Financial Capital Remains Hurdle for Women Entrepreneurs

“Data reveal that an increasing number of women are choosing entrepreneurship as a career path, and of those, a growing number of them share aspirations for growth.”  That fact, pointed out in the preface of a new book co-written by a local university professor, is the proverbial tip of the iceberg. According to the U.S. Census Bureau, there are roughly 9.9 million women-owned firms in the United States, representing over a third of all firms in the country—and the ranks of new enterprises with women at the helm are growing rapidly. Between 2007 and 2012, women-owned firms in the U.S. grew by 27 percent compared to a growth rate of 2 percent for firms overall.

“But in spite of their impressive growth in numbers,” writes University of Hartford finance professor Susan Coleman, “the business ventures women are launching today continue to lag behind those launched by men in terms of revenues and employment. So while an increasing number of women can count themselves as entrepreneurs, many appear to be running into barriers, as the vast majority of their businesses remain quite small.”

Coleman, along with Alicia M. Robb, have co-authored The Next Wave: Financing Women’s Growth-Oriented Firms (published by Stanford University Press), which points to “three essential factors that women entrepreneurs need to thrive: knowledge, networks, and investors. In tandem, these three ingredients connect and empower emerging entrepreneurs with those who have succeeded in growing their firms while also realizing the financial and economic returns that come with doing so.”

Robb is Senior Fellow with the Ewing Marion Kauffman Foundation and Visiting Scholar at the University of California, Berkeley and the University of Colorado, Boulder. She previously worked with the Office of Economic Research in the Small Business Administration and the Federal Reserve Board of Governors. Coleman is Professor of Finance and Ansley Chair at the Barney School of Business at the University of Hartford.

Coleman notes that “A crucial pitfall is that women face unique challenges in their attempts to acquire financial capital. Growth-oriented firms typically require substantial investment—both in the form of bank loans and external equity in the form of angel or venture capital funding—to scale up.” Studies reveal, however, that “women entrepreneurs raise significantly smaller amounts of capital than men and face continued barriers in their attempts to secure external equity in particular,” Coleman points out.

In the book’s forward, the authors explain that the motives behind women-run entrepreneurial businesses vary.  “Some of these growth-oriented entrepreneurs are motivated by a desire to pursue an opportunity or an unmet need in the marketplace.  Others are frustrated by the constraints imposed by a ‘glass ceiling’ that prevents them from reaching the most senior ranks of corporations.  Still others are drawn by the financial and economic rewards that can come from leading a firm that achieves scale.”

According to IRS data, women represent over 40 percent of top wealth holders in the United States, yet estimates from the University of New Hampshire’s Center for Venture Research indicate that they represented only 25 percent of angel investors in 2015, Coleman notes.

Optimistic about the future success of women entrepreneurs, Coleman and Robb observe that “Successful women entrepreneurs who are paying it forward in a variety of ways are a driving force” in what they describe as the “next wave.”

“In a virtuous cycle, women entrepreneurs evolve from being the recipients of human, social, and financial capital into becoming the providers of those key resources as their firms grow and create economic value. The more successful women at the helm of businesses that kick off cash, the more women there are to invest in others, and the faster we see the number of women grow in the ranks of larger businesses and investing.”

In addition to appreciation expressed to the Kansas City-based Kauffman Foundation for financial support, the book’s acknowledgements note that the Barney School of Business and the University of Hartford’s Women’s Education and Leadership Fund provided grants that helped support initial research and development of case studies on women entrepreneurs. The authors also expressed appreciation to three University of Hartford graduate assistants – Ece Karhan, Mert Karhan, and Isha Sen – who “played an invaluable role in the book’s development.”

