Conn Econ Summer_2013 (1)

7/28/2019 Conn Econ Summer_2013 (1)

1/16

CRIME AND EDUCATION AT ACROSSROADS

Crime and Public Spending

Controlling Gun Violence

The Cost o Equal Educational Opportunit

SUMMER 2013


2/162 THE CONNECTICUT ECONOMY Summer 2013

CONNECTICUTECONOMIC INDICATORS

(Percent change: 2012-Q1 to 2013-Q1)

Indicatos of

Cuent Economic Activity

Total Nonarm Jobs +0.3%

Number Unemploed -3.3%

Labor Force -1.7%

Manuacturing

Jobs -1.6%

Average Weekl Hours +0.1%

Average Hourl Earnings -9.8%

CT Mg. Production Index -4.4%

New Auto Registrations -2.9%

Travel and Tourism Index -3.7%

Bradle Airport

Passengers -4.7%

Freight -9.0%

State Tax Receipts

Income 2.8%

Sales -7.9%

Real Estate Conveance +20.9%

Electricit Sales +2.3%

State Exports +5.4%

Personal Income (est.) +2.7%

Coincident GDI -0.1%

Indicatos of

Futue Economic Activity

Initial Unemploment Claims -2.5%

Housing Permits +0.5%

Net New Business Starts -25.7%

Leading GDI +2.3%

CONTENTS

Summe 2013 Volume 21 Numbe 3

Taking Stock ........................................ 2

Crime in Connecticut ..........................3

Gun Violence .......................................5

Centerfold: Town Crime Rates............ 8

Paying for ECS ...................................10

Labor Market Outlook .......................12

Labor Market Data ............................13

Quarterly Forecast ............. ............. ...14

A Forward Look .................................16

TAKING STOCKBack on Track?

The meager 0.3% increase in jos during the four quarters ending 2013-Q1

elies Connecticuts reneed dnamism. Jos jumped nearl 3,500 in the

latest quarter, maring one of the est outings for the recoer to date, and sug-

gesting the states recentl derailed recoer might again e ac on trac.

Construction jobs were up smartly1,400 for the quarter. Brisk activity innonresidential building (e.g., commercial buildings, schools) and nonbuildingconstruction (i.e., infrastructure) helped fuel the rise. Recent advances in hous-ing permit activity should further prop up the residential end of the market andprovide continued support for industry jobs in coming months.

Leisure and hospitality also contributed to the quarters strength. The restau-rant and lodging industry beefed up staffing by 3,000 on top of a similar additionin 2012-Q4. Unfortunately, the casinos didnt benefit from the heightened socialactivity. Local government jobs in Norwich-New London, where the gaming jobsare tallied, dropped another 350a typical attrition rate of late and a big reasonrecovery has eluded this major labor market area.

In a sign that renewed state job growth may have staying power, professionaland business service jobs advanced by 2,100, thanks to a big jump in administra-tive, support and waste services, a category that includes employment services.In recent quarters temporary help, a leading indicator of overall job growth, hasshown a stronger and more consistent pattern of expansion than has total employ-ment. Theres also little evidence that employers are substituting temp workers forpermanent hires (graphs). With luck, the gains will continue (page 14).

Sustained job growth would do much to restore the states housing market,which seems to be lagging the U.S. in its recovery. Home prices are still slidingaccording to the constant quality home price index at UConns Real Estate Center.But permits are up, as are housing sales. And though down a bit from last quarter,real estate conveyance tax receipts are at their highest level in five years.

This quarters issue takes us to the intersection of crime and the classroom. Weexamine recent trends in violent and property crimes and consider the likely effectsof changing gun laws on gun deaths and industry employment. We also look atthe states constitutional mandate to provide a substantially equal education toits schoolchildren and ask what the added cost of meeting this legal requirementwould mean to the typical household.

10

15

20

25

30

35

40

20102005200019951990

1500

1550

1600

1650

1700

1750000s 000sTemp Jobs

Total Jobs

1.0%

1.5%

2.0%

2.5%

Average

Temp Jobs as % Total Jobs

20102005200019951990

Jobs with temporar emploment service irms are growing briskl, and leading the rebound inConnecticuts broader econom (let). Temp jobs as a percent o total jobs are near their 20-earaverage (right), suggesting emploers are not substituting temp workers or permanent hires.

TEMP JOBS SIGNAL CONTINUED EXPANSION


3/16Summer 2013 THE CONNECTICUT ECONOMY 3

By DENNIS HEFFLEy

The murder of 26 students and staffmemers at Sand Hoo Elementar

School, shoced the nation and the

orld, draing reneed attention to

the hot-utton issue of gun control.

Connecticut legislators quicl enact-

ed ne las that require acground

checs for gun purchases, an cer-

tain tpes of eapons, and prohiit

the purchase or sale of high-capac-

it magazines. Spurred the polls,

seeral other states hae adopted

similar measures, ut spending

the NRA and other gun loists con-tinues to slo legislatie efforts.

There are other impediments to suchlaws, including the common percep-tion that we live in a more crime-filledworld. Some regard this as a valid rea-son for not restricting, or even encour-aging, gun ownership, in the beliefthat crime will only be controlled bymore guns in law-abiding hands. But

the perceived increase in crime ratesis generally unfounded (http://www.utexas.edu/features/2008/crime/).Crime rates have declined sharply, andthis decline has occurred at the sametime that the percentage of families

owning guns has fallen (NY Times,3/9/13). But lets examine these trends

one at a time.

LOwER CRIME RATES

The FBIs Uniform Crime Reporting(UCR) Program compiles, analyzes,and publishes data on seven indexcrimes, including four types of vio-lent crime (murder, rape, robbery,aggravated assault) and three typesof property crime (burglary, larceny,vehicle theft). Yearly state-level dataon the number of such crimes and theresulting crime ratesreported hereas crimes per 1,000 residentsareavailable for years 1960-2011. Thetwo graphs show the violent crimerate and the property crime rate forConnecticut and the U.S.

Over the entire period, Connecticuthas experienced a significantly lowerrate of violent crime than the nationas a whole, averaging about 1.8 fewerviolent crimes per thousand persons.

Both the country and the state sawdramatic increases in violent crimesduring the 1960s and 1970s. A briefrespite in the early 1980s gave wayto further increases, with the violentcrime rate peaking for Connecticut

in 1990, at 5.54 per thousand, andat 7.58 per thousand for the U.S. in

1991. Since then, violent crime rateshave fallen back to levels not seensince the 1970s: 3.86 for the U.S. and2.73 for Connecticut. Property crimerates reveal a similar pattern, peakingfor the U.S. and the state in 1980,then again in the early 1990s, followedby major reductions to 1967 levels.

These improvements are impressiveand tend to contradict casual claimsabout rampant or ever-rising crime,

but they also need to be put into per-spective. First, national or state-leveldata mask the enormous variation incrime rates across towns or neighbor-hoods. Our centerfold data, for exam-ple, show that recent crime rates perthousand for Connecticuts 169 townsrange from zero to 13.51 for violentcrimes, and from 1.52 to 50.31 forproperty crimes. When it comes tocrime, location clearly matters, so thereduction in state-level crime rates may

offer little solace if you live in a high-crime area. Second, while U.S. crimerates generally have declined in recentdecades, we have miles to go in match-ing the crime-control record of othercountries. A 2002 study published by

0

1

2

3

4

5

6

7

8

CT Violent

US Violent

2010

2005

2000

1995

1990

1985

1980

1975

1970

1965

1960

SOURCE: The Connecticut Economy, based on U.S. Department of Justice data (www.bjs.gov/ucrdata/).

