Friday, February 03, 2006

DeStefano Outlines Economic Growth Plan

Candidate Proposes Using Surplus for Job Growth

Gubernatorial candidate John DeStefano of New Haven has re-entered the war of ideas in a big way, unveiling a major job growth package today at the Legislative Office Building in Hartford. DeStefano's announcement comes just a week after rival Dan Malloy introduced a major health insurance intitative.

DeStefano's plan revolves around the state surplus. Most lawmakers want to quietly invest the money, use it to pay down state debt, stow it away in the rainy day fund, or use it to fund existing obligations like the state teacher's retirement fund. DeStefano disagrees, and wants to use $375 million of the $500 million projected surplus to fund an economic development program. DeStefano claimed that the state needed to "...act quickly and decisively to solve the problems that result in workforce shortages that make it impossible for us to grow our economy," (DeStefano for CT press release, 2/3/06).

The full plan is here: DeStefano Outlines First Phase of Jobs Plan: Surplus Must be Used to Spur Economy

Okay, let's take a look. The four major initiatives are:
  • College Scholars Program:$180 million for In Demand Scholars

  • Housing Trust Fund for In-Demand Careers

  • Elimination of the property tax on manufacturing equipment

  • Economic SWAT Teams

There is a strong focus here on "in-demand" careers, namely bioscience, computer science, engineering, physical science and nursing (librarians, alas, are not in demand). The first two points of the plan deal with growing these industries by first helping to fund students who are in these programs and second by providing incentives for these young professionals to stay in Connecticut once they are educated. It's unclear at this time what, exactly, the money in the first point will actually be going towards. Is it scholarship money? Are we funding programs at state universities? Can out-of-state residents in CT schools take advantage of it? What about the reverse?

DeStefano's home buying program as an incentive for young professionals in these "in-demand" fields to live in Connecticut, making the state more attractive for firms who want to relocate here. 20K seems like a decent amount for a down payment, but when one considers the price of housing in, say, Simsbury or Tolland, it isn't that much. Still, it's an incentive.

The elimination of property tax on manufacturing equipment is a common-sense plan that's already in the works, and will hopefully pass in the upcoming session.

Lastly, the most interesting idea here is the "economic SWAT teams," which would deploy to plant closings and sites of other layoffs to help people find new jobs right away, as well as engaging in retraining. I'm very curious to see just how such a program would work.

The point of contention here may be the source of the money: the surplus. The trend so far has been not to spend the money on new programs, but to use it for either existing debts/obligations or to store it away for future emergencies. DeStefano's plan won't use all of the surplus, but will take a big enough chunk out that fiscal conservatives will start to break out in hives.

Does a slumping economy require drastic fiscal action? DeStefano says yes.

Source

DeStefano for Connecticut press release: "DeStefano Outlines First Phase of Jobs Plan: Surplus Must be Used to Spur Economy." 3 February, 2006.

31 comments:

A Different Anonymous (No! Really!) said...

Englehart's cartoon really said all that was needed on the subject today.

OB1 said...

Yeah this plan will fly...I couldn't get thorugh the first paragraph without getting bored.

I am not a big fan of Gov. Rell but I think she is okay, I think Laurence Cohen was right, this election is going to be a snooze fest.

Using surplus money is dangerous. Once you spend (appropriate) that money for a specific program it becomes part of the budget, so the next year when the surplus there suprisingly no money to pay for the for that program. Then Republicans will get up and say "we can't afford that new program" and Democrats will get up and say "you Republicans can't cut that program." And then everyone gets mad at each other and calls each other names. Then everyone comes to this bored to talk about Joe Lieberman. Amazing process!!!

Chick Who Never Blogs said...

It's great to see these innovative ideas and kudos to the team for creating them. But I find them a bit more focused on attracting people to the state for jobs that don't exist. Or trying to keep people in the state for jobs that don't exist. The economic swat team is great-- support at a time when just losing your job and feeling lost is well needed. But helping people look for a job is not going to help as much as creating the jobs to be there for them. I read what was on the DeStefano site, and could be missing something, but there's nothing about jobs CREATION. Connecticut already has highly skilled, and well trained labor, but no jobs to keep them here-- the best ususally heading to NYC or Boston. Offering a program to help young people buy a house is cool, but what would be better is the abiltiy to get a job that would enable one to pay the mortgage.

superD said...