Student Loans Grow; Home Ownership Pushed Back 5 Years, on Average

An analysis on the cost of student loans and home-buying nationwide finds that it takes graduates with the average student loan debt of $28,950 about 5 years longer to save a 20 percent home down payment. Thereafter, these graduates have almost $50,000 less in home equity 15 years after graduation compared to debt-free graduates, according to an analysis by GoodCall, The Real Cost of Student Loans. In Connecticut, where 62 percent of students graduate with debt averaging $29,750, above the national average, and home prices tend to be higher than in most states, the challenge is particularly acute.  Delaware has the highest average student loan balances, at $33,808. Utah has the lowest, with $18,921, according to data compiled by the Institute for College Access & Success and included in the report.

Nationally, average debt for new bachelor’s degree recipients rose at more than double the rate of inflation from 2004 to 2014, but in some states it grew even faster.  In Connecticut, the percentage of graduating students with debt rose from 57 percent in 2004 to 62 percent in 2014; the average amount of debt increased by 57 percent (20^th highest increase among the states), from $18,906 to $29,750.

Homeownership has generally fallen over the past decade, and for college graduates with student loan debt, the downward trend is even more marked, according to research by the Federal Reserve Bank of New York, the report indicates. What is clear, the report notes, is that after college, graduates with student debt must use part of their income to pay down loans. This means less income is available for saving compared to debt-free graduates.

It also means that graduates with student loan debt will have to save at a higher rate than their debt-free counterparts to buy a home sooner. This points to another challenge student loan borrowers face: making tough decisions over whether to pay student loans off as quickly as possible or save for big purchases like a home, the report explains.

Waiting longer to buy a home can mean missing out on accruing home equity, an important part of building wealth and financial security over the long term. Home equity is how much of the home’s current value is owned by the homeowner. This is calculated by taking the current market value, which typically grows year over year, and subtracting any remaining mortgage payments.

A recent Harvard study noted in the report revealed the consequences for wealth building that these financial decisions can have over the long-term, where college-educated households with student loan debt were found to have significantly less in assets, cash savings, and net wealth compared to college-educated households without student loans.

Among the report’s key findings regarding the home buying timeline:

• A 23-year-old debt-free college graduate today will be ready to buy a home with a 20 percent down payment in 2021 at age 28. That’s five years earlier than the 33-year-old average home buyer today.
• Graduates with $12,000 in student loan debt can expect to save until 2022 before they’re able to put a 20% down payment on a median price home.
• A 23-year-old graduate with $28,950 in student loan debt today will be saving until 2026 before she can make a 20% down payment on a home, at age 33 – the current average age for home buying.
• Graduates with $50,000 in student loans will be saving until age 36 in 2029 before they’ll have enough for a 20 percent home down payment.

The report also highlights the impact of student loans on the age at which people decide to get married, their job choices, starting salaries and retirement savings – and the impact those choices have on their ability to pay off student loans.

Add a Teen Driver to Policy? Rates Double in CT, 8th Highest Increase in Nation

Adding a teen driver to the family automobile insurance policy drives up rates.  That’s true everywhere across the United States, and in Connecticut the increase is among the highest in the nation, almost doubling the policy's premium. A new survey reveals that the average premium increase in Connecticut when adding a teen driver to an existing policy is 96.3 percent, which is the 8^th highest increase in the U.S.  The only states with higher jumps in premiums are New Hampshire, Rhode Island, Arizona, Wyoming, Ohio, Oregon and Maine.

The study, by insuranceQuotes, found that the average increase in premiums across the country when a teen driver is added to an existing policy is 79 percent.  That is a slight improvement from a few years ago, when the increase nationwide averaged 84 percent.

The study also found that it costs more to add a young male driver than a female driver to an existing policy - adding a male teen to a married couple's policy results in a national average premium increase of 91 percent, compared to an increase of 67 percent for a female.  The difference is wider the younger the driver.  For 16 year old male driver is added, for example, the premium cost more than doubles on an existing policy.

Connecticut has consistently been ranked in the top ten, with among the highest increases when a teenage driver is added to an existing policy.  A year ago, Connecticut was ranked 7^th, with a 98.3 percent increase in insurance rates after adding a teen driver.  The previous year, Connecticut ranked 5^th in the annual survey, with an increase of 102.4 percent in the policy cost when a teen driver was added.