10

20

30

40

50

60

CT Property

US Property

2010

2005

2000

1995

1990

1985

1980

1975

1970

1965

1960

SOURCE: The Connecticut Economy, based on U.S. Department of Justice data (www.bjs.gov/ucrdata/).

Crimes per 1000 Crimes per 1000

CRIME, PUBLIC SAFETy,AND EDUCATION

VIOLENT CrIMES PEr 1000 PErSONS IN CTAND THE US, 1960-2011

PrOPErTY CrIMES PEr 1000 PErSONS IN CT ANDTHE US, 1960-2011Gr

APH

1 GrAPH

2


4/16

4 THE CONNECTICUT ECONOMY Summer 2013

the New Zealand Ministry of Justice(https://www.ncjrs.gov/App/publi-cations/Abstract.aspx?id=199977),showed that New Zealands rate ofviolent crime in 2000 was only aboutone-fourth the U.S. rate.

FEwER OwNERS, MORE GUNS

Interestingly, the fall in crime

rates, noted above, has occurred dur-ing a period when the percentagesof individuals and families owningguns have declined (http://www.cnn.com/2012/07/31/politics/gun-own-ership-declining). At the same time,this shrinking gun-owning share ofthe population apparently has beenaccumulating more guns. Unless onebelieves this increased concentrationof gun ownership has been an effec-

tive crime deterrrent, its difficult toattribute the observed reduction incrime rates to any deterrent effect ofgun ownership.

Unfortunately, the question ofwhether gun ownership (or multi-gun ownership) deters or encouragescriminal activity will remain largelyunanswered without better data. Thelack of consistent registration require-ments and the weak data on compli-ance with even existing gun laws make

this a challenging area of research.Still, there are other public policies anddemographic patterns that affect crimerates, and the poor quality of gun own-ership data should not preclude morecomplete studies of the factors thatinfluence crime.

CAN PUbLIC SPENDING HELP?

Much of the formal analysis of crimehas focused on the relative effective-ness of deterrence and punishment.

For example, is it better to invest inofficers on the beat or prison cells?But the question can be expanded toinclude other public outlays, beyonddollars spent on public safety. Are pub-lic dollars spent on better housing, jobcreation, or education more effectivein combatting crime than expenditureson public saftety? The following mul-tivariate regression analysis addresses

this issue using state-level data for theyears 1995, 2000, 2005, and 2010.

In the regressions, summarizedbelow, state-specific violent and prop-ety crime rates are regressed on severalcategories of direct general expendi-tures per capita (state and local spend-ing combined)educational services,public safety, and all other state andlocal outlaysas well as the stateunemployment rate, percent living inurban areas, percent in the 18-24 agegroup enrolled in college, and percentof the age 25+ population with at leasta bachelors degree. Dummy variablesalso were used to distinguish the threelater data periods (2000, 2005, 2010)from the base year (1995).

In the regression table, each coef-ficient sign indicates a positive or

negative relationship with the depen-dent variable (violent crime rate orproperty crime rate) after controllingfor the other variables. Greater reli-ability of the estimated coefficient isindicated by a lowerp-value. Resultsare mixed. Not too surprisingly, the setof variables explains a larger share ofthe variation in property crime (52%)than violent crime (42%), since thelatter crimes are likely more subject toirrational influences.

Differences in violent or propertycrime rates are, for the most part,weakly associated with the three cat-egories of per capita state and localspending. The one exception is thepositive link between public safety

spending and the violent crime rate.This may simply reflect the need tospend more on public safety where vio-lent crime rates are high, rather thanhigher public safety spending actuallyincreasing violent crime. Such prob-lems of reverse causality are commonin this sort of analysis.

The unemployment rate appears tobe less of a factor in determining crimerates than the percent of the popula-tion living in urbanized areas, whichis positively linked to both violent andproperty crime. While public educa-tion spending per capita appeared tobe weakly associated with either violentor property crime, both the percentageof 18-24 year olds in college and thepercentage of adults 25 or older withat least a bachelors degree are strongly

associated with lower crime rates. Thenegative dummy variable coefficientsreflect the downward drift in both cat-egories of crime, noted earlier.

The secular decrease in both violentand property crime rates is a wel-come trend, but not guaranteed andnot one that should divert attentionfrom the issue of safe and responsiblegun ownership. Education may haveplayed a role in paring crime back to1970 levels: one way to view the above

results is that current public spendingon schooling may have little influenceon present crime rates, but is essentialin setting the table for the longer-term crime-control benefits of a bettereducated population.

VIOLENT CrIME rATE PrOPErTY CrIME rATE

Explanatoy Vaiables Coefficient p-Value Coefficient p-Value

Constant 6.5536 0.000 56.1739 0.000S&L Educ Services ($ pc) 0.0001 0.855 -0.0005 0.815S&L Public Safety ($ pc) 0.0027 0.078 -0.0093 0.172S&L All Other Exp ($ pc) -0.0002 0.398 -0.0006 0.453% Unemployed 0.1189 0.218 0.0911 0.833% Urban 0.0551 0.000 0.3101 0.000% Age18-24 in College -0.1141 0.000 -0.6271 0.000% Age 25+ with BA+ -0.1230 0.000 -0.3991 0.009Dummy_2000 -0.9332 0.013 -6.1108 0.000Dummy_2005 -1.1648 0.010 -5.5085 0.007Dummy_2010 -1.7944 0.013 -7.1068 0.028R-squared 0.452 0.544

Adjusted R-squared 0.420 0.519# Observations 200 200

SOURCE: Developed by The Connecticut Economybased on public data sources.

ANALYzING STATE-LEVEL CrIME rATES, 1995 - 2010



By STEVEN P. LANzA

The Neton massacre has raised

the issue of gun iolence to a feer

pitch. while Connecticut and a fe

other states hae responded ith

tough ne controls on firearms, most

states hae loosened restrictions.

Ho might such changes affect gun

iolence? And ould tougher gun

las drie gun maers and their jos

to other states?

Columbine. Virginia Tech. Fort

Hood. Tuscon. Aurora. BeforeDecember 14, 2012, this long, sad,but incomplete tally of mass shootingsin America kept the debate over fire-arm safety on a low, slow simmer fornearly 15 years. But the latest incidentin Newtown Connecticut, where 20innocent children and 6 staff mem-bers at Sandy Hook Elementary schoolwere brutally massacred in their class-rooms, barely a week before Christmas,triggered universal shock and outrage,

and prompted renewed efforts to curbgun violence.

Some, including the victims fami-lies, called for new restrictions onthe sale and use of firearms. Theirefforts led the U.S. Congress to takeup the issue of gun laws for the firsttime since it passed a 10-year suspen-sion on the sale of semi-automaticweapons back in 1994. This time,however, in the face of Republicanopposition, Congress failed to enactany of the proposed safeguards, whichincluded universal background checksfor gun buyers, a reinstated ban onmilitary-style assault weapons and newprohibitions on high-capacity maga-zines. With overwhelming bipartisansupport in the General Assembly, how-ever, Connecticut embraced these andother measures at the state level andenacted among the most restrictive gunlaws in the country, as did Colorado,

Maryland and New York.

