Politics & Policy

Rust Belt Connecticut

Connecticut state capitol in Hartford (Photo: Aaron Johnson)
The state is losing population and businesses, for reasons as much cultural as economic.

It has become a familiar pattern in Connecticut over the last few years. Each spring, as the state’s budget dips back into the red, legislators gather in Hartford to prognosticate over the state’s fiscal viability. They fumble around for agencies to cut, for taxes to raise, for concessions from the public unions. Eventually they reach, with the help of Governor Dannel Malloy, some sort of stopgap deal, enough to paper over the wounds for the present fiscal year but woefully insufficient to address the roots of the longer-term problem.

Connecticut is, in many ways, a state grappling constantly with the mistakes of past policy. The classic example of this pattern is the problem of unfunded pension liabilities. Among all the states in the union, Connecticut performs especially poorly in this regard: only 35.5 percent of its pension liabilities are funded. It’s tempting to pin the blame on current leadership, but that misses most of the story: The far more important factor is the rampant inability, or more likely unwillingness, of politicians over the last eight decades to fund the system adequately. The state has rarely, if ever, contributed the requisite amount to the system and indeed contributed nothing at all for the first 30 years of its existence.

The same pattern crops up in a different domain as well, one not strictly fiscal in nature but rather economic, one that might not threaten the immediate fiscal viability of the state but that certainly will in the long term. This is the long trend of jobs and people exiting Connecticut for brighter, better-performing environs. The most recent iteration is the health insurer Aetna’s announcement that it has begun negotiations with various states, New York prominent among them, to move its headquarters from Hartford, where it has been since its founding in 1853. One can point as well to General Electric’s impending move from the leafy suburbs of Fairfield County to the Boston waterfront — the announcement of this early in 2016 sent shockwaves through Connecticut politics. Or one can point to the $220 million incentive package — poli-speak for “bribe” — the state offered Sikorsky, the famed helicopter manufacturer, in exchange for remaining in Stratford.

The typical critique goes like this: To dig itself out of its fiscal hole, Connecticut has raised taxes exorbitantly, making the price of doing business in the state untenable and creating one of the country’s worst business climates; companies such as GE and Aetna are escaping these constrictions and indeed are receiving healthy sums to do so ($145 million from Boston and the state of Massachusetts in GE’s case).

But that angle of critique gets at only a small portion of the real issue. GE and Aetna are, after all, leaving for Massachusetts and New York, not uber-business-friendly Texas and Arizona. The real reason for leaving Connecticut is that the state has failed to prepare itself for the new, modern economy, and that to participate in the dynamism and innovation that marks certain sectors, companies must now look far afield from the suburbs of Hartford.

When Jeffrey Bornstein, the CFO of GE, was asked by the Wall Street Journal why his company had chosen to relocate, the answers he gave had little to do with relative levels of taxation or the promise of a favorable business climate elsewhere. Rather, he focused on social and cultural factors. In Connecticut, “there wasn’t a huge ecosystem around the company,” he said. “Attracting talent there was a bit of a challenge. For younger folks, [Fairfield is] maybe not the most dynamic place in the world.” Boston, meanwhile, features hundreds of thousands of students, multiple world-class universities, an “innate culture and tactical depth and talent.” Other cities offered more money, but only Boston could offer the “cultural fit and dynamism that [GE] saw in Boston.” Why confine yourself to the suburbs of Hartford and Fairfield County when the cosmopolitan metropolises of Boston and New York beckon?

Connecticut has none of what makes those cities glisten. Rather, it has for decades neglected its own cities to the benefit of its suburbs. It has done little to encourage its cities to become hubs of innovation and design. It has made a fetish of home rule and the peculiar New England system of small municipalities reliant almost solely on property taxes for revenue, a policy that has made the state synonymous with vast inequalities between even neighboring towns. Advocates of regionalization and revenue-sharing between municipalities have run into brick walls time and time again. Hartford and Bridgeport have stagnated and are wracked by crime, corruption, and a perennial lack of money stemming from a dearth of taxable property within city limits. New Haven, meanwhile, has managed to right the ship from the storms of the 1980s and early 1990s, thanks in no small part to the beneficent largesse of Yale University.

The Connecticut model worked quite well when the suburbs were the bastion of American life.

The Connecticut model, so to speak, worked quite well when the suburbs were the bastion of American life — it is no mistake that Richard Yates’s novel Revolutionary Road, ur-text of the 1950s, is set in tony Darien. But that era has faded, and a much-heralded urban age has taken its place. Connecticut is woefully unprepared for that. Pittsburgh, the feted champion of the new urbanism, went bankrupt in 2003 and has since undergone an impressive rejuvenation; with its nadir arriving just before the boom years, the once-beleaguered city was in a good position to capitalize on the urban renaissance. If Hartford goes bankrupt in the next few years, as looks increasingly likely, it will come at the worst possible time, potentially squandering a rare chance at rebirth and only greasing the wheels of out-migration and job loss.

Though the suggestion might seem outlandish, it’s not entirely inconceivable that large swathes of Connecticut will, 20 or 30 years from now, look much like the Rust Belt does today. Certainly a set of factors points in that direction. The state has lost population for three years in a row, and the exodus is only accelerating; The story is not a fiscal one, as migrants from greater Hartford are moving to more, not less, expensive places. The ongoing collapse of the retail sector, as wonderfully elucidated by Kevin D. Williamson, will hit Connecticut especially hard: The state has the highest number of shopping malls per capita in the country. Meanwhile towns and cities across the state, rural and urban alike, are plagued by the opioid epidemic, which killed nearly a thousand Connecticut residents in 2016 alone. Connecticut in 2017 seems like a state on the verge of — or in the middle of — an inexorable decline.

All of this is to say that prosperity is not permanent. Occupying a prime position in the economy of one era does not guarantee you that same position in the next. As the world evolves around you, you must either adapt or find yourself left behind. Connecticut has failed to perform the former and now faces the risk of the latter. In the face of this threat, the never-ending budget crisis in the halls of the capitol building can seem like something of a sideshow. There are far more pressing matters at hand.

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