will lift state Sen. Boucher: wrong direction

September 23, 2013

Hartford, CT – Senator Toni Boucher (R-Wilton) responded to a recent report conducted by the Connecticut Center of Economic Analysis. The report entitled, The Connecticut Economic Outlook: September 2013, suggested more borrowing and spending will lift the state out of the economic doldrums. State Senator Boucher, a member of the Finance Revenue and Bonding committee said that this was the wrong direction for the state to be taking.

“More borrowing is not going to get the state out of this mess. This action could further deteriorate our bond rating,” said Sen. Boucher.

The report published by newspapers around the state suggests job growth in the state could brighten dramatically — adding as many as 29,000 jobs in 2014 if the state invests in projects and programs financed through the sale of bonds.

“We do need to address our infrastructure needs, but massive borrowing ($6 billion un-issued bonds) is not a way to address long-term job creation. Instead, we need to lower taxes to help businesses to keep their structural costs low over the long term. To do that, we have to address spending,” added Sen. Boucher. “This administration increased state spending by almost 10% in the next two years and nearly 16% since taking office. That is not responsible given the huge debt our state faces.”

Connecticut has only recovered 51.3 percent of the jobs that were lost in the March 2008 – February 2010 employment recession. In order to fully recover Connecticut needs to add 59,000 jobs, according to Labor Department officials.

Boucher also points to statistics from the Department of Labor that state: From August 2012 to August 2013 Connecticut’s “nonfarm payrolls” grew by 15,400, or 0.94%. During the same period, U.S. nonfarm payrolls grew by 1.65%, nearly twice Connecticut’s rate.

Boucher says Connecticut has a long way to go. An economist with the Connecticut Business and Industry Association recently suggested the financial services sector is one to watch.

“Unfortunately, we do still see weakness in financial services,” says Connecticut Business and Industry Economist Peter Gioia, “and that’s a concern going forward.”

“This pattern of unsustainable borrowing and spending at a time when the state’s future debt is one of the highest in the country does not engender confidence in businesses planning for the future,” stated Boucher.

Policies enacted to support this high rate of spending and borrowing such as the 20% surtax on corporate profits and the state $250 business entity tax are wrong and add even more downward pressure on job growth.

To see the full UCONN report visit http://ccea.uconn.edu/forecasts/CTOutlook_2013Sep.pdf