I have to agree with the Chick who never blogs. I read the post on the DeStefano site and while it certainly has some interesting ideas that will help in the future, it doesn't address our state's two immediate needs: 1) keep companies from leaving and 2) bringing in new companies to create or enticing existing companies to expand their business here and create more jobs.

Captain Obvious said...

Soooooo the whole thing is based around our surplus? Well, what happens when we don't have a surplus???

Genghis Conn said...

Dan Malloy just asked the same thing, Captain Obvious:

"As for John DeStefano's proposal, it's funded out of the surplus, and since surpluses are one-time sources of revenue, it's not the right way to fund an ongoing plan. What happens when there is no surplus, and worse, what happens if the Legislature spends the surplus this year? Second, there is nothing in this plan about reorganizing the state's three dysfunctional economic development agencies - which desperately needs to be done. They're inefficient, ineffective, and they've wasted hundreds of millions of taxpayer dollars. My plan will address both these issues, and more." (from a Malloy campaign press statement just noticed in my inbox)

Seems that the DeStefano plan is a one-time economic jump-start, though...

DeanFan84 said...

If there is money to be spent, count on the Democrat to find a way to spend it!

Is DeStefano really putting forward a program where with a job in the "right" field, the state of CT gives you up to $20K to buy a house. What about those of us in the "wrong" fields? Where is my $20K handout?

If CT needs to develop a higher-skilled workforce I'd suggest this: CT college loans that are forgivable if the student 1)makes the grade and 2)lives in CT for the first 5-10 years out of college. This would help retain the best and the brightest without engendering resentments.

But you still need the employers.

Franks said...

Early this week, UCONN released their latest polling data and three responses had some disturbing implications 77% of respondents thought the cost of living was worse in Connecticut, 60% of respondents thought traffic was getting worse in Connecticut and 48% thought job creation was getting worse. These public preceptions are apparently lost to DeStefano.

Using a one time state surplus to fund an ill-defined scholarship/loan scholars program that in 4-5 years would train an individual presumes an openly competitive and growing job market in these areas apon completion, when the Connecticut's experience over the past 15 years has been no job growth. A similiar one time revenue infusion into an upwardly priced housing markets, would limit this benefit to a very small group.

Proud Moderate Dem said...

Genghis, i like malloy, but wasnt he planning to fund his child plan with the surplus????

Genghis Conn said...

PMD,

I went over the .pdf of Malloy's plan and didn't see anything in there about the surplus.

Proud Moderate Dem said...

GC, there was a story about it in one of the local papers and malloy indicated that some suprlus money would be used as part of his funding and rell was questioning where money would come from after this year if there wasnt a surplus and he didnt have an answer, think he just said something like, 'i'll find it, and no, i wont have to raise taxes to do it.' think it was the waterbury rep-am that ran the story.

Aldon Hynes said...

(Loyal DeStefano staffer stepping in to spin some responses to comments here.)

Genghis writes, “Most lawmakers want to quietly invest the money... DeStefano disagrees”

Actually, as I read it, Mayor DeStefano doesn’t disagree. He has come up with a proposal about how best to invest in the future of our state. We need to build a better workforce that will keep existing jobs in the state and draw in new jobs.

OB1 writes, “Using surplus money is dangerous.” He is right. However, not addressing the future of our state is also dangerous. Is Mayor DeStefano’s the best way of addressing investing the surplus money? That is an important issue to debate, however I think Rell’s economic policy of “Stay the course” isn’t a real policy.

The Chick Who Never Blogs raises the concern about how the proposals seem more focused on building a workforce than on creating jobs. SuperD concurs. However, having a stronger workforce is a key part of attracting new jobs to the state.

DeanFan84 raises the concern about keeping people the newly trained workforce in the state. The plan says, “each scholarship will require a 4-year residence in the state” and that the “recipient [of a housing downpayment] will be required to be the primary tenant and live in the housing unit for 4 years”.

