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Federal Budget Cuts Deepen State's Problem

Hartford Business Journal

June 07, 2010

Connecticut appears to be leading the nation in one important item: Optimism.

How else can we explain the balancing of the stateís budget by anticipated federal aid that is both unpromised and increasingly unlikely. By using $260 million of what amounts to smoke and mirrors, Connecticut is tied with Florida and trails only Georgia, which included $370 million of funny money in its budget.

Do we really want to be among the largest bettors on the federal governmentís willingness to help out the states when the feds are themselves wallowing in red ink?

At issue is federal funding for Medicaid beyond Dec. 31. The feds coughed up $87 billion in stimulus money to help states weather the economic storm through the end of 2010. But what of the rest of the fiscal year? Naturally, states want the extra cash to keep flowing. But only a handful had the nerve to put that revenue in their budget calculations. In Connecticutís case, thatís a $260 million adventure in positive thinking.

If you can find it in your heart to believe in the tooth fairy, perhaps the feds will help out again. Then again, itís an election year and members of Congress are hearing the din of concern about the mounting budget deficit.

Last week, the House declined to add more funds to the fire. In the whacky world of Washington, that could change. But the storm clouds are gathering.

It seems increasingly likely Connecticut has gambled and lost.

For a state that prides itself on its ingenuity, itís well past time to start thinking about that fix for the worst-case scenario.

The legislature is due back in Hartford shortly for a special session. Maybe instead of avoiding the hard choices as legislators have done the past few sessions, they can spend some time talking through a real fix for a budget problem that just canít be wished away.

Sports As Elixir

Speaking of optimism, the passion of former Hartford Whalers owner Howard Baldwin is both impressive and laudable. The only question is whether his latest scheme is even remotely viable or whether itís a feel-good business unto itself.

Last week, Baldwin launched a push to bring the National Hockey League back to Hartford. To make his case that the area is hockey-friendly, heís promising to stage as many as 20 outdoor games at Rentschler Field in East Hartford next February. Heís also fanning the flames of reunion events, Whalers paraphernalia and a social networking website, any and all of which can make the cash register ring.

The issue really isnít about interest in hockey; itís here. The issue is the economics of sustaining an NHL team in a small market.

What has materially changed that would suggest the Whalers would do better here this time? The XL Center is now an aged building that would be at the tail-end of league facilities. The overall economy has sapped disposable income and eroded the corporate base. The television market has gotten worse, with hockey readily available via signals from Boston and New York City and new cable options. Governments at all levels are on life support and in no position to help. The whole vibe seems much less hospitable to a new run at fun and games.

The NHL so far isnít impressed. A deputy commissioner immediately threw cold water on the idea.

Thereís no doubt Hartford would be a better place if it had a major league hockey team. And people simply want to believe. Thatís one of the things that make us human. But keeping an eye on the economic realities is what keeps us all in business.

In the case of Baldwin and the Whalers, maybe thereís a business model in the chase for the good old days but heaven help you if you catch them.

Reprinted with permission of the Hartford Business Journal. To view other stories on this topic, search the Hartford Business Journal Archives at http://www.hartfordbusiness.com/archives.php.
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