Harding pleased $46 billion state budget has 'zero tax increases'

By Scott Benjamin

BROOKFIELD – State Rep. Stephen Harding (R-107) says the General Assembly delivered a split decision: A $46.4 billion two-year budget with no tax increases but a bill to implement it that “had plenty of red flags.”

The fourth-term legislator from Brookfield praised Gov. Ned Lamont (D-Greenwich) for resisting efforts by the General Assembly’s Progressive Caucus to increase taxes on the wealthy for the fiscal cycle that starts July 1.

“Ultimately there were zero tax increases,” Harding remarked in an interview with Patch.com.

However, he indicated that the implementer was similar to congressional earmarks, where funding is directed by individual lawmakers for projects but the sponsor is not necessarily evident.

CT Mirror reported that the Republican minority complained that the 837-page budget implementer “was less about fiscal policy than an exercise of raw power by the Democratic majority.”

Harding said the state has benefited from the volatility and revenue caps that was established in the 2017 bipartisan budget agreement.

Under those provisions, when there is a surge of investment income taxes the money is directed to the rainy day fund and when the rainy day fund reaches 15 percent of the budget, the additional funds are utilized to pay for state employee pension benefits and the teachers’ retirement fund, which the state has financed since 1939.

“It has turned out to be effective,” Harding exclaimed.

The state has $4.5 billion in its rainy day fund and is poised to complete the fiscal year on June 30 with a $470 million surplus, according to The Wall Street Journal.

However, Donald Klepper-Smith of DataCore Partners, who was chairman of former Gov. M. Jodi Rell’s (R-Brookfield) economic team ,recently told Patch.com that Connecticut’s economy is currently “artificially inflated” from federal stimulus money and the current status cannot be sustained over the long run.

Harding says now that the pandemic is subsiding, Lamont and the General Assembly should tackle a state employee pension system that is, according to a Fitch Ratings report of last fall, the second worst in the country, behind Illinois.

“[Lamont] has the political capital now to do things like that,” he said of the governor’s poll ratings, which has improved considerably as a result of his handling of the pandemic.

Lamont noted recently that Connecticut state government recently received three credit rating upgrades, as it has been able to place more money in its rainy day fund and has begun to better fund its pension system.

However, Keith Phaneuf, the budget reporter for CT Mirror, told a Wilton League of Women Voters forum in April 2019 that Connecticut faces a massive challenge since its employee pensions were structurally under-funded each year from 1939 through 2010.

Leonard Gilroy and Steven Gassenberger of the Reason Foundation wrote recently in the Wall Street Journal that the Texas state Legislature has passed “a major pension reform that tackles the Employees’ ’Retirement System {ERS] of Texas’ nearly $15 billion in pension debt.”

They added, “The reform legislation commits Texas to paying the bill for retirement benefits promised to workers by shifting the ERS to actuarially based funding and a fixed payoff schedule. The new law also enters all future employees into a new low-risk “cash balance” retirement plan that provides a guaranteed minimum 4% return on investment along with the portability of a 401(k). In short, the reforms would enable Texas to keep the promises made to current and retired workers but would stop making unsustainable pension promises to workers in the future.”

Harding exclaimed, “That is an example of reforms that the governor and our legislature should at least be considering moving forward to addressing our growing obligations.”

On another subject, he said he was pleased that the General Assembly approved tax incentives to computer data centers – a recommendation that was made by state Department of Economic & Community Development Commissioner David Lehman of Greenwich.

University of Connecticut Finance Professor Fred Carstensen – the director of the Connecticut Center For Economic Analysis - told Patch.com in 2020 that, "Neighboring states – Rhode Island, Massachusetts and New York – have well-developed digital technology data storage systems," he said. "Connecticut doesn't have that. It is about the equivalent of driving along I-95 with no exits to go to,"

Harding also applauded the General Assembly’s approval of expanding “Connecticut’s investment in fuel cell” technology.

Danbury, for example, has the administrative offices for Fuel Cell Energy. Much of the company’s manufacturing is done at its Torrington facility.

Connecticut was once apparently primed to become the leader in hydrogen technology. During his primary race for the U.S. Senate in 2006 against Lamont, former U.S. Sen. Joe Lieberman (D-Stamford) told The Litchfield County Times that in 25 years – 2031 - more people will be employed in fuel cell technology than any other sector of Connecticut’s economy.

UTC Power in South Windsor had the contract for fuel cell installations with NASA from 1966 to 2010 and was once considered the granddaddy of research in the field.

Said Harding, “It hasn’t grown at the rate that some officials first believed. But I think there is strong potential for fuel cell development in Connecticut.”

Harding, who was initially elected in a February 2015 special election, said that the municipal finances in the towns that he represents – Brookfield, Bethel and Danbury – are strong and secure.

However, he added that, “We’re not there yet” when asked about the local economies fully recovering from the pandemic.

“Our economy has changed in some ways forever,” remarked Harding. “Webinars will continue to be part of our lives.”

Washington Post economics correspondent Heather Long wrote recently, “There are obvious changes, like the realization that working from home is possible for a sizable part of the labor force and the widespread adoption of online ordering for daily necessities like groceries. These will remain significant parts of work and commerce going forward. Nearly a quarter of workers are likely to work at least a day or two from home each week, the McKinsey Global Institute predicts. And e-commerce, which grew three times faster last year than in prior years, shows few signs of ebbing.”

Are these changes going to impact the commercial real estate market?

“I do have a fear,” said Harding, who acknowledged that he has not spoken to any real estate professionals about that issue.

“Businesses may not need to operate with a brick and mortar operation,” the legislator said.

On a separate topic, Harding said he supported the establishment of online sports gambling which may launch as early as this fall through the Connecticut Lottery and the two Native American casinos – Foxwoods in Ledyard and Mohegan Sun in Uncasville.

He said, “It has strong bipartisan support. There was thorough discussion and I am also confident that it will not hurt the integrity of any of the sports leagues since professional athletes make so much more money than they did generations ago.”

CT Mirror reported that some legislators feared the bill would increase gambling addition among state residents.

However, Harding said he opposed making marijuana legal in the state, indicating that the bill that was approved by the legislators “could have significant public health and public safety ramifications.”

On another subject, recent news reports indicated that legislators in the closing weeks of the session were drinking alcohol at the State Capitol while the General Assembly was debating issues.

Harding said the incidents were “unfortunate” and he believes they were “isolated.”

“Considering the magnitude of what we’re doing we should not be drinking while we’re voting on such important legislation,” he declared.

Wall Street Journal columnist Joseph C. Sternberg - who was born in 1982, near the beginning of the Millennial age bracket, wrote in his 2019 book “The Theft of a Decade” (PublicAffairs, 288 pages) – that politically many people of his generation are “contrarians.”

He stated that they “consistently tell pollsters that we’re less likely to affiliate with a particular party then previous generations were.”

Harding, who will turn 34 in July, agreed.

He explained that the Millennials are “very pragmatic, and they’re not interested in party labels. Many are unaffiliated, and they don’t subscribe to one political persuasion, which I think is a good thing. This generation wants solutions and doesn’t care which party offers that solution.”