Concerning the one time use concern, as noted above, this is an investment. If the investment is successful, it will generate additional funds from the income tax on the new employees and from the property tax from new home owners. Granted, like any investment there are risks that it may not have sufficient returns.

Yes, the two Mayors will go back and forth on who has the best plans to make our state better. This is the sort of democratic process that helps make our country better.

armchair economist said...

At best JD's plan is a half-assed jump start. Lots of bones to industries he wants to build in New Haven, nothing for any of the financial services (anyone heard of RBS? GE? Thompson? UBS?)or insurance. I also think his targetted affordable housing program is nonsensical. I'm all for 20k or more in downpayment assistance for anyone who needs the money, more in expensive areas, but assigning it by careers sounds like five-year planning to me.

A Different Anonymous (No! Really!) said...

Aldon writes, I think Rell’s economic policy of “Stay the course” isn’t a real policy.

Well, one might argue, Aldon, that "spend the shit out of a surplus that does not, technically, exist yet" does not fall under the category of "real" policy either.

Aldon writes, The Chick Who Never Blogs raises the concern about how the proposals seem more focused on building a workforce than on creating jobs. SuperD concurs. However, having a stronger workforce is a key part of attracting new jobs to the state.

So, as I understand it, DeStefano's plan would increase the unemployment rate and decrease tax revenues at the same time by eliminating the property tax on manufacturing equipment (unless he supports the millionaire's tax, which - when pressed - he explicitly declined to do). There's solid fiscal planning for you.

Aldon writes, DeanFan84 raises the concern about keeping people the newly trained workforce in the state. The plan says, “each scholarship will require a 4-year residence in the state” and that the “recipient [of a housing downpayment] will be required to be the primary tenant and live in the housing unit for 4 years”.

Concerning the one time use concern, as noted above, this is an investment. If the investment is successful, it will generate additional funds from the income tax on the new employees and from the property tax from new home owners. Granted, like any investment there are risks that it may not have sufficient returns.


So, in other words, we've got a paper surplus -- let's take some of our friends and go to Foxwoods. Not all of them, mind you. Just some.

Aldon writes, Yes, the two Mayors will go back and forth on who has the best plans to make our state better. This is the sort of democratic process that helps make our country better.

Oy. I don't know that our country can take much more getting better.

Again, I think Englehart had the best perspective.

A Different Anonymous (No! Really!) said...

PS: Tell me again where the real jobs come from?

Anonymous said...

DeStefano-Malloy...Doesn't really matter. I hear that even the inside Democrats in Hartford are already declaring Rell the winner. That means they will do exactly the same thing they did when Kennelly and Curry ran. Pat them on their back when they are in front of them and stab them in the back when they are not in the room. Looks like this race is over before it begins.

Anonymous said...

This is just a jobs program for DeStefano's crew of "fixers" like Altieri and Brancati

"Here, let me get you a scholarship from a college professor who works with us "

""let me find you an entry level job from a firm we give grants to"

"Let me find you a starter house from a politically connected realtor"

"By the way, here's our fundraiser ticket, and we do expect you'll attend"

"I know, it's tougher to pay for this since we blew through the surplus and raised the income tax annually to pay for all this new bureaucracy, but we have to save the state from those evil Republicans"

Anonymous said...

Let's see tax people more who already own houses ( and are having trouble affording them) so we can GIVE AWAY money to other people to buy them?

Another "fair" Democrat idea

I suppose that the existing CT program of lending a downpayment @ 1% is either 1: unknown to the genius DeStefano or 2: not welfare like enough for his socialist ideology

from www.chfa.org

Downpayment Assistance Program (DAP)

The Downpayment Assistance Program (DAP) provides homeownership opportunities to eligible buyers who are unable to provide their own downpayments. Applicants may also be eligible to borrow funds to pay their closing costs. A DAP loan can only be used in conjunction with a CHFA first mortgage.

The DAP loan is secured by a second mortgage on the home. The DAP interest rate* is the same as the regular program rate for the Homebuyer Mortgage
Program, Homeownership Program, Teachers Mortgage Assistance Program, Police Homeownership Program, Military Homeownership Program and the Home of Your Own Program. (Click here for the Current Interest Rates.)