According to the data, the largest increases in Connecticut were in New Haven County, more than 11 percent higher than the statewide average.  Tolland, Windham, Middlesex and New London counties were slightly lower than the statewide average; Hartford and Fairfield counties slightly higher.

Laura Adams, senior insurance analyst at insuranceQuotes stressed that states differ considerably when it comes to the cost of insuring a teenage driver – noting that a teen added to a married adult's auto policy in New Hampshire results in an average annual premium increase of 125 percent, while in Hawaii the average increase is just 17 percent.  New Hampshire had the highest increase in each of the past three years.

"Insurance companies have pretty wide lattitude in many states in the reasons for raising rates, and in some states adding a teen really moves the needle," Adams told CT by the Numbers.  As for Connecticut, Adams said she doesn't see any reprieve anytime soon.  "Teen drivers are among the riskiest, and companies take advantage of the opportunity to raise rates."

Perhaps the most significant underlying factor is that each state regulates insurance differently, and those regulatory differences account for some of the variations in the study’s findings, according to insuranceQuotes.  For instance, Hawaii is the only state that doesn't allow insurance providers to consider age, gender or length of driving experience when determining premiums. That means that the cost for teens doesn't differ much from the cost for adults buying auto insurance.  This may also account for lower increases in states such as New York, Michigan and North Carolina, where insurance is regulated more strictly and rating factors are more stringent, insuranceQuotes points out.   The increases in those states when adding a teen to an existing policy were all below 60 percent, among the lowest increases in the nation.

Adams noted that people often notice the difference in rates when they move to another state.  "You are penalized for where you live.  States handle this very differently."

She added that "regardless of the costs to insure your teen driver, safety is the No. 1 priority. We suggest parents educate teens on the dangers of driving, especially when it comes to texting while driving, or driving under the influence.”

Kathy Bernstein, senior manager of the National Safety Council's Teen Driving Initiatives, told insuranceQuotes that the riskiness of teens behind the wheel may be "leveling off."  For instance, in 1978 there were nearly 10,000 teen driver deaths, according to the Insurance Institute for Highway Safety (IIHS). That number has dropped every year since then. In 2014, the number of teen driver deaths was about 2,600.  The percentage of teens on the road has steadily declined as well. According to a recent study from the University of Michigan, 69 percent of 17-year-old Americans had a license 30 years ago. Now, less than half have a license - 45 percent.

Adams indicated that as teen drivers get older and gain driving experience, rates tend to come down, unless, of course, they happen to have an accident in which they are at fault.  In those instances, "very high rates" result.

For the annual study, insuranceQuotes and Quadrant Information Services examined the economic impact of adding a driver between the ages of 16 and 19 to a family's existing car insurance policy.  The insuranceQuotes website provides consumers with a free, easy way to compare insurance quotes online for auto, home, health, life and business policies.

Most Valuable States in America: Connecticut Ranks #3

A recent study estimates that the combined value of all land in the contiguous United States is worth nearly $23 trillion. The most valuable state, according to the survey, is California, which accounted for 17 percent of the total value of the 48 bordering states. New Jersey, however, had the most valuable real estate relative to its size, estimated at $196,400 per acre, or 16 times the average value per acre across the contiguous U.S. Connecticut ranked third overall.  Although the third smallest state in the country, containing just over 3 million acres, Connecticut is also one of just four states where land is valued at over $100,000 per acre on average. By contrast, the estimated value of an average acre across the country is just over $12,000.

The study, authored by William Larson, senior economist at the Federal Housing Finance Agency and previously at the Bureau of Economic Analysis, estimated the value of different property types, including agricultural areas, federal land, and developed suburban and urban areas.  The study is featured on the website 24/7 Wall St.

States with generally larger rural areas tended to have a lower value relative to their size, while more densely populated states that contain large urban centers had the highest estimated worth per acre. The value of Connecticut’s land is reflected in the higher cost of a house in the state. The typical house is worth $267,200, compared to a national median home value of $181,200, according to the analysis.

