Harding says economy isn't fully in recovery yet

By Scott Benjamin

BROOKFIELD – Fourteen months after the pandemic sent the economy plunging into the biggest downturn since the Great Depression, state Rep. Stephen Harding (R-107) says it is premature to say that we’re in a solid recovery.

Economist Donald Klepper-Smith of DataCore Partners, who chaired former Gov. M. Jodi Rell’s (R-Brookfield) economic team, stated in a newsletter to clients May 3 that in “strong terms” the “U.S. recession is over.”

“Now, the combination of strong consumer fundamentals, a surging housing market, accommodative Fed policy, and massive fiscal stimulus at the federal and state level, have all worked towards economic recovery,” wrote Klepper-Smith, who has been the featured speaker in recent years at the Greater Danbury Chamber of Commerce’s Economic Forecast breakfast.

Harding of Brookfield said, “We’ve made some significant steps forward” as Gov. Ned Lamont (D-Greenwich) has started to further reopen Connecticut’s economy.

“I’ve heard that the PPP loans have been very effective,” he said of the federal Paycheck Protection Program that has helped keep some small businesses solvent.

Still, from February 2020, the month before the pandemic began, and February 2021 the metro Danbury labor market experienced an 8.8 percent loss of jobs – 6,800 positions – which is the second worst performance among Connecticut’s nine labor markets.

Harding says the businesses in his district – which includes all of Brookfield, the Stony Hill section of Bethel and a small portion of northern Danbury – still have some obstacle walls to climb. He noted that retailers and restaurants have suffered during the pandemic.

“We’re certainly moving in the right direction,” he remarked in an interview. “However, I don’t think that we’re at the point where we can pour Gatorade over the coach.”

Harding, who is in his fourth term in the state House, said he supports Lamont’s announced intention to veto the proposed $46 billion budget for the two-year budget cycle beginning July 1, approved by the General Assembly’s Finance, Revenue & Bonding Committee. CT Mirror has reported that, among other things, Lamont objects to increases in capital gains and consumption taxes at a time when Connecticut, which only grew in population by 0.9 percent during the last decade, is now attracting people moving from New York state.

Harding said he supports Lamont’s plan to spend about two-thirds of Connecticut’s state government share from the $1.9 trillion American Rescue Plan to offset budget deficits and avoid tax increases or program reductions.

Some Democrats in the General Assembly want to make major investments in higher education, social services and municipal aid with the proposed additional revenue. They also have indicated their plans would make the state’s tax system more equitable.

Harding declared, “I don’t think that right now is the time to raise taxes across the board.”

CTNewsJunkie columnist Susan Bigelow recently stated that opponents of the Finance Committee package probably overestimate how increasing taxes would prompt some wealthy residents to live elsewhere.

“This time, I say call them on it,” she wrote. “Tax them without fear. If they all do leave, at least we’ll have a few years of money we can use to make the lives of the poor better. And maybe we can turn their crappy McMansions into public housing.”

Harding said he doesn’t believe that the Finance Committee proposal will garner any Republican votes and that about 25 percent of the Democrats object to the package.

However, he noted that typically the Finance Committee’s proposal goes through major revisions.

He praised Lamont’s management of the state during the pandemic and added that as a result the governor is “very popular now” and “has a lot of political capital.” This is in sharp contrast to 15 months ago when it appeared many residents associated Lamont with his unsuccessful tolls plan.

Declared Harding, “What will be interesting to see and what will test his leadership is how he manages the far left of his party and seeing how he manages some of the things that they want.”

Harding said that during 2019, Lamont’s first year in office, he signed an increase in the minimum wage and family medical leave legislation even though he objected to some of the provisions.

Harding also recommended that Lamont use his current political leverage to garner concessions from the public employee collective bargaining units as the current ‘no-layoffs’ clause expires on June 30.

A November 2020 Wall Street Journal editorial stated that Fitch Ratings has reported that Connecticut has a pension liability for its workers that equals 25.9 percent of personal income – the second highest in the nation, behind Illinois. Fitch indicated that anything above 20 percent is considered to be "elevated."

In 2017, Harding voted against the pension agreement with the state employee collective bargaining units, which extended the basic agreement from 2022 to 2027 and the no layoffs clause into 2021.

“Not enough has really been done on the pensions,” he said.

A report from Segal Consulting for the state Office of Policy & Management, the governor’s budget arm, indicated that the package would save the state $1.57 billion during the 2017 to 2019 fiscal cycle and $24 billion from 2017 to 2037 through state employee concessions.

Harding has said he was pleased that the agreement put future new employees into a hybrid-benefit system instead of a defined benefits plan. However, he said the new hires should be placed into an even less-expensive defined contributions plan.

Washington Post columnist George Will reported last year that then-Rhode Island Gov. Gina Raimondo – who is now the U.S. Secretary of Commerce – had led a campaign as state treasurer in the early 2010s that resulted in a pause on cost-of-living benefits for retired state employees an increase in the retirement age and boosted the ratio of defined contribution to defined benefit plans.

At that time, Rhode Island’s state employee pensions were only 48 percent funded. A 2018 report from the state Commission on Fiscal Stability & Economic Competitiveness indicated that the Connecticut state employee pensions were only 28 percent funded.

On another topic, Harding said he would need further information before taking a position on the proposal by the state Board of Regents for Higher Education to require that full-time faculty teach five instead of four courses per semester, as CT Post has reported.

The New Haven Register has reported that there have been protests by faculty over the recent months as contract negotiations have progressed. Leigh Appleby, a spokesman for the Board of Regents, has said, for example, the system is struggling to recover from a 41 percent decline in housing revenue for the Spring 2021 semester.

Harding acknowledged that there has been considerable friction between the Board of Regents and the faculty since former Gov. Dannel Malloy (D-Essex) and the General Assembly established the board a decade ago. Many faculty have been opposed to efforts to reform how the system operates. They have indicated that the Board of Regents proposals to greatly expand online learning and streamline the administrative structure at the community colleges would harm students.

The state university system and the community colleges had previously been governed since 1967 under separate boards of trustees.

“I do have concern with the Board of Regents,” Harding said of the body that governs the four state universities, the 12 community colleges and Charter Oak State College.

“I’m not sure it is the most efficient way to run those colleges,” he explained.

However, Harding added, “I’m not certain that going back to a system with a Board of Trustees is the answer either.”

He concluded, “Maybe the best answer is a hybrid of those two systems.”