DAP loans are available at an interest rate of 1% (APR approximately 1.1%) to some income-eligible borrowers under the Homeownership Program (for residents of public and subsidized housing).

Anonymous said...

When working families set budgets, then find themselves with a little extra cash at the end of the year, they pay down their credit card bills. They don't use it for a down-payment on a new car that's going to cost the more every month.

Everyone is falling all over themselves to be the voice of "working families." But if we ran our homes like these jokers want to run the government, we'd all be broke.

Aldon Hynes said...

Anonymous(8:55) Thank you for highlight Connecticut Housing Finance Authority. It is an important program to help first time home buyers and home buyers in targeted areas. Just as it is a wise investment to target specific geographic areas, it is also a wise investment to target workers in employment areas .

ADA(NR): If your idea of a wise investment strategy is to go gamble at Foxwoods, I’m even more concerned about your ideas. I’m also disappointed that you don’t seem to think that democracy is good for our country. Likewise, your understanding of the proposal seems especially flawed. To suggest that it would increase unemployment is a very big stretch.

It appears that you are saying that if we encourage people to study skills that are in demand, they will have a harder time finding a job than if they study skills that are not in demand. Can you explain your logic there?

No, we need to encourage people to develop skills that are in demand. By doing this, we will encourage companies that are deciding whether to create new jobs to create them here, where we are developing a better skilled workforce.

I think that reflects my view of where jobs come from. Jobs come from companies deciding to grow their business in a given state, and that decision is affected by the availability of a skilled workforce. If you think availability of a skilled workforce isn’t important, well, I guess I see why you’d rather be gambling at Foxwoods.

armchair economist: As someone who has worked on Wall Street for nearly twenty years and watched the consolidation of the financial services industry, and RBS and UBS are good examples of this consolidation, my impression is that there isn’t a high demand for financial services people, with the possible exception computer scientists, which is covered in DeStefano’s plan.

Anonymous(9:17) You are right, when people find they have a little extra cash, they need to make decisions. Do they gamble it away the way ADA(NR) would suggest? Do they pay down their debts a little, or do they invest in their future by learning skills that will increase their earning power?

Do we want policies that will help make the state better by encouraging people to work together to build a more skilled workforce, or are we going try to discourage dialog and cooperation by resorting to old fashioned name calling. I applaud both Mayor Malloy and Mayor DeStefano for seeking ways to make life better for everyone in Connecticut.

Economist said...

DeStefano's plan missed a fundamental point-- a supply of workers does not necessarily create jobs. Businesses create jobs. While a pool of skilled workers is an attractive thing for businesses, it will not cause them to move or be created in CT.

The best thing to stimulate jobs is to do one of two things: 1) Reduce taxes and regulation (the Republican answer) or 2) Focus on one particular industry and create a "hub" of businesses by giving incentives for them to move. For example, Hartford used to be the insurance hub. Silicon Valley is a tech hub. Detroit was an auto hub.

Either path will work-- but no one in this campaign (R or D) has proposed anything worthwhile the create jobs.

Anonymous said...

Aldon:

CHFA is an investment. You get a loan. You pay it back

You guys want a giveaway program. More welfare for us taxpayers to pay for.

Aldon Hynes said...

Economist, it sure sounds like you are arguing Mayor DeStefano's case:

1) Reduce taxes: As GC notes, the plan calls for an "Elimination of the property tax on manufacturing equipment"

2) Focus on one particular industry and create a "hub" of businesses by giving incentives for them to move:
The plan recognizes that "This country is facing a severe shortage of math and science professionals" and is proposing addressing this by "raising the talent pool in the fields of math and science." This helps build the hub of business in Connecticut's greatest strength, innovation.

Having a pool of skilled workers that is lacking across the country is essential to getting companies to chose to expand their companies in Connecticut, it is a core component of building the hub that economist describes.

Anonymous said...

Who is going to take DeStefano seriously about building economic hubs? New Haven is trying to be the center of medical research and DeStefano is the one blocking the Y-NH cancer center.