Key data for Connecticut includes:

• Value of land per acre: $128,824
• Total value: $400 billion (18th highest)
• Total acres: 3.1 million (3rd lowest)
• Percent land mass rural: 62.3% (4th lowest)

The top 10 “most valuable” states:  New Jersey, Rhode Island, Connecticut, Massachusetts, Maryland, Delaware, New York, California, Ohio, and Pennsylvania.  Next are Florida, Michigan, Illinois, Virginia, New Hampshire, South Carolina, Indiana, Washington, North Carolina and Tennessee.

The analysis points out that the type of land in a given area has a significant impact on its worth. Agricultural and other largely undeveloped areas are generally worth significantly less than cities and suburbs land.  Developed land, or land where housing, roads, and other structures are located, is valued at an estimated $106,000 per acre, while undeveloped land was estimated at $6,500 per acre, and farmland at only $2,000 per acre, according to the analysis.

That said, the analysis notes that it is not surprising that most of the states with the highest per acre land values are predominantly urban, such as New Jersey, Rhode Island, Connecticut, and Massachusetts. These Northeastern states are smaller and have less rural acreage “to bring the average value down.”  The data reflects that the six most valuable states were also among the 10 smallest states by landmass. In New Jersey, for example, 39.7 percent of the area is considered urban, compared to a national urban share of just 3 percent.

The entirety of Delaware is worth just $72 billion, the second smallest total value compared to the other states in the lower 48, the analysis notes. On a per acre basis, however, the state is valued at $57,692 on average, the sixth highest in the country. Just behind Delaware is New York, with more than 30 million acres worth $41,314 each, on average. In total, the Empire State’s acreage is worth $1.25 trillion, based on the analysis. Because of the large rural areas in the state, the analysis explains, less than 10 percent of New York’s total area is considered developed. However, that developed property is so valuable it accounts for roughly two-thirds of the state’s total value.

All 10 of the states with the largest proportions of federally-owned land are west of Kansas, reflecting the way in large swaths of that land entered the United States at various junctures in U.S. history.   The Louisiana Purchase and the conclusion of the Mexican-American War left considerable areas across the western United States in the hands of the federal government.

While less than 25 percent of all land in the lower 48 states is owned by the federal government, in Nevada, as one prime example, the third least valuable state by acre, 86.8 percent is federal, the highest share in the country.  As a result, western states with a lot of federal land tend to have lower average values per acre. More than 30 percent of land in nine of the 15 “least valuable” states was federally-owned as of 2009.

Six State Commissions, Victims of Budget Consolidations, Disappear After Decades-Long Record of Achievement

After 43 years, the ironically-named Permanent Commission on the Status of Women began the organization’s final newsletter with an ironic observation:  “the PCSW had its most successful legislative session ever, celebrating the passage of four bills instrumental in protecting women's health and safety.” The PCSW is one of six legislative commissions eliminated in a last-minute budget compromise at the end of the legislative session a month ago.  The six ceased to exist on Thursday (June 9).  In their place will be two Commissions, each a mash-up of three of the organizations.

Wiped from the roster of state agencies are the PCSW, Legislative Commission on Aging, Commission on Children, Latino and Puerto Rican Affairs Commission, African American Affairs Commission and Asian Pacific American Affairs Commission.  Replacing them will be the Commission on Women, Children and Seniors and a Commission that merges the Latino, African-American and Asian Pacific American Commissions.

All staff members were effectively laid off, some applied for the handful of jobs that are to exist in support of the new Commissions.  The volunteer Commissioners will be holdovers, meaning that 63 Commissions will remain in place to set policy direction.

The 23 year old Commission on Aging was eliminated as Connecticut rapidly approaches a new, long-term reality—older adults will comprise an increasingly large proportion of the population.  At least 20 percent of almost every town’s population in the state will be 65 years of age or older by 2025, with some towns exceeding 40 percent.  Already, Connecticut is the 7^th oldest state in the nation.

