Economy & Business

Connecticut’s Bad for Business

Connecticut state capitol building in Hartford (John Bilous/Dreamstime)
But the problem can be solved.

It hasn’t been a good year for Connecticut. The state’s perpetual budget crisis has continued unhindered, with no resolution on the horizon. The state’s junior senator garnered national fame for a 15-hour filibuster on gun control replete with falsehoods and rank inaccuracies. The opioid crisis has swept across its cities and towns; on a single night in New Haven in June, 16 people overdosed. Companies have picked up and left the state, taking their jobs with them; almost half of its residents would leave, too, if they could. The state’s governor, the second-term Democrat Dannel Malloy, seems more preoccupied with high-publicity PR stunts not-so-subtly designed to garner him a cabinet position in the Clinton administration than with addressing the root causes of the state’s dire straits.

And so has come the bad press, mostly outraged at the presence of vast inequalities within Connecticut’s small geographic boundaries. Perhaps the most damning was an article earlier this month in the New York Times, casting light on the educational disparities that characterize the school systems of Fairfield and Bridgeport — adjacent cities, but one a post-industrial wasteland and the other a glitzy suburb. The origins of these disparities present intriguing questions. To what extent are they determined by funding inequities? Are there other explanations?

Let’s start with a look at spending numbers on a per-student basis. If you’re inclined to view educational outcomes as having a one-for-one correlation with funding per student, these are likely to surprise. New Haven, featuring a perpetually beleaguered and fairly depleted school system, spends $17,200 per student. Fairfield, the wealthy town right next door to Bridgeport, actually spends less — just under $16,000. Waterbury, one of the poorest cities in the state, spends $15,000 per student; West Hartford, regarded by all as some sort of suburban Zion, spends $500 less. Hartford spends $19,400 per student, more than the New York exclaves of New Canaan and Darien and more than the shoreline oases of Madison and Guilford. Wealthy towns may, on average, spend more per student than poorer towns and cities do, but it’s not a hard-and-fast rule; sometimes poor towns spend more, and sometimes they spend less. In any case, spending can’t explain it all.

So is it possible that Connecticut’s admittedly vast disparities in educational quality across districts result not from funding gaps, but instead from factors more endogenous to those districts in the first place?

Take, for example, Bridgeport and New Haven, similar cities whose school systems bear unmistakable resemblances. Though New Haven does spend a fair amount more per pupil than does Bridgeport — $17,200 to $13,900 respectively — their test scores at the fifth- and eighth-grade levels are relatively similar. Perhaps the most obvious similarity between the two districts is that both have stunningly dysfunctional boards of education.

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To recount some darkly amusing examples: When New Haven added two elected members onto the board last year, the city quite literally miscounted, and ended up with eight members where only seven were permitted by the charter. The saga ended with the city council suing the mayor; eventually, they reached a negotiated settlement that involves one board member sitting out each meeting. Meanwhile, the superintendent has been forced out two years before the end of his contract, for apparently no good reason. The board itself has descended into bitterly personal partisan acrimony, with sessions lasting well into the night and board members regularly engaging in shouting matches.

Bridgeport’s board can’t claim to be doing much better. It’s been in a state of semi-permanent crisis for at least five years: They spent 2011 and 2012 dealing with an attempted state takeover of the board, which ended with a Connecticut supreme-court opinion ruling the takeover illegal. The budgetary woes never ended, though, and now the board’s chairman has demanded the resignation of one particularly troublesome member, Maria Pereira, and has canceled a board meeting in protest. Pereira has in turn sued the mayor — himself an ex-felon who spent years in prison for running a pay-to-play scheme out of City Hall in his previous stint as mayor of Bridgeport — for allegedly improperly naming a replacement to the board. Above all this, Bridgeport, like New Haven, is currently without a permanent superintendent. If you’re looking for a guiding vision, you’d be hard-pressed to find one.

Of course, there’s no use denying that at least some of this turmoil results from the fiscal difficulties faced all too often by cash-strapped cities across the country. It’s no coincidence that richer towns have, for the most part, less rambunctious, more civil politics. But maybe some of this damage is self-inflicted, the result of an inability to rise above petty, factionalist squabbling in the school systems’ governing bodies — a crisis of leadership as much as a crisis of funding. Blame inequitable funding for some of it, sure. But infighting is not the only response to nagging fiscal troubles. Connecticut’s troubled cities would do better to look inward than to blame external factors, to ask how they can improve themselves and their culture.

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The problem clearly extends beyond education, and people are looking for scapegoats for Connecticut’s broader problems. One theory is that the finance industry bears a substantial degree of culpability. That’s the claim made in a recent Atlantic article titled, simply and revealingly, “Finance Is Ruining America.” The argument of writer Alana Semuels is that finance is ruining Fairfield County, at least, because of “what it isn’t doing: providing good middle-class jobs”: “Those in finance are . . . focused on earning more money” because of the “relatively low tax rates for those who make the most.”

The blame here seems misplaced. For one thing, Connecticut’s tax system is currently so dependent on the incomes of Fairfield County high-earners — as Governor Malloy has often made clear — that even the slightest variations can trigger a budget crisis, as happens once every three or four months. To say that the finance industry bears the moral burden for Connecticut’s travails seems an odd thing to do when the high incomes of those working in that industry are practically the only thing standing between Connecticut and fiscal oblivion. This is not to say that the role of finance in Connecticut’s travails does not merit inquiry; rather, it is to argue that finance lies somewhere near the bottom of a long list of factors in explaining the current state of Connecticut.

Semuels hints at a deeper explanation in her recounting of the tale of General Electric. This explanation posits that Connecticut is simply no longer a good place to do business in the 21st century. GE’s story is a familiar one: Its executives made millions, but the company closed down its plant in Bridgeport, as part of the general collapse of manufacturing employment in southwestern Connecticut. One fact, though, goes curiously unmentioned in Semuels’s piece: that GE recently decided to relocate its headquarters from suburban Fairfield to Boston. Much political acrimony and vitriol flew around Connecticut in the wake of this January decision; some accused GE of seeking a better tax deal in Massachusetts, while others felt its intentions were more benign. It seems that the latter camp has the stronger case: Rather than stick around the apparently stagnant environs of southwestern Connecticut, GE wanted to decamp to the Boston area, the hip symbol of the 21st century’s urban renaissance.

Connecticut lacks middle-class jobs because of its long-decaying business climate.

There’s another data point to support this thesis. When companies decide to stay in Connecticut — announcements typically accompanied by great ceremony on the part of Governor Malloy, who is desperate for any good press — they seem to do so less out of pre-existing intention and more owing to massive state subsidies. Sikorsky, the renowned helicopter manufacturer, recently announced that it would retain its headquarters and 8,000 jobs in Stratford; the price of its continued presence was $140 million in grants and $80 million in tax breaks. That Sikorsky probably would have followed GE’s path out of the state without that offering suggests to me that Connecticut just isn’t a good place for business anymore — unless the state opens the coffers. The lack of middle-class jobs in Connecticut cannot be explained by an overreliance on finance in one of the state’s eight counties; rather, it has far more to do with Connecticut’s long-decaying business climate.

What has pushed Connecticut in such a direction? There’s a long list of causes: burdensome regulations, the second-highest tax burden in the country, restrictive zoning rules, high costs of labor, a lack of meaningful regional cooperation, clogged highways, crowded trains, and overall inadequate public transportation. None of those are immutable; most could be changed through the political process at the state or municipality levels. To do so could do a world of good for Connecticut. But beginning that process requires honesty about the causes: Blaming inequalities in education funding or the prominence of finance in Fairfield County’s economy are poor places to start.


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