"Look for the union label" Let's be real. This is just a buyoff for the union representing college professors

Economist said...

Aldon,

I am not arguing DeStefano's point. His spending will not add any jobs to CT. You can argue the merits of giving loans to students because it is the right thing to do, not because it will miraculously cause employers to appear.

The tax credit for manufacturing is small and inconsequential. Do we really think that manufacturing is coming back to CT with high labor costs? We need to pick an emerging industry (e.g., bio tech) and give companies massive tax breaks for moving to CT (e.g., no income tax for five years). Once you have a critical mass, the workers with the skills will start moving here. Then you will not have to give tax breaks because companies will WANT to move here.

If you really think that DeStefano's plan is viable, then you believe that just training workers somehow creates jobs. I don't buy it.

Now, to be fair, neither Malloy or Rell has anything better at this point.

armchair said...

The most obvious economic development failure in CT is the I-95 corridor. Failure to invest in the rail system and allowing the inept DOT to turn routine expansion projects into 20-year nightmares -- this has been how the State has treated the its fastest growing region. (Well, maybe the New London area has grown faster, but they have their own well-founded traffic gripes)

Then there is affordable housing. In Oneill's last year the State borrowed $125 million for affordable housing projects. Lately, $10 million has been a good year.

Why don't companies grow or move here? Because there's too damn much traffic and it costs too much for your employees to buy houses or pay rent. Even if Malloy gets elected! and the state can start to put more resources into these obvious areas, we will stay a high-cost area. But the pound-foolish approach under Rowland and now Rell just makes it worse.

What makes me wonder about DeStefano's plan is that it focuses on one area that actually has received some reseources in the last decade: higher ed. (although that was pretty badly spent, it appears) I'm not saying education isn't a good way to spend economic development dollars, but housing and traffic are where its at now in CT.

Anonymous said...

will armchair please tell the good folks on the Gold Coast where the wider highways and the affordable housing are going to go...even if all the money needed was available the projects would be summarily dismissed by the intended beneficiaries.

Until there is a consensus in that region to accept wider roads and more multifamily housing, why worry about a situation the locals evidently prefer to the alternatives??

A Different Anonymous (No! Really!) said...

Alson writes, ADA(NR): If your idea of a wise investment strategy is to go gamble at Foxwoods, I’m even more concerned about your ideas. ... To suggest that it would increase unemployment is a very big stretch. ... No, we need to encourage people to develop skills that are in demand. By doing this, we will encourage companies that are deciding whether to create new jobs to create them here, where we are developing a better skilled workforce. ... Jobs come from companies deciding to grow their business in a given state, and that decision is affected by the availability of a skilled workforce. If you think availability of a skilled workforce isn’t important, well, I guess I see why you’d rather be gambling at Foxwoods.

No, indeed. That's not what I said, as you well know.

DeStefano's proposal is all about putting the cart before the horse: Let's create a pool of workers and hope (which is to say, gamble on) some companies will be coming to Connecticut to hire them. Let's spend an assload of money on housing assistance for a handful of special people - the ones we think are in the right jobs, because under DeStefano, government
always knows best - and hope (which is to say, gamble on) some companies will be coming to hire them.

You yourself, Aldon, put it this way: Granted, like any investment there are risks that it may not have sufficient returns.

In other words: The wonder of it all, baby.

Aldon writes, I’m also disappointed that you don’t seem to think that democracy is good for our country.

No again. You said these grand proposals were democracy in action. What I said was I don't know how many more awesome ideas we can stand from Mayors Malloy and DeStefano. A health insurance plan with grossly lowballed costs and a jobs creation plan that doesn't actually create any jobs?

Stop them before they help us again!!

Anonymous said...

Does anyone else view Aldon as Destefano's version of Fox News. Talking points, defense at all costs, occasional mea culpa to seem "independent." Such crap. A paid hack masquerading as "the new grassroots truth-teller" - a paid political consultant. The only difference between Aldon (and paid bloggers like him) is that most political consultants will be honest enough to tell you that they will do anything to make their client look good get elected. Stay on your paid blog, earn your cash and continue to believe you are so high and mighty and that blogs are the way of the future campaigns.

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