But others, led by the gun lobby,

insisted that deterring gun violencerequired making firearms morewidelyavailable. National Rifle Association(NRA) president Wayne LaPierrefamously quipped, the only thing thatstops a bad guy with a gun is a goodguy with a gun. Accordingly, theNRA made a plan to arm the nationsclassroom teachers the centerpiece ofits response to Newtown. Withoutgoing quite so far as to mandate uni-versal firearm possession, most states

that have revised their gun laws post-Newtown have opted to loosen ratherthan tighten gun restrictions, in manycases via more permissive concealedweapon laws.

THE GUN TOLL

International statistics show theU.S. has among the highest rates ofgun violence in the developed world.According to 2009 data from theUnited Nations Office on Drugs andCrime, America was a global leader infirearm homicides3.3 per 100,000people that year, compared with ratesof 0.5 in Canada, 0.2 in Germany,0.1 in Great Britain and Australia, andnear zero in Japan. All but the U.S.require firearms to be registered andowners licensed, and they often bancertain categories of weapons such ashandguns or assault weapons.

According to data from the Centers

for Disease Control, approximately30,000 people die each year in theUnited States at the hand of a gun,through homicides, suicides and acci-dents. In Connecticut, the number ofannual gun deaths is about 200. Alaska,Alabama, Louisiana, Mississippi andWyoming rank highest among states inthe rate of gun-related fatalities, withmore than 15 gun-related deaths per100,000 people.

Despite the Sandy Hook massacre

and other earlier mass shooting inci-dents in the state, including the 2010Hartford Beer Distributor shootingin Manchester, and the 1998 shoot-ing at the Connecticut Lottery inNewington, the incidence of gun deathsin Connecticut is relatively low, withfewer than 6 per 100,000 each yearConnecticut, along with neighboringNew York, New Jersey, Massachusettsand Rhode Island, plus the island stateof Hawaii, consistently rank lowest

nationally in firearm fatality rates.

TwO SIDES OF A COIN

The reaction to Newtown highlightstwo opposing approaches to deal-ing with gun violence. One involvestrengthening restrictions on firearmuse; the other, expanding the num-ber of firearms in circulation. Theoptions are, in a sense, two sides of acoin denominating firearm availabilityAreas with tougher gun laws are likelyto have lower rates of gun ownershipand vice versa. The accompanyingscatterplot (Graph 1) illustrates thisinverse relationship between gun lawrestrictions and gun ownership.

The index of gun laws shown inthe graph has been compiled annuallysince 2007 by the Brady Campaignto Prevent Gun Violencenamed inhonor of Jim Brady, President Reaganspress secretary who was partially para-

lyzed in the 1981 assassination attempton the president.The Brady Campaign examines

more than 40 features of state gunlaws, grouped into five broad cat-egories including firearm traffickingbackground checks, child safety, assaulweapons, and guns in public placesand grades states on a 100-point scaleIn the latest Brady scorecard for 2011California ranked first (most restrictive) among states with 81 points.

TARGETING GUN VIOLENCECan We Reduce Gun Deaths and Not Lose Jobs?


6/16



effects (FE), and lagged dependentvariable (LDV) regressionstry toexploit this feature of the data, each ina slightly different way.

Together, these models have a usefulbracketing property. When wereunsure of the appropriate model, thevarious results give us some upper andlower bounds of reasonable estimatesof the true coefficient values.

Compared to the OLS estimates,the panel models generally have smallercoefficients and larger p values. Nowa ten point increase in the Brady scoreis associated with a 0.14 or 4% dropin fatalities in the RE model, a 0.1 or3% decline in the LDV model and nochange in the FE model, since the esti-mate is not statistically significant.

By contrast, a ten point increase

in gun ownership is associated with0.23 or 7% greater fatalities in the REmodel, but with no change under theLDV and FE models.

Gun control thus seems to havea modest negative effect on firearmfatalities, and gun ownership a modestpositive effect on gun deaths.

wILL REGULATION COST JObS?

Connecticuts efforts to tighten gunrestrictions this year elicited threats

from firearm and ammunition manu-facturers to abandon the state for moregun-friendly climates. Is there any evi-dence that gun laws scare away firearmmanufacturers?

A simple scatter graph of the num-ber of firearm establishments (NAICS332994) plotted against Brady scoresshows a positive, not negative, relation-ship between the two variables, thoughthe link is not statistically significant(see Graph 2). Controlling for thepanel structure of the data, and forother determinants of business loca-tion, like taxes paid by fabricated metalmanufacturers, the productivity of fab-ricated metal workers, and the generaleducation level of the adult popula-tion, doesnt alter that conclusion.

An LDV model (Table 2) suggeststhat the key determinant of the num-ber of firearms establishments in a stateis having a tradition of those busi-nesses in the first place. The positivecoefficient on lagged (previous years)

establishments indicates a certain iner-tia or path dependency in locationdecisions. That seems sensible, sincemanufacturers come to depend onlocal suppliers, workforces and otherunique area capabilities they mightlose if they abandon the location.Establishments also vary positivelywith the location quotient for thebroader fabricated metal manufactur-ing industry (NAICS 332). That againmakes sense, since gun makers and

other fabricated metal firms are likelyto have similar input requirements.

And while the Brady index coef-ficient is positive, its not statisticallysignificant, providing no evidence thattougher gun laws send arms makers

packing. Thats eminently reasonabletoo: whatever the in-state constrainton firearm and munitions sales anduse, an arms makers market is primar-ily national and international, both owhich are beyond the reach of localawmakers.

THE UPSHOT

Gun control advocates may bemoan(and gun enthusiasts applaud) themodest link between firearm deathand gun availability. But rememberthe analysis only considers how fatalities respond to changes in local lawswhich might be easily circumventedby taking a short drive across the stateborder. Whats more, new gun lawcan do little to alter the existing stockof weapons already in circulation.

For similar reasons, changes to anyindividual states gun laws are unlikelyto have much of an economic impacon manufacturing firms and theiemployees if those changes arent replicated at the federal level.

Reducing death rates to levels seenin other developed countries wouldno doubt require the kinds of universal restrictions on the acquisition anduse of firearms often adopted abroadBut the United States constitutiona

enshrinement of gun rights, coupledwith its romanticized view of the rolefirearms played in winning AmericanIndependence and taming the Wesmakes gun control a perennial toughsell.

Deteminantsof AmsEstablishments

Coeff. p-Value

C -1.071 0.725

Brady Index 0.003 0.211

Taxes 2.071 0.500

WorkerProductivity 0.125 0.651

PercentBachelors 0.004 0.755

FabricatedMetal LQ 0.002 0.028

LaggedEstablishments0.134 0.000

SOURCE: The Connecticut Economy, based on data from the U.S. Census Bureau, BEA and the Brady Campaign.

Controlling or other inluences, gun deaths varied positivel with gun ownership and negativel with gunlaws during the 2007 and 2010 period according to a variet o panel regression estimates (above).Over the same period, gun laws had no relation with the number o irearms-related establishments(NAICS 332994) locating across states (right).