The Asian Pacific American Affairs Commission, the most recent of the six, was established in 2008 to respond to a growing population in Connecticut.  With the smallest budget, the agency struggled to gain traction, and was just beginning to fulfill its mission when the end arrived.  Connecticut's Asian American population grew from 95,368 in 2000 to 157,088 in 2010 – a 65% increase. Asians represent the majority minority in 40 percent of Connecticut school districts, according to the Commission. 

The Permanent Commission on the Status of Women was formed in 1973 to study and improve Connecticut women’s economic security, health and safety; to promote consideration of qualified women to leadership positions; and to work toward the elimination of gender discrimination.

Over the next four decades, the organization played a pivotal role in the passage of more than 50 significant pieces of legislation, often placing Connecticut at the forefront of progress towards greater justice or equal treatment for women.

That was certainly true in 2016, in what turned out to be, as was once said in a different context, the best of times and the worst of times.  This year, PCSW advocated for major initiatives that gained legislative approval:

• Allow judges to remove firearms during temporary restraining orders in domestic violence;
• Make affirmative consent the standard for investigating alleged campus sexual assaults;
• Establish a working group to study possible labor violations in the nail salon industry;
• Eliminate the discriminatory tax on feminine hygiene products and diapers;
• Dramatically strengthen anti-trafficking laws by: shifting the focus of arrests in prostitution cases to the "demand side"; raising penalties against buyers of sex; removing the "mistake of age" defense; and requiring hotels and motels to keep records of those who rent rooms by the hour; and
• Give judges authority to remove parental rights from rapists in cases of clear and convincing evidence of sexual assault resulting in pregnancy.

Established in 1997, the mission of the African-American Affairs Commission (AAAC) was to improve and promote the economic development, education, health and political well-being of the African-American community in the State of Connecticut.  The Commission has been at the forefront of a range of issues impacting the African American community in Connecticut, and its demise occurs when race relations and equal opportunity remain under heavy scrutiny in Connecticut and across the country.   

Glenn A. Cassis Executive Director of the African-American Affairs Commission, when the consolidation plan was announced, said merging the panels will cause "irreparable damage to the African-American community in Connecticut."

"The elimination of AAAC tells the African-American community that their issues are not important to the state,'' Cassis wrote in an open letter to the leaders of the General Assembly. "The message that resonates is that despite the successful efforts of the past to eliminate the disparities that exist for this constituency in education, health, economic development, criminal justice and incarceration, and social well-being have become marginalized. Years of progress made has been cut short from being fully impacted to the level that this growing segment of Connecticut’s population deserves and expects."

The Latino and Puerto Rican Affairs Commission (LPRAC) was created by an act of the Connecticut General Assembly (CGA) in 1994. This 21 member non-partisan commission is mandated to make recommendations to the CGA and the Governor for new or enhanced policies that will foster progress in achieving health, safety, educational success, economic self-sufficiency, and end discrimination in Connecticut.  As of 2014, the state’s Hispanic population exceeded 500,000, about 15 percent of the state’s overall population.

In an Open Letter, LPRAC Executive Director Werner Oyanadel said “The decision to eliminate LRPAC does not in any way diminish the significant pride of the Commissioners and LPRAC staff, present and past, in the far-reaching and often ground-breaking work that has been accomplished to advance the quality of life for our state’s steadily growing Latino population.”  He added that “the end of a distinguished and impactful decades-long history does not diminish or eviscerate the landmark laws, policy-changing research and enduring impact of LPRAC on countless families, businesses and individuals of Hispanic heritage, and all the citizens of Connecticut.”

The Commission on Children, established in 1985, was borne of the legislature’s desire for the development of “policies that would ensure the health, safety, and education of Connecticut children.”  Said long-time Executive Director Elaine Zimmerman: “We feel we’ve succeeded beyond anyone’s wildest hopes, taking a leading role in issues as important—and diverse—as closing the achievement gap in reading, school climate, immunization, disaster planning for families, school readiness, children’s mental health, home visitation, youth employment, equity, and poverty reduction.”

