Face the Facts: Prioritizing affordability this legislative session

How do you tackle funding issues and reduce the cost of living here in Connecticut?

Governor Lamont said affordability is a priority for him. It is also one of the main obstacles, though, when it comes to recruiting and keeping businesses in our state.

So how do we make it easier to live here, start a business here and raise your kids here?

NBC Connecticut's Mike Hydeck spoke with Chris DiPentima, CEO of the Connecticut Business Industry Association.

Mike Hydeck: Chris, good to see you once again. So first and foremost, one of the things that is central to business leaders here in Connecticut, existing ones and maybe those looking to locate here, affordable childcare. If you can't get your mom and dad out of the house because they have little kids, you can't get them to work. We have 90,000 jobs that are still open. What are business leaders saying needs to be done on this topic, and then other things to try to get the employment up here?

Chris DiPentima: Yeah, childcare is going to be a big priority of this session, not just for the business community, but for many legislators. And the governor mentioned it even in his State of the State, our labor participation rate for women is about 10% less than men after age 30 in Connecticut, yet it's actually higher for women before age 30 than men. So getting, you know, childcare is critical to getting those women back into the workforce. A couple years ago, we advocated for the tri-share model, which is where an employer voluntarily pays a third, the employee pays a third and the state matches a third to help with the cost of childcare, which is about $20,000 per child this year. I think we're going to hear a lot around probably maybe universal pre-K, which will likely come with a bigger funding tag. And then it comes down to, OK, if you're going to do something like that, some big investment, how do you go about funding that, while, you know, keeping the guardrails in place and the budget surpluses and paying down our liability.

Mike Hydeck: Right, and then you have to see, well, is it going to be a payroll tax? Is it going to be a tax on employers? How would you fund something? Because that would be a significant cost, I would think. So, Democrats want to adjust the spending caps. Martin Looney, the main man of the Senate, says, look, we got to do something. We got to get help for education, mental health, childcare, all the above. I've spoken with many Republicans who disagree. Where do you stand on it?

Chris DiPentima: Yeah, we've got to maintain the guardrails. I do disagree. I mean, we've got to. The guardrails have been so critical, not only to paying down the long-term liabilities, and we're still the third most indebted state in the country. So even though we paid it down, we've still got a long ways to go. Our fund is only 55% funded right now, but it's freed up almost $800 million in the general fund to do additional spending. On top of that, even with all those guardrails and mechanisms in place, we have the ability to spend almost a billion dollars more this year, $900 million in new spending this year. So I don't think you need to look at the guardrails and adjusting those. I think you need to do what the governor called for in the State of the State address, which is lifting up to hood the car, and looking at the $26 billion plus budget that we have. Are the dollars that we're spending being used wisely? Are they going a long way? Are they having impact? Are they making investment? If not, reallocate those dollars to things like universal childcare, our nonprofits, education, the things we need to invest in the state.

Mike Hydeck: So that billion dollars is available this year, fiscal year, as is before any spending cap adjustment would take place?

Chris DiPentima: Before any spending cap adjustment takes place. Yup. New money.

Mike Hydeck: So now to play devil's advocate for a second, some are saying those spending caps were, in 2017 set in place, and they were based on unrealistic numbers as far as what our revenue is. Significantly lower than the average year was 2017, so we end up saving maybe more than we should. What's your argument on that?

Chris DiPentima: Yeah, that's the attack on the volatility cap. Is that one, it was too hurriedly rushed in '17, which wasn't the case. We didn't have a budget for almost nine months. Did you remember? So people worked in that room for a long time. I'd get rid of the whole rushed thing. And it was set too low because we looked at one year. The challenge is, if you go back and now say, ;Okay, we want to base it on the last couple years,' now, you're basing on a really high year. The stock market has had five years in the last 20 where it's returned more than 20%. Three of them have been in the last five years. And the stock market is really where it's funding the volatility. So you've got to be careful, you know, did we set too low a year in '17 and now we're gonna set too high a year if we adjust them this year? I think you and the other thing is, you got to watch out for the uncertainty at the federal level. There could be tax reforms at the federal level, which impact what we define as volatile today and how much we come in volatile today. So if you move that volatility cap around, next thing, you know, we actually may end up with a deficit, and then now we're taking away from services.

Mike Hydeck: And with the new administration, and there's likely going to be some changes, even specifically here in Connecticut, you think?

Chris DiPentima: No doubt. And it will affect our taxes.

Mike Hydeck: So got about a minute. I know this is not the best topic to jump into, but health insurance is a big deal here in Connecticut. We're seeing a lot of people rebel against not getting things funded when it comes to an operation. How do we try to start to tackle that?

Chris DiPentima: Yeah, and the governor mentioned in the State of the State as well, when it comes to affordability, he mentioned energy, then he mentioned healthcare right after it. And healthcare is a huge issue for the business community. It's for their employees, attracting, retaining employees. It takes a big chunk out of their paycheck, just like childcare and housing do as well. We continue to push the association health plan bill so allowing associations of any type, to be able to pull their membership together to look like a big company.

Mike Hydeck: So you get 10 pizza places. They go in and they order healthcare together.

Chris DiPentima: They order healthcare together. You get leverage. You get power that way. This year, CBIA launched its own medical product. We invested about $2 million of our own dollars to help our members. But again, it only goes to 10 employees and above, so those small employees still need some type of pooling mechanism. It's got to be the association health plan. We can certainly look at the exchange and tax subsidies, but the pooling is really what's worked across the country.