GUN LAwS MIGHT SAVE LIVES, wITHOUT COSTING JOBS

TABLE

1 Deteminants of Gun Fatalities

OLS rE LDV FE

Coeff. p- Value Coeff. p- Value Coeff. p-Value Coeff. p-Value

Brady Index -0.034 0.000 -0.014 0.084 -0.010 0.035 0.015 0.419Gun Ownership 0.085 0.000 0.023 0.030 0.009 0.228 -0.014 0.270

TABLE

2


8/168 THE CONNECTICUT ECONOMY Summer 2013

VIOLENT PROPERTy TOTAL

CRIME RATES CRIME RATES CRIME RATES

bridgeport - Stamford LMA

Ansonia 1.6 19.2 20.8

Bridgeport 9.9 38.2 48.1

Darien 0.3 7.3 7.6

Derby 1.7 28.7 30.4Easton 0.5 3.0 3.5

Fairfield 0.4 18.8 19.2

Greenwich 0.4 6.7 7.1

Milford 0.6 31.9 32.5

Monroe 0.3 9.0 9.3

New Canaan 0.2 5.3 5.5

Newtown 0.5 7.4 7.9

Norwalk 3.8 22.1 25.9



Oxford 0.3 6.3 6.6

Redding 0.3 6.8 7.1

Ridgefield 0.0 2.8 2.8

Seymour 1.0 14.4 15.4

Shelton 0.7 13.1 13.8Southbury 0.6 9.8 10.4

Stamford 3.2 16.3 19.4

Stratford 2.8 29.7 32.6

Trumbull 0.6 19.3 19.8

Weston 0.1 5.1 5.2

Westport 0.7 15.0 15.7

Wilton 0.1 6.3 6.4

Woodbridge 0.1 13.2 13.3



Danur LMA

Bethel 0.1 16.3 16.4

Bridgewater 1.0 6.8 7.8

Brookfield 0.6 12.3 12.9

Danbury 2.1 20.2 22.3New Fairfield 0.6 2.7 3.3

New Milford 0.6 20.6 21.3

Sherman 0.5 4.2 4.7

Enfield LMA

East Windsor 1.4 29.2 30.5

Enfield 0.8 17.2 18.0

Somers 0.6 5.6 6.2

Suffield 0.2 6.9 7.2

Windsor Locks 0.9 16.1 17.1

< 8 ( 60 towns)

8 to 17 ( 53 towns)

> 17 ( 56 towns)

THE CENTERFOLDIndex Crimes Per 1,000 Residents, 2011

SOURCE: The Connecticut Economybased on data rom theAnnual Report o the Uniorm Crime Reporting Program, Stateo Connecticut Department o Emergenc Services and PublicProtection, Crimes Analsis Unit.





Hartford LMA

Andover 0.3 7.8 8.1

Ashford 0.7 4.6 5.3

Avon 0.0 10.9 10.9

Barkhamsted 0.0 6.8 6.8

Berlin 0.8 19.8 20.6

Bloomfield 2.2 25.6 27.8

Bolton 0.6 7.2 7.8

Bristol 1.9 23.8 25.7Burlington 0.1 5.0 5.1

Canton 0.3 11.7 12.1

Colchester 0.3 7.5 7.8

Columbia 0.0 5.4 5.4

Coventry 1.2 16.0 17.3

Cromwell 0.4 25.3 25.7

East Granby 0.2 7.2 7.4

East Haddam 0.3 14.6 15.0

East Hampton 0.8 17.5 18.2

East Hartford 3.3 27.5 30.8

Ellington 0.3 5.7 6.0

Farmington 0.6 25.2 25.9

Glastonbury 0.6 9.8 10.4

Granby 0.8 10.8 11.6

Haddam 0.4 7.7 8.1

Hartford 12.8 43.0 55.9

Hartland 0.0 3.3 3.3

Harwinton 0.2 8.8 9.0

Hebron 0.2 5.3 5.5

Lebanon 0.1 7.4 7.6

Manchester 2.2 29.9 32.1

Mansfield 0.4 9.0 9.4

Marlborough 0.0 5.7 5.7

Middlefield 0.5 7.7 8.1

Middletown 1.7 22.6 24.3

New Britain 4.4 39.4 43.8

New Hartford 0.3 7.3 7.7

Newington 0.8 24.4 25.3

Plainville 3.5 29.7 33.2

Plymouth 0.2 13.8 14.0

Portland 0.5 9.1 9.7

Rocky Hill 0.3 14.1 14.4

Simsbury 0.2 7.5 7.7



South Windsor 0.6 16.6 17.2

Southington 0.7 18.5 19.2

Stafford 1.1 6.9 8.0

Thomaston 0.5 16.6 17.1

Tolland 0.4 3.8 4.2

Union 0.0 9.6 9.6

Vernon 1.1 10.6 11.6

West Hartford 0.4 4.7 5.2

Wethersfield 0.8 13.3 14.1

Willington 0.6 3.8 4.5

Windsor 0.7 15.8 16.5

Ne Haen LMA

Bethany 0.2 7.0 7.2

Branford 0.9 24.9 25.8

Cheshire 0.4 9.7 10.1

Chester 0.0 6.4 6.4

Clinton 1.4 23.5 24.8

Deep River 0.6 7.4 8.0

Durham 0.6 8.2 8.8

East Haven 0.8 28.3 29.1

Essex 0.4 6.0 6.4

Guilford 0.7 15.4 16.1

Hamden 5.5 20.3 25.8

Killingworth 0.3 4.7 5.1

Madison 0.3 6.6 6.9

Meriden 2.4 28.1 30.5

New Haven 13.5 50.3 63.8

North Branford 0.1 17.0 17.0

North Haven 0.5 26.3 26.8

Old Saybrook 0.8 15.5 16.3

Orange 0.3 29.3 29.6

Wallingford 0.6 19.0 19.7

West Haven 4.5 23.0 27.4

Westbrook 0.5 6.0 6.5

Norich - Ne London LMA

Bozrah 1.2 9.3 10.5

Canterbury 0.0 9.5 9.5

East Lyme 0.5 9.6 10.1

Franklin 0.0 11.4 11.4

Griswold 0.9 9.4 10.3

VIOLENT PROPERTy TOTA


Groton 1.1 17.5 18.6

Ledyard 0.8 7.8 8.6

Lisbon 0.7 32.7 33.4

Lyme 0.0 7.5 7.5

Montville 1.0 6.6 7.6

New London 12.1 30.2 42.3

North Stonington 1.0 13.0 13.9

Norwich 3.5 22.5 26.0

Old Lyme 0.1 6.0 6.2

Preston 0.2 7.3 7.5

Salem 0.2 5.7 5.9

Sprague 1.3 9.9 11.2

Stonington 0.6 16.9 17.5

Voluntown 0.4 9.8 10.2

Waterford 2.6 24.3 26.9

Torrington LMA

Bethlehem 0.6 7.5 8.1

Canaan 0.0 4.4 4.4

Colebrook 0.0 7.1 7.1

Cornwall 0.7 14.6 15.2

Goshen 0.7 4.9 5.6

Kent 0.7 13.0 13.6

Litchfield 0.3 8.0 8.3

Morris 0.4 6.6 7.0

Norfolk 0.0 10.3 10.3

North Canaan 0.0 7.1 7.1

Roxbury 0.9 7.6 8.5

Salisbury 0.7 6.7 7.4

Sharon 0.6 5.4 6.1

Torrington 1.7 20.6 22.3

Warren 0.8 1.5 2.3

Washington 0.3 7.7 7.9

Winchester 1.0 19.9 20.9

Woodbury 0.0 7.4 7.4

waterur LMA

Beacon Falls 0.2 14.3 14.5

Middlebury 0.1 12.4 12.5

Naugatuck 1.0 18.8 19.7

Prospect 0.2 7.4 7.6

Waterbury 3.2 40.5 43.7

Watertown 1.6 19.6 21.2

Wolcott 0.3 18.9 19.1

willimantic - Danielson LMA

Brooklyn 1.2 8.1 9.3

Chaplin 0.4 9.7 10.2

Eastford 0.0 3.5 3.5

Hampton 0.0 4.3 4.3

Killingly 1.0 9.4 10.4

Plainfield 0.5 3.3 3.7

Pomfret 0.0 5.3 5.3

Putnam 0.9 20.6 21.5

Scotland 0.6 6.7 7.3

Sterling 0.0 11.4 11.4

Thompson 0.5 10.7 11.2

Windham 1.0 14.2 15.2

Woodstock 0.4 4.2 4.6

Ton Aerage 1.1 13.5 14.5

Index crimes are the sum o violent (murder,rape, robber, assault) and propert (burglar,

larcen, vehicle thet) crimes per 1,000 popu-lation. Violent crimes ma grab headlines, butpropert crimes are ar more commonacrossConnecticut towns propert crimes outnumberviolent crimes b nearl 13 to 1. The graphshows a strong positive, nonlinear associationbetween the two broad measures o crime. Atlow rates o propert crime, the violent crimerate is airl constant. Eventuall, though, agiven increase in propert crimes is associatedwith a rising incidence o violent crime.