One of the testimonials on the PCSW website, said succinctly: “The commission boldly tackles the issues that matter to my survival and prosperity! Their work to identify and eradicate inequality (whether of the deliberate kind or not), to serve as a public voice for women’s issues which are underrepresented in all public spheres, and to engage the public is integral in working toward a fair and just society.”

Regarding the state’s Latino population, Oyanadel said “the successor combined Commission will not be nearly the same; we can only hope that its impact will not be diluted or weakened, though we are concerned that our community will have a softer voice advocating for those issues of particular importance in and impact on the Latino community.”

Back in 2011, when consolidations and eliminations were under consideration by legislators, but ultimately not approved, as was the case repeatedly since the 2008 recession, Gov. Malloy told the CT Mirror: "If they asked my advice, I'd consolidate a bunch of them."

And in 2016, it came to pass.

Most CT Residents Concerned About Loss of Jobs, Access, Care in Aetna-Humana Merger, Poll Shows; Missouri Decision Points to Adverse Impact

The State of Missouri raised a red flag today, waving it directly into the headwind that is the pending merger between health care giants Aetna and Humana.  Missouri’s action came just as a public poll was released in Connecticut by consumer advocates opposing the merger which indicated a general lack of public awareness about the merger plan and substantial concern about potential job losses and adverse health care affordability and choices here if the merger goes forward. The Missouri Insurance Department issued an order banning Aetna and Humana from selling certain types of insurance in the state if the companies’ planned $37 billion merger comes to fruition. The order states that Aetna and Humana should “cease and desist from doing business” throughout Missouri with respect to individual and small group insurance and the group Medicare Advantage market if Aetna’s acquisition of Humana is completed.

In Connecticut, the Connecticut Campaign for Consumer Choice coalition released results of a recent poll which found that most Connecticut voters “didn’t know that the five major national health insurance companies – UnitedHealth, Anthem, Cigna, Aetna, and Humana - are attempting to merge down to three companies from five. The new research found that only 27 percent of respondents were aware of the plans.

After they were given more information about the consequences of the mergers among the five national health insurance providers (Aetna-Humana and CIGNA-Anthem), 71 percent of Connecticut voters were opposed to State Insurance Commissioner Katherine Wade approving the mergers in Connecticut.

Nine in ten state voters (91 percent) think that it’s either very or somewhat important that Commissioner Wade “considers the impact of these mergers on the affordability of insurance premiums and out-of-pocket costs, and their potential to limit health care choices, in her decision making process.” And those surveyed were overwhelmingly concerned that the proposed mergers will lead to job losses in Connecticut.

The Connecticut survey, conducted earlier this month by Public Policy Polling, found that 89 percent of Connecticut voters are either very or somewhat concerned that the proposed mergers will lead to job losses in Connecticut. Additionally, 89 percent of those polled believe it’s either very or somewhat important that the impact of these mergers on job losses in Connecticut be considered by state regulators.

Missouri is the first state regulator to release findings against the proposed deal, announced last year, published reports indicated. The deal is being reviewed by the U.S. Department of Justice, as well as state regulators and antitrust authorities, who are also reviewing competitor Anthem’s plan to buy Cigna Corp. Aetna has filed for regulatory approval in the 20 states where Humana is domiciled and of those, 15 have approved the deal thus far, including Connecticut.  Because of Humana's limited footprint in Connecticut, the review was more form than substance.  The Cigna-Anthem merger, however, is to receive a much fuller review, according to state insurance officials, as Cigna is a state-domiciled company.

Regarding Aetna-Humana, the Missouri Insurance Department “found that in its current, unmodified, form – as to a few specified lines of insurance – that the proposed acquisition would violate the competitive standard set forth in Missouri law, meaning that as to those lines the acquisition would substantially lessen competition in this state.”

The Missouri Insurance Department stressed that the decision “is not a final order. The statute provides that Aetna and Humana may submit a plan to remedy the anticompetitive effect of the merger as to those specified lines.”  If that step is taken, the department “would evaluate the plan and may modify or vacate” the order issued today banning the merged company from certain lines of insurance in the state.

