‘A look behind the numbers’

Officials get review of CT economy as prep for diving into town budget

CROMWELL —The goal was to learn more about the state and national economies before the town begins its new budget cycle.

To accomplish that, Finance Board Chairman Julius C. Neto invited George Rafael, the director of the Municipal Resource and Service Center for the Connecticut Conference of Municipality, to share his observations about the national and state economies.

“I felt it was important before we begin the budget cycle that we get some information about the state economy from an individual who is a subject matter expert,” Neto said.

“We’re going to need to make some (difficult) financial decisions in the next couple of months,”

Neto said, “and before that process begins, we wanted to hear from someone who can give us a look behind the numbers.”

The budget-making process will begin in earnest on Monday when Town Manager Anthony J. Salvatore formally presents a proposed general government budget to the Town Council.

In speaking to the finance board, Rafael began by noting that almost a full year into the coronavirus pandemic, “COVID-19 has changed our way of life.”

Going forward, “We don’t know what this ‘new normal’ is going to look like,” he said.

He said the pandemic has underscored that what happens locally, in the state, regionally, nationally, or globally are now more interrelated than ever.

Turning his attention to the national economy, Rafael said, “Things are looking good for a rebound, with indications of a Vshaped recovery.”

That is an economy that will come back up and as quickly – and dramatically – as it went down when the pandemic surged last spring, he said.

Early indications are for a 4 percent growth in GDP in 2021, Rafael said – quickly adding that just this week Goldman Sachs suggested growth could top 6 percent.

However, even as the economy shows signs of bouncing back, “Employment is lagging,” Rafael said.

At least for now, inflation appears to be stable.

Real estate sales continue to push up, he said, adding his mantra of caution: “Is that a trend – or a blip?”

“Keep an eye on air travel,” which could become another marker for an expanding economy, Rafael said.

Turning to the state, Rafael said: “The state’s got some challenges – to put it mildly.”

The combination of pension costs and state employment retirees continue to weigh heavily in the state’s financial health, he said but “The revenue picture for the state got a lot better.”

An anticipated $4 billion state deficit has been halved, in large part because of the influx of federal stimulus funds, but also, especially in Fairfield County, due to a continuously strong stock market, he said.

However, the state still needs to find $775 million to balance its proposed two-year budget, Rafael said.

Speaking for himself, Rafael said he doesn’t foresee reductions in the state’s Education Cost Sharing funds or the implementation of a two-year pause in sharing those funds.