0 10 20 30 40 50 60

0

2

4

6

8

10

12

14

16

ViolentCrimeRate

Property Crime Rate

ABOUT THE CENTErFOLD


10/1610THE CONNECTIC UT ECONOMY Summer 2013

By STAN MCMILLEN

Connecticut has long underfundedits Education Cost Sharing (ECS)

program, designed to help equalize

educational opportunities across the

state. Closing the $1 illion gap

ont e eas, ut it is a constitution-

al and educational imperatie. And

the state has optionssome are fairl

straightforard, others are a it less

conentional.

Connecticut has a tradition of fund-

ing public education through localproperty taxes. But the large variationin property wealth among Connecticuttowns can result in equally large dis-parities in per-pupil spending. The1977 Connecticut Supreme Court caseHorton v. Meskill struck down thestates then-exclusive reliance on localproperty taxes to finance education,ruling that Connecticut is constitu-tionally bound to provide a substan-tially equal educational opportunityto all schoolchildren. In response,Connecticut adopted an EducationCost Sharing (ECS) program, whichimposed on towns a minimum expen-diture requirement, but also providedstate support to help close the gaps inper-pupil spending.

But the state has long underfundedECS. For the last five fiscal years, theECS budget has been frozen at $1.89billion, yet the cost to fully fund ECS

according to the current statutory for-mula is $2.65 billion. Include excessspecial education costs and the schoolreadiness program and the total growsto $2.98 billion.

USUAL SUSPECTS

ECS is currently paid out of thestates general fund, where sales andincome taxes provide the two largestrevenue streams. Thus, one way toclose the $1 billion gap is to raise the

sales tax, the personal income tax orsome combination of the two.

Consider increasing the personalincome tax. Connecticut receivedapproximately $7.78 billion in person-al income tax revenue in calendar year2011. The ECS gap represents about13.8% of this amount. That meansclosing the gap would require a $1.09billion or 13.8% income tax hike.According to Connecticut Departmentof Revenue Services (DRS) data, theeffective tax rate on adjusted gross

income (AGI) in 2011 was approxi-mately 4.1%, so increasing that rateto 4.67%through a 0.57-percentagepoint across the board increasewouldproduce the requisite revenue.

Another option is to increase salestaxes by $1.09 billion. In 2011,Connecticut collected $3.53 billionin sales tax revenue through a 6.35%levy on taxable goods and services. Toraise the revenue needed to close thegap, the sales tax rate would need to

increase by 30.8%, or to 8.3%.One caveat to the analysis: these

tax hikes are probably the minimumincreases needed to raise the requiredrevenue because there would likelybe behavioral responses to the higher

rates. If residents work less or buyfewer taxable items, the added revenue

may well fall short. Thus, somewhatlarger rate increases might be neededto fully fund ECS.

IMPACT ON THE MEDIANHOUSEHOLD

What would these tax increases meanto the median household in the state?The median is more representative ofthe typical household than is the aver-age because it is in the exact middle ofthe income distribution of householdsand is less subject to distortion by out-lying observations. According to datafrom the Census Bureaus AmericanCommunity Survey (ACS), the medi-an AGI for households living in owner-occupied units was $85,610 in 2011.

Using the Connecticut DRS incometax calculator and assuming the filerswere married filing jointly, and claimedthe $300 property tax credit, the medi-an household owed $3,192 in 2011

Connecticut personal income taxes.Assuming deductions and creditsremain the same but that the stateadopts an across-the-board 0.57 per-centage point increase in marginal per-sonal income tax rates, the median

FUNDING CONNECTICUTSEDUCATION COST SHARING

$0 $50 $100 $150 $200 $2500.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0Sales Tax Offset

Income Tax Offset

SOURCE: The Connecticut Economy, based on data from CT OPM, CT DRS, U.S. BLS and U.S. Census.

Net increase in taxes as apercent of income

Median household income in 000s

NET TAX INCrEASE FrOM HYPOTHETICAL STATE MILL rATEwITH OFFSETS FOr INCOME AND SALES TAXES


11/16Summer 2013 THE CONNECTICUT ECONOMY1

households personal income tax obli-gation would rise to $3,529a $337or 10.5% increase in taxes.

Suppose the sales tax rises to 8.3%.Assuming spending patterns ofConnecticut households are similarto households in the Northeast atcomparable income levels, our medianhousehold earning $85,610 spendsabout $23,231 or 27.1% of its incomeon items subject to Connecticut salestax. Thats based on the Bureau ofLabor Statistics regional ConsumerExpenditure Survey data for 2011.

The households sales tax burden is$1,475 or 1.7% of its income beforeother taxes. If the Connecticut salestax rate rose from 6.35% to 8.3%, ourmedian homeowners sales tax burdenwould increase by $453 or 0.58% of

its household income.Hiking taxes for ECS, and funnel-ing the revenue into the general fund,however, might prove an irresistibletemptation to spend the extra moneyon other budget priorities. One wayto secure ECS funding would be toremove ECS from the general fundaltogether and place it, for example,in trust of the State Treasurer. Butanother way to safeguard ECS moneyis to tie funding to a dedicated revenue

stream from the very beginning.

THINkING OUTSIDE THE bOx

Many states have such dedicated reve-nue streams. According to the NationalConference of State Legislatures, sixteenstates, including neighboring Vermontand New Hampshire, levy a state prop-erty tax, often earmarking the revenuesfor education. Vermont, for example,levies a 15.9-mill state education taxon nonresidential property and an 11-

mill tax on homes. In Montana, thestate education tax is 40 mills and isdirected entirely toward school financeequalization. Minnesota pegs its statemill rate to inflation, rather than fixingit at a predetermined millage. Howmight a similar system work here inConnecticut?

Generating revenue to fully fundECS under the current statutory for-mula would require levying a flat 7.68-

mill property tax across all Connecticutmunicipalities. That mill rate is basedon an ECS budget of $2.98 billion andthe total assessed value of taxable prop-erty in Connecticut of $388 billion forthe 2010 grand list year.

ACS data shows that the mediansingle family home in Connecticut wasworth $278,700 in 2011. And accord-ing to OPM records, Connecticuthomeowners owned, on average, tax-able motor vehicle property worthanother 7.8% of the value of theirresidences. If that ratio holds true atthe median, our household would owntaxable property worth $300,350.

