People of Faith CT

By LYNN DOAN
The Hartford Courant
February 18, 2009

If the governor and the legislature cut $1 billion from state workers' salaries and benefits to shrink the deficit, Connecticut's economy would lose 7,000 private-sector jobs this year in addition to the direct layoffs, according to a University of Connecticut report being released today.

The projection looks only at the effect of a cut in the amount of money earned and spent by state workers. It does not account for an increase in overall consumer spending if residents weren't paying as much in state taxes — or the effect on the economy if taxpayers had to pony up extra cash to maintain state employee payrolls.

A billion-dollar cut in public-sector salaries would cause a massive drop in consumer spending, prompting thousands of job losses in the private sector and "sustained emigration and shrinkage in Connecticut's labor force," according to the quarterly economic outlook released by the Connecticut Center for Economic Analysis at UConn. A cut of that size, leveled out over many years, would result in the state's economy having 5,000 fewer jobs in each year through 2020, the report said. The state has about 1.7 million jobs in all.

"Even if the federal stimulus achieved its job creation targets, Connecticut would still suffer a recession worse than that of 2001-2003," the report said, if budget cuts led to massive state layoffs.

Gov. M. Jodi Rell's office declined to comment on the report Tuesday. Rell is proposing a $2 billion cut in government expenses and $570 million in concessions from state employees over two years.

In its outlook, the Connecticut Center for Economic Analysis poses another, drastically different "economic path" the state could take: borrowing money through bonding to invest $1 billion in biomass-fueled power plants.

That would create short-term construction and permanent forestry and agricultural jobs. If the state spent $1 billion annually during the next five years to install small, biomass-fueled power generators, it could retain and attract a more skilled labor force and give birth to a new, ecologically sound market for biofuels, such as wood chips and biodiesel.

UConn has invested significant research in developing biomass technologies.

That plan, the report said, would "save the state millions of dollars in congestion charges, improve the environment, and lay the foundation for a shift to electric vehicles."

The UConn outlook predicted 55,000 job losses in the state from 2008 through the end of 2010, a deterioration from its last forecast, in November.

"There is little reason to think relief will come soon," the report said.