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Governor And UTC Finance Chief Agree: Business Climate Needs Overhaul

Mara Lee

March 02, 2011

Connecticut has neglected outreach to small and large businesses, and has let reports that the state is a bad place to do business go unchallenged, Gov. Dannel P. Malloy said Tuesday night at The Hartford Courant's "Open For Business?" forum.

United Technologies Corp. Chief Financial Officer Greg Hayes — who ignited a firestorm a year ago when he said anyplace is lower cost than Connecticut — said of the governor's approach, "a change in attitude will make a difference."

"We've been in a negative tailspin for the better part of a generation," Malloy said. "We don't even fight back."

Other states "are beating us because they work harder," Malloy added. "They tell their story."

The forum, co-sponsored by the Courant and FoxCT and attended by several hundred people, was moderated by Courant editorial columnist Tom Condon and also included University of Hartford business professor Susan Coleman.

Malloy defended tax increases and budget cuts, such as the scholarships to Connecticut graduates attending private colleges in the state, a subject that hit close to home for the University of Hartford, which hosted the forum.

"I. Have. A. 3.3. Billion. Dollar. Budget. Deficit," Malloy said, with a dramatic pause between each word in the sentence. "Is anybody out there listening to me?"

He said ending the private-school scholarships for 2011 high school graduates saves $6 million this year, and $12 million next year.

Hayes, too, faced critical questions. He said he was surprised by reaction to his "anyplace but Connecticut" comment. Singling out Connecticut may have been unfair, he said, but it's true the state is a high-cost place to do business.

Later, he said, "To the extent we're in an uncompetitive location, we're going to do something about that." But he also said manufacturing will continue to be a part of UTC's 26,000-person workforce. "We're always going to do work in Middletown and East Hartford."

Malloy added, "UTC never got the credit it deserves for moving a whole bunch of engineers from Florida to Connecticut."

An audience member asked Malloy whether, if he can't get the unions to agree to cut $1 billion in their compensation next year, he would be willing to borrow money to close the gap.

"No, I'm not interested in that," Malloy said flatly, as Hayes nodded in approval. Hayes also nodded when Malloy said the budget shortfall was too big to close only by raising taxes or only by cutting spending.

Still, Hayes said, "This is a crisis, and we shouldn't waste the opportunity of this crisis." He said the state should no longer offer pensions to new hires. His company no longer offers pensions to its non-union employees. Instead, those workers bear responsibility for their own retirement through a 401(k).

"Put people in state government on the same footing as people in private enterprise," Hayes said.

Malloy did not endorse that idea, but said benefits have to be sustainable.

Audience member Debra Tomasino said after the forum that Hayes was right, and the governor skirted the issue. "The government employee benefits really need to be on the same footing as the private sector," she said. While 12 years of her career were covered by a pension, now she has a 401(k) plan.

"I don't feel like I've lost a benefit by moving to that plan," she said. "I think I have more control over my money now."