Towns are required to assess propertyat 70% of market value, and in fiscalyear (FY) 2011 they levied, on average,a 24-mill tax on the assessed value of

property. At that rate, the owner of amedian home in Connecticut wouldhave paid $5,047 in property taxes.Adding a 7.68 state mill rate increasesthat bill by another $1,615 or 32%.

But the net effect on total taxeswould be less if the state property taxhike were paired with a correspond-ing reduction in other state taxes,made possible because the ECS budgetwould no longer be financed throughthe general fund. Sales or personal

income tax burdens could be reducedby $1.89 billion.

A $1.89 billion cut in the sales taxwould allow the rate to drop to 3% andour median homeowners Connecticutsales tax burden would fall by 52.8% or$778. Alternatively, income taxes couldbe cut by a percentage point across alltax brackets. That would reduce themedian homeowners income tax liabil-ity by 19.3% or $622.

Neither cut would fully offset the

increase that arises from a state proper-ty tax. The median homeowners totaltax obligation after the introduction ofa state property tax and correspondingoffsets, would rise by $837 annuallywith the sales tax offset (0.98% of themedian homeowners income) and by$1,025 annually with an income taxoffset (1.2% of income).

And under either offset, the taxincrease as a share of income grows as

income rises. The scatter plot relatethe net tax increases to householdincome for median homeowners acrostowns in the state. The more steeplysloped line for the sales tax offset suggests that a state property tax pairedwith a cut in the sales tax is more progressive than the same tax hike pairedwith an income tax cut.

wEIGHING THE OPTIONS

Which route is best? Thats fopolicymakers and the public to decideSales and income tax increases spreadthe burden more broadly across thepopulation. But the risk of so-calleddeadweight losses is higher if taxpayerrespond by changing behavior (working less or switching from taxed tountaxed or less-taxed good and services

either in-state or out).Property taxes probably entail fewesuch inefficiencies since property igenerally less mobile. And a propertytax hike paired with a sales tax decreasewould likely raise the progressivity othe overall tax system, since propertytends to be concentrated more heavilyamong the wealthy, and sales taxes tendto consume a larger fraction of theincome of poor households.

Bottom line: there is no free lunch

Any way you slice it, fully funding ECSrequires a $1.09 billion tax increase. Iit worth it? Consider that Connecticuhas some of the largest achievemengaps in the country (nces.ed.govnationsreportcard/statecomparisons)and that the most important factor ina firms decision to expand or locatehere is the quality and availability oour workforce. Education providethe pipeline to firms looking to locateexpand or just stay here. Other region

in the U.S. and around the world rec-ognize that education is a key to economic growth. We are competing withthese places for the jobs of the futurethat will require a workforce withadvanced skills. Connecticuts futurelike its past, depends on the quality oits workforce and that depends largelyon our education system. Maybe thebetter question is: Can we afford noto fully fund ECS?


12/16

LABOR MARKET OUTLOOKForecasts or Ke Labor Market Areas

JObS

UNEMPLOyMENT RATE

HOUSING PRICES

HOUSING PERMITS

During the our-quarters ending 2013-Q1,nonarm jobs grew modestl in the HartordLMA, held stead in New Haven but lostground in New Londonpatterns that arelikel to continue during the orecastperiod. Hartord could add 1,500 jobsor more, New London could lose upwardso 1,000, while New Haven will probablsee little change. Bridgeport-Stamordsrecent emploment decline should reverseitsel, with the region gaining 1,400 jobs inthe next our quarters.

12 THE CONNECTICUT ECONOMYSummer 2013

-3%

-2%

-1%

0%

1%

2%

New LondonNew HavenHartfordBridgeport-Stamford

ACTUAL: 2012-Q2 to 2013-Q1 PREDICTED: 2013-Q2 to 2014-Q14Q

%

6.0%

6.5%

7.0%

7.5%

8.0%

8.5%

9.0%

9.5%

10.0%


ACTUAL: 2012-Q2 to 2013-Q1 PREDICTED: 2013-Q2 to 2014-Q1

-20%

-15%

-10%

-5%

0%

5%

10%



4Q

%

-100%

-50%

0%

50%

100%

150%

200%

250%

300%



4Q

%

Jobless rates remain above 8% in all majorarea labor markets except Bridgeport-Stamord, but the should continue inchingdownward nearl everwhere. Anticipated

job growth should help Hartord breakbelow its 8% loor and bring Bridgeport-Stamords unemploment rate to under7%. The orecast calls or lower joblessrates in New London, toopossible iworkers exit the labor orce or lack o

job opportunities. New Havens lat jobmarket, though, will produce stead unem-ploment rates.

Despite a rebound in home values nation-all, prices are still slipping in Connecticutsmetro areasb as little as 1.2% inHartord to as much as 14.1% in NewLondonaccording to UConns constant-qualit price index rom CREUES. The pro-

jected ourquarter price declines acrossregions over the orecast period belie anexpected steading o home values in allmajor markets save New Havens. Pricescould even begin to turn up at ears endin New London and Bridgeport-Stamord.

In marked contrast to home prices, housingpermits dont look hal bad. Bridgeport-Stamord excepted, permits are up in allmajor labor markets, continuing a recenttrend. Permit data is naturall volatile,subject both to vicissitudes in the weath-er and to lump construction projects.Despite the expected ups and downs,permit activit should be double that orecent recession lows, particularl alongConnecticuts Gold Coast.

By STEVEN P. LANzA



INFOrMATION JOBS FINANCE JOBS BUSINESS SErVICES EDUCATION & HEALTH LEISUrE & HOSP. GOVErNMENT JOBS

Labo Maket Aea2013-Q1

(000)% Changeyea ago

2013-Q1(000)

% Changeyea ago

2013-Q1(000)

% Changeyea ago

2013-Q1(000)

% Changeyea ago

2013-Q1(000)

% Changeyea ago

2013-Q1(000)

% Changeyea ago

Bidgepot - Stamod 11.0 -0.6 40.1 -2.0 65.6 -0.7 69.7 2.0 35.6 4.5 45.8 0.7

Danbuy - - - - 7.6 0.9 - - 5.9 -1.1 8.6 0.8

Enfeld - - - - - - - - - - - -

Hatod 10.9 0.6 59.7 -2.2 63.4 3.7 99.3 1.7 42.4 3.1 85.5 0.4

Ne Haven 4.2 -5.9 12.0 -0.8 26.4 -1.1 76.6 0.7 21.8 2.5 32.9 -2.1

Noich - Ne London 1.4 -2.4 3.1 0.0 8.6 -3.0 21.0 1.0 13.2 -2.0 34.2 -3.3

Toington - - - - - - - - - - - -

watebuy 0.6 0.0 2.0 1.7 4.4 -5.0 16.3 0.0 4.5 -4.2 10.0 -1.0

willimantic - Danielson - - - - - - - - - - - -

STATEwIDE 30.7 -1.7 129.9 -1.5 197.9 0.4 319.4 1.1 138.0 4.4 241.2 -0.4

HOUSING PrICES* HOUSING PErMITS HOME SALES AVG. wKLY. HOUrS AVG. wKLY. EArNINGS AVG. HrLY. EArNINGS

Labo Maket Aea

2013-Q1

($000)

% Changeyea ago

2013-Q1 % Changeyea ago



2013-Q1

($)

% Changeyea ago

2013-Q1

($)

% Changeyea ago

Bidgepot - Stamod 465.8 -2.4 364 -15.2 1016 18.8 34.5 1.1 1065.69 -3.2 30.89 -4.2