"The Missouri order does not impede the Department of Justice approval process," Aetna said in a statement. "We're disappointed, but expect to have a constructive dialogue with the state to address their concerns."

In addition to the public poll, Connecticut Campaign for Consumer Choice – a coalition that includes the Universal Health Care Foundation, Connecticut Citizen Action Group and Connecticut State Medical Society -  released a letter to Commissioner Wade signed by 17 state legislators calling for multiple public hearings on the merger, intervenor status for interested consumer advocates, and a study that would “analyze the potential impact on cost, access, and the Connecticut economy, including jobs” and warning that if the merger is approved, “the resulting mega-insurer will cover 64 percent of covered lives in Connecticut, with an even greater concentration in some regions of our state.”

The Missouri decision comes following a public hearing held on May 16.  In testimony provided as part of the public record, Consumers Council of Missouri expressed “profound concern,” warning that the merger would result in a “significant reduction in competition (that) will most certainly result in increased cost to consumers,” adding that “the results will be catastrophic and we will have no power to undo it.”

The Missouri Hospital Association, in offering a detailed 21-page analysis, indicated that “Consolidation will affect the ability of hospitals and other health care providers to bargain competitively for contracts containing appropriate fees for medical services. In turn, such providers are less able to invest in the resources to maintain and improve the quality of care. An anticompetitive suppression of healthcare payments will suppress innovation, to the detriment of consumers.”

CT Aims to Keep Ultra-Wealthy in State; Tracks Tax Payments of 100 Top Earners

Connecticut is ranked second in the nation in the number of millionaires per capita.  Only Maryland has more.  But with Connecticut’s precarious financial situation amidst what has been described as a “new economic reality,” any drop in the plethora of extremely wealthy residents can almost instantly have far-reaching consequences, officials say. In Connecticut, as well as California, Maryland and New Jersey, the top 1 percent pay a third or more of total income taxes, The New York Times reported this month. “There's an outmigration trend. It's real,'' Sullivan recently told The Hartford Courant, describing the departure of wealthy residents from Connecticut.

But Connecticut is not sitting idly by.  The state is trying to keep its wealthy residents right here in the Land of Steady Habits.

Connecticut, the Times reported, now tracks the quarterly estimated payments of 100 of its top earners. State Revenue Services Commissioner Kevin B Sullivan told Inside Wealth columnist and CNBC wealth editor Robert Frank that about five or six of the highest earners could have a "measurable impact on the revenue stream."

By way of example, Sullivan said that when one of the state's rich hedge fund executives planned to move his family and company to a lower-tax state, state officials met with him and persuaded him to leave some of his work force in Connecticut, the Times reported.  "We knew we were going to lose him," Sullivan said, "but we wanted to keep some of the higher-paying jobs."

He added, “We advised him that there are ways to be close to family and friends in Connecticut on occasion that are perfectly legal.  We're trying to send a more welcoming message to the high earners as a group." Homeowners who spend more than 183 days in the state are considered residents for tax purposes.

The top 10 states in millionaires per capita, after Maryland and Connecticut, are Hawaii, New Jersey, Alaska, Massachusetts, New Hampshire, Virginia, Delaware and the District of Columbia, according to Phoenix Marketing International’s Global Wealth Monitor.

Earlier this year, the Courant reported that one of three Connecticut residents with an 11-figure net worth, according to the latest Forbes magazine list of the wealthiest individuals, had relocated from Greenwich to Florida, the second individual in that tax bracket to do so recently.  The exits, the Courant reported, “leave Connecticut with 13 billionaires, including Ray Dalio ($15.6 billion) and Steven Cohen ($12.7 billion), both hedge fund owners who live in Greenwich.”  Eight of those 13 state residents list Greenwich as their home address, according to Forbes.

