Even with the headlines-dominating state budget talks finally at an end, business leaders throughout Fairfield County and the state are collectively viewing 2018’s prospects with bated breath.
When they’ll feel free to exhale very much remains to be seen.State Comptroller Kevin Lembo on Dec. 1 announced that Connecticut was on course to end the 2017-18 fiscal year with a $207.8 million deficit. Connecticut in recent years “has not fully participated in the nation’s economic recovery,” he said, instead experiencing “much more mixed results across a variety of key economic indicators.”
Compounding concerns over the deficit-ridden state’s short-term and long-term fiscal health is uncertainty over how the recently signed federal Tax Cuts and Jobs Act will affect businesses and business owners. Those have made for an unsettled, if not unsettling, business forecast for 2018.
“What it comes down to is, we (in Fairfield County) are responsible for our own future,” said Christopher Bruhl, president and CEO of The Business Council of Fairfield County. “It’s up to us to close the achievement gap, which is completely within our control. Context matters, both at the federal level and in Hartford, but the immediate need is to look at our local problems and try to fix them.”
Economic growth and educational equality remain major Business Council priorities, said Bruhl. Connecticut needs to work harder to retain state residents who go off to college and never return.
Joseph Brennan, president and CEO of the Connecticut Business & Industry Association in Hartford, said the new state budget on balance “is better than what we’ve had in the past.” However, the CBIA remained concerned about the state still being so deeply in debt. “We just haven’t seen the level of investment and economic growth that we have in most of the region and throughout most of the country,” Brennan said.
Connecticut has lost 15,300 jobs since June, according to the latest data from the state Department of Labor, and has recovered 70 percent of jobs lost during the Great Recession, statistics that recently prompted CBIA economist Peter Gioia to declare that “we now have a full-blown crisis in jobs.”
Brennan noted that many published reports have indicated that the national economy will grow by 2 percent to 3 percent in 2018. However, he said, Connecticut “will struggle to grow by zero to 1 percent. Job growth will hopefully be better, but still won’t be robust.”
BANKS, HOSPITALS SHOW STRENGTH
Fairfield County’s banks apparently have thrived this past year despite the state’s gloomy financial landscape. Top executives at People’s United, KeyBank and Newtown Savings Bank all said that commercial lending was up at their institutions in 2017.
“There’s been a little negative overhang because of the state of the state,” said Kenneth Weinstein, president and CEO of Newtown Savings Bank, “but in general we’ve seen very strong and growing businesses looking for loans. In greater Danbury especially, the economy has held up really well.”
Jeff Hubbard, KeyBank’s Connecticut and Western Massachusetts Market president, said that while Fairfield County has seen strong business activity, statewide activity “is not as strong as it is in the other New England states.”
The KeyBank executive laid some of the blame on the state’s transportation system. “Transportation here can be difficult, expensive and time-consuming. Being able to take advantage of an improved rail system would help take not just Fairfield County but also New Haven and Hartford to another level.”
In the health care industry, the Connecticut Hospital Association and 20 hospitals in 2017 filed a lawsuit seeking to end the state’s controversial hospital tax. The hospitals in the lawsuit claim the special tax and poor Medicaid funding have resulted in 1,390 layoffs and more than 1,700 open positions eliminated at Connecticut hospitals since 2013, with more cuts likely to come.
Still, most hospitals in Fairfield County had a healthy fiscal 2016, the most recent year for which data is available, according to a report last September from the state Department of Public Health’s Office of Health Care Access.
When calculating revenues over expenses, Bridgeport Hospital generated $46.6 million in 2016; Danbury Hospital, $24.7 million; Greenwich Hospital, $34.7 million; Norwalk Hospital, $38.6 million; and Stamford Hospital, $39.8 million. Saint Vincent’s Medical Center in Bridgeport eked out $100,000 in revenues over expenses.
At Stamford Health, “2017 was a pretty good year for us,” said Kevin Gage, CFO and senior vice president for finance. He noted that Stamford’s collaboration with the Hospital for Special Surgery has been “a tremendous success,” with the addition of a 40,000-square-foot orthopedic inpatient surgical unit announced last fall.
However, the hospital tax and the elimination of the Affordable Care Act’s individual health care mandate in Republicans’ recently enacted Tax Cuts and Jobs Act continue to loom, he said.
“Without the mandate, there’s a real concern that people will not get insured and get the health care that they need,” Gage said. “And that could lead to significant increases in premiums for those who do have
William Jennings, president and CEO of Bridgeport Hospital, agreed. “It is inarguable that more people with health insurance is a good thing,” he said. “We are not in the business of withholding care” to those without insurance coverage, “so the burden then shifts to those who have insurance. It becomes a hidden tax for them.”
Jennings noted the Bridgeport Hospital’s Park Avenue Medical Center, a 200,000-square-foot medical office building and outpatient campus that opened in Trumbull in 2016, is “growing like crazy,” with a number of new doctors expected to join it in 2018.
“It’s been a relatively positive year, especially given the economic headwinds facing us,” he said.
THE NEXT GOVERNOR
Asked what they’d like to see from the state’s next governor following the November election, business leaders were adamant that steps must be taken to improve the economic landscape.
“The next governor is going to have to be engaged in the actual management of the state,” said Bruhl at the Business Council. “And we need our state commissioners to be more competent, to wring everything out that we can.”
Bruhl is a proponent of home rule, whereby municipalities “whose borders were drawn 100, 200 years ago and are not necessarily the most efficient for the 21st century” would combine resources for regional, rather than town-by-town, services like fire and police departments and school districts. “Having 150 police departments with 150 police chiefs is not the way to go,” he said.
“The new governor is going to have his or her hands full,” said Gage at Stamford Health. “It’s going to be an uphill battle.”
Gage said that efforts need to be made to attract younger people to come to Connecticut and stay here. He noted the state lost 29,880 people between July 2015 and July 2016, according to the U.S. Census Bureau. The Census Bureau estimates that the population will have declined by about another 12,000 residents at the end of 2017.
“There’s a lot of competition out there,” Gage said. “We need to look to our legislators to be creative with coming up ways to make us more competitive.”