Danbuy 259.7 -0.7 25 -21.9 139 11.8 31.5 -4.3 918.35 -1.3 29.12 3.2

Enfeld 149.1 -6.5 10 0.0 94 42.9 - - - - - -

Hatod 250.0 -1.4 241 36.2 946 13.5 34.1 -3.4 965.64 -5.8 28.29 -2.4

Ne Haven 215.8 -1.7 67 42.6 390 29.1 32.6 -1.7 865.09 -3.1 26.57 -1.4

Noich - Ne London 173.5 -14.7 46 21.1 96 2.9 32.9 4.3 860.46 13.2 26.13 8.5

Toington 147.7 -5.5 3 -75.0 79 63.7 - - - - - -

watebuy 131.7 -3.3 14 100.0 114 32.9 32.5 -1.5 801.61 1.1 24.69 2.6

willimantic - Danielson 136.1 - 11 -56.0 16 -25.2 - - - - - -

STATEwIDE 299.3 -2.6 781 0.5 2889 19.0 33.1 -2.5 935.02 -3.2 28.2 2 -0.7

LABOR MARKET DATA2013-Q1 Summar Statistics

*Trade, Transportation and Utilitie

LABOr FOrCE UNEMPLOYMENT rATE NONFArM JOBS CONSTrUCTION JOBS MANUFACTUrING TTU* JOBS

Labo Maket Aea2013-Q1

(000)% Changeyea ago

2013-Q1(%)

2012-Q1(%)

2013-Q1(000)

% Changeyea ago

2013-Q1(000)

% Changeyea ago

2013-Q1(000)

% Changeyea ago

2013-Q1(000)

% Changeyea ago

Bidgepot - Stamod 465.5 -2.1 7.9 8.0 398.1 -0.2 10.4 -3.4 33.6 -2.8 69.7 -2.1

Danbuy 90.8 -1.0 6.9 7.0 67.6 1.6 - - - - 15.4 3.4

Enfeld 47.9 -2.4 8.1 8.1 44.6 0.6 - - - - - -

Hatod 586.4 -1.0 8.4 8.6 542.1 1.2 17.0 7.8 56.6 -1.2 86.8 1.3

Ne Haven 307.6 -2.0 8.8 8.9 266.6 -0.2 7.9 -5.2 25.6 -1.3 49.0 1.2

Noich - Ne London 144.3 -2.6 8.7 8.8 124.6 -1.0 3.2 2.1 14.2 0.0 22.5 0.3

Toington 53.2 -1.0 8.3 8.5 34.9 1.0 - - - - - -watebuy 99.1 -2.2 11.3 11.3 62.0 -1.0 1.9 -6.7 7.6 0.9 12.4 0.0

willimantic - Danielson 57.1 -1.4 9.7 9.9 36.4 1.1 - - - - - -

STATEwIDE 1839.9 -1.7 8.4 8.6 1621.0 0.3 46.8 -1.4 162.7 -1.6 293.2 0.4

Nonfam jobs inched up 0.3% in the fou quates ending 2013-Q1, thanks largel to gains in the Hartord LMA. But Hartord

and Bridgeport-Stamord were stung b losses in manuacturing and fnance. Home prices havent stopped alling, but permits are

up and sales are wa up.

*Connecticut Center for Real Estate and Urban Economic Studies


14/16

ForecastedGDPGrowthatAnuualRate

14THE CONNECTICUT ECONOMY Summer 2013

-8%

-6%

-4%

-2%

0%

2%

4%

6%

US

CT

201320122011201020092008

0%

1%

2%

3%

4%

75th Percentile

Average

25th Percentile

2014-Q22014-Q12013-Q42013-Q32013-Q2

0

1

2

3

4

5

675th Percentile

Average

25th Percentile

2014-Q22014-Q12013-Q42013-Q32013-Q2

ForecastedQu

arterlyJobChange

QuarterlyChangeatAnnualRate

SOURCE: The Connecticut Economy, based on data from theBureau of Labor Statistics.

SOURCE: The Connecticut Economy, based on survey data fromthe Wall Street journal.

SOURCE: The Connecticut Economy.

THE QUARTERLy FORECASTA Sunnier Outlook, With Possible Storms

By STEVEN P. LANzA

Piggacing on reounding U.S. GDPgroth, Connecticut posted one of

the healthiest jo gains of the reco-

er in 2013-Q1. And though the

outloo for the U.S. econom ma not

call for spectacular adances in com-

ing quarters, the nation could do ell

enough to help sustain the states

current pace of recoer this ear and

into the net.

Connecticuts economy has been inhibernation since 2012-Q1, when the

state notched the kind of job gains,nearly 10,000 strong, it hadnt seen in15 years. But the next three quartersbrought fewer than 1,000 jobs, net, tothe Nutmeg State.

2013 began with a smaller, butpotentially more sustainable, bang of3,400 jobs, raising hopes that the statesrecovery may finally be back on track.

Four dozen economists surveyed bythe Wall Street Journal expect U.S.growth to slow to just under 2% in2013-Q2, before returning to 2013-Q1s 2.5% pace in quarter three, andto nearly 3% by 2014-Q2. At thoserates of U.S. GDP growth, Connecticutcould average about 3,300 new jobs ineach of the coming quarters.

This relatively upbeat outlook comesas households, feeling perhaps a tadricher as the stock market scales newheights, shrugged off a jump in payrolltaxes and boosted real personal con-

sumption expenditures by 3.2%morethan in every quarter of the recoverybut one. Washington lawmakers alsoappear to have backed away from thepartisan brinksmanship that undercutthe economys momentum in both2011 and 2012.

The U.S. and the state could do bet-ter still if the budding housing recoveryreally takes off. U.S. home sales, pricesand permits are all on a steady rise,while foreclosures are at their lowest

levels since the National Associationof Realtors started tracking them in

2008.The top quartile of economists sur-

veyed see U.S. GDP logging gains of3% or more in the second half of 2013and the first half of 2014. At that rela-tively frothy pace, Connecticut couldadd an average of 4,500 jobs in comingquarters.

But the pessimists fret, with goodreason, that we have yet to see the fulleffect of recent federal austerity mea-

sures. Households have responded tohigher taxes by saving less, somethingtheyre unlikely to do indefinitely. Andthe effects of the sequester could buildas the year goes on. Whats more,Europes economies are still in reces-sion, and Chinas is shifting down agear.

Even the naysayers concede that thechances of an outright recession hereare quite slim. Fewer than 1 in 4economists in the WSJsurvey see GDP

advancing by 2.2% or less in the fore-cast perioda rate that should none-theless support Connecticut job gainsof at least 3,000 quarterly .

Connecticut may be especially vul-nerable to the sequester fallout. GeorgeMason University economist StephenFuller estimates that the sequestercould cost Connecticut over 40,000jobs, with 6 of every 7 tied to cuts inthe defense budget. Those losses aremore than enough to offset the gains

anticipated under any of the three fore-cast scenarios.

And even if Connecticut did manageto nab all the jobs expected under themiddle-road scenario, the state wouldstill be less than 60% recovered fromthe 2008 recession at the halfway markof 2014.

CT JOB GrOwTH IMPrOVES...

...AND rISING PrOSPECTSFOr U.S. GDP...

...SHOULD HELP CT BUILD ONEArLIEr GAINS


15/16

The oveall index deceased 3.7% in

2013-Q1 compared with the same quarterthe ear beore. The index consists o roomoccupanc, slot machine revenues, atten-dance at six major tourist attractions, andtraic on ive tourist roads.

Room Occupancy s +3.7%

Slot Machine Revenue t -11.8%

Attendance t -1.6%

Traffic t -5.2%

Oerall t -3.7%

THE CONNECTICUT TrAVELAND TOUrISM INDEX

A FORwARD LOOk (continuedfrompage16)

#

to towns accounted for 27.8% of localnet current expenditures; in 2012, theshare had dropped to 24.4%. State aidhas simply not kept pace with localneeds, and this waning commitmenthas left municipalities filling the gap.This trend is completely contrary to

the Horton decisions goal of alleviat-ing the inequity that a funding systembased on unequal local property taxrates and unequal property wealth nec-essarily creates.

The challenge is all the greater whenwe continually ask our schools to domore to meet our education needsin an increasingly complex and tech-nologically dynamic global economy.In a milestone CCJEF v. Rell deci-

sion (2010), the State Supreme Courtdefined the goals of a suitable educa-tion as preparing students to prog-ress to institutions of higher education,or to attain productive employmentand otherwise to contribute to thestates economy. Clearly, investingmore in our schools benefits studentsindividually, but it also recognizes thatour schools have become increasinglykey to the states economic prosperity.

How then can we break our 40-year

sentence and end the long frustrationwith school funding? The first step insolving a problem is acknowledging itexists. Our current school funding sys-tem does not work. It is too dependent

on a level of state commitment that issystemically and politically impossibleto fulfill. School funding is one of theonly services the state is constitution-ally bound to provide, yet it is treatedno differently than many other discre-

tionary programs and must compete,politically, for the limited resources ofthe General Fund. Annual fundingdecisions have been driven by politi-cal budget negotiations, not by theeducational needs of students or thestates economy. Its why the boulderkeeps slipping back down the hill.ECSs declining share of General Fundexpenditures is a case in point.

The current school funding systemalso relies too much on local prop-erty taxes. For school funding reformto succeed, we must comprehensivelyreexamine the interaction between state

and local tax policies. Because education funding makes up the majority olocal municipal expenditures, propertytax reform must be part of this con-versation.

We must consider alternative schoofunding systems that are more predict

able and less vulnerable to distortionsWe must consider creating revenuestreams dedicated exclusively to schoofunding, and then set this revenueaside in a fund devoted solely to meeting the states constitutional obligationto equalize educational opportunityacross the state. Other states have donethis, and so can we.

The challenge is not insignificantfailure to change comes too easily. Bu

if we continue on this endlessly frus-trating path, our competitive advan-tage will fade away, along with theremaining little red barns.

Joos

Viewjoocartoon.weebly.com

Please cut out this reply form and return along with your payment to:

c/o Business Manager

CLAS Business Services Center

Universit o Connecticut

215 Glenbrook Road U-4158

Storrs, CT 06269

To meet the states constitu-

tional obligation to equal-

ize educational opportu-

nities, we must consider

creating revenue streams

dedicated exclusively to

school funding.


16/16

vi si t Us On -l in e - http :/ /c te co no my.u co nn .e du

(continuedonpage15)

__ Please send me 4 quarterl issues o

The Connecticut Economyat the annual

subscription rate o $55.00. M pamentin ull is enclosed.

____________________________________________________________________________Name

______________________________________________________________________________________Address

______________________________________________________________________________________Cit/State/zip

______________________________________________________________________________________Email

______________________________________________________________________________________

Ifyouhavenotyetsubscribedto

The Connecticut Economypleasecut

outandsignthisreplyform,placeitina

stampedenvelopealongwithyour

paymentandmailtotheaddress

indicatedonthereverseside.

#

A FORWARD LOOKImproving the Education Landscape

Published by:UConn Depatment of Economics

Oak Hall, 365 Faifield way, Unit 1063

Stos, CT 06269-1063

Executive Edito: Steven P. Lana

Co-edito: Dennis R. Hele

Contibuting Editos: Bruce Blake, Daniel W. Kenned,and Stanle McMillen

Editos Emeitus: William A. McEachern, Ramond R.Beauregard, Edwin L. Caldwell, and Arthur W. Wright

reseach Associate: Sining Wang

Foecast Adviso: Daniel W. Kenned

Poject Development and Founding ExecutiveCommittee Membe: Peter deWilde Shapiro

Copright Universit o Connecticut 2013. All rights

reserved. The annual subscription is $55. Send subscrip-

tion requests and change o address inormation to:

Circulation Manager, The Connecticut Economy, CLAS

Business Services Center, Universit o Connecticut, 215

Glenbrook Road U-4158, Storrs, CT 06269-4158 or email

us at [email protected]. Make checks paable to

the Universit o Connecticut/The Connecticut Economy.

Bill Kell is the designer. The views expressed b authors

are theirs alone.

Tha nks fo the Hel p

The editors thank those who provided inormation or this

issue, including Robert Damroth and Kolie Sun o the

Department o Economic and Communit Development;

Michael Galliher o the Department o Revenue Services;

John Quinn and Stace Doan o the Department o

Transportation; Michael Howser and his colleagues at

UConns Map and Geographic Inormation Center or

their mapping assistance; and especiall Dan Kenned,

Charles Joo, Sarah york and their colleagues at the

Department o Labor, who have been most helpul with

labor data.

http://cteconomy.uconn.edu

ConnecticutSecretary of the State

wee gateful fo the financial s uppotof the folloing Sustaining Patnes:

Almost 40 years have passed since theonce bucolic town of Canton was sub-ject to Connecticuts paramount schoolfinance lawsuit, Horton v. Meskill. TheHorton decision reaffirmed educationas a matter of public utility, requiringthat the state provide a substantiallyequal educational opportunity to itsyouth.

The landscapefiguratively andliterallyhas changed since the

Horton decision. Many of the pasto-ral red barns that dotted Canton andConnecticuts landscapes have givenway to strip malls and office parks asmunicipal officials scrambled to gener-ate more local property tax revenue tofund public schools.

And while much has changed, muchhas stayed the same. By issuing itslandmark Horton decision in 1977(Horton I), the Connecticut SupremeCourt seems to have sentenced law-makers to an eternity of frustration.Every year, like clockwork, lawmakerspush the proverbial school funding

boulder up the hill only to see it slipback down to a new resting spot,well short of the goal. Today thestates primary equalization grant (theEducation Cost Sharing grant or ECS)is funded at about 72% of its statutorygoal. The commitment necessary tocomply with the Horton decision haseluded lawmakers for decades.

Immediately after the 1977 deci-sion, the legislature increased funding

for local schools. By 1984, 11.4%of the General Fund was devoted tolocal equalization aid, and ten yearslater the state share crept up to 12.7%.Recently, however, the boulder hasslipped back down again. If an expect-ed increase of $50.8 million in FY14 isenacted this year, education equaliza-tion aid will account for a mere 9.8%of General Fund expenditures.

As equalization aid declined as ashare of state General Fund expen-ditures, it also declined as a share ofwhat school districts spend on localeducation. In 2002, equalization aid

MARK WAXENBERGEXECUTIVE DIRECTOR, CONNECTICUTEDUCATION ASSOCIATION

RAy ROSSOMANDOMEMBER: CONNECTICUT TASK FORCETO STUDy STATE EDUCATION FUNDINGAND CEA RESEARCH AND POLICyDEVELOPMENT SPECIALIST

Date post:	03-Apr-2018
Category:	Documents
Upload:	jordan-fenster
View:	214 times
Download:	0 times

Conn Econ Summer_2013 (1)

Documents