Connecticut is not alone in keeping a watchful eye on its billionaires.  New York is now more closely monitoring wealthy taxpayers who have homes in New York but claim Florida as their tax residence. And New Jersey is collecting data on all of the taxpayers who make more than $1 million to forecast their tax payments more accurately, the Times reported.

As is true in a number of states with wealthy residents, including New York, New Jersey and California, even as some of the state's wealthiest residents head to warmer climates and more favorable tax structures, the number of millionaires in the state grows.

Just three years ago, in 2013, the number of millionaires in Connecticut topped 100,000 for the first time.  In 2015, it exceeded 101,000.  That compares with just over 84,000 in 2006.  Millionaires made up 6.2 percent of state residents that year, compared with 7.3 percent in 2015, based on data from Phoenix Marketing International.

Awards Will Recognize Innovative Efforts Invigorating CT Main Streets

A local theater helping to re-energize downtown Fairfield and a New London developer and property manager who took it upon himself to improve a neighborhood by offering attractive housing that is also affordable are just two of the initiatives being recognized with a 2016 Award of Excellence from the Connecticut Main Street Center (CMSC). In total, five recipients have been selected to receive the prestigious awards, including organizations and initiatives from Fairfield, Farmington, Mansfield, New London and Waterbury.

Also being recognized with awards are a public outreach effort in Farmington that resulted in hundreds of residents voicing their opinion on plans for a new gateway into the town; a holiday window display competition that draws shoppers back to downtown Waterbury while garnering extra press and marketing for the businesses; and a new Town Square in Storrs Center, built around the unique needs of the space and the people that use it.

This year's awards will be presented on June 6th at E.O. Smith High School in downtown Storrs.  CMSC’s mission is to be the catalyst that ignites Connecticut's Main Streets as the cornerstone of thriving communities. CMSC is dedicated to community and economic development within the context of historic preservation, and is committed to bringing Connecticut's commercial districts back to life socially and economically.

In addition to the competitive Awards of Excellence, where CMSC members submit applications that are reviewed by a jury of industry-related professionals and CMSC staff, CMSC also named Upper Albany Main Street (a CMSC member community) and the University of Hartford to receive the Founder's Award for their long and fruitful partnership - a relationship that has not only helped improve the appearance of the Avenue, but empowered many of the small business merchants in the neighborhood as well.

In addition, the Jack Shannahan Prize for Public Service was awarded to the Legislative Commission on Aging in recognition of their Livable Communities initiative.  This initiative aims to create thriving places for residents to grow up and grow older, notably by helping prepare Connecticut for the challenges presented by a rapidly increasing aging demographic through education, awareness and advocacy.

"This year's crop of winners is really special, because they demonstrate how important incorporating the voice of the people is in the final success of a project," said CMSC President & CEO John Simone. "In Farmington, Fairfield and Mansfield especially, each one either specifically asked - or was smart enough to observe - what people wanted in the space, and made changes accordingly.  As a result, there is greater support and usage of their public spaces and private businesses, meaning more people on Main Street and more money for the town coffers."

The June 6 awards ceremony will be followed by interactive experiences in the new Storrs Center.  Activities will include guided tours of the downtown development, a collaboration with the Ballard Institute and Museum of Puppetry, time for dinner and exploration among the Center's many shops and restaurants, and a closing concert featuring the Funky Dawgz Brass Band.

Created in 2003 to recognize outstanding projects, individuals and partnerships in community efforts to bring traditional downtowns and neighborhood commercial districts back to life, socially and economically, the Awards of Excellence are presented annually at CMSC's Awards Gala.  The evening’s welcome Reception Sponsor is United Illuminating and awards are presented with support from Webster Bank and Eversource Energy. 

Connecticut Earns A+ in Government Data Transparency

Connecticut is one of five states providing state residents with the most comprehensive online access to government spending data, according to an analysis by the U.S. Public Interest Research Group (USPIRG). Nationwide, government spending transparency is improving, but many states still lag far behind, according to “Following the Money 2016: How the 50 States Rate in Providing Online Access to Government Spending Data,” the sixth annual report by the organization’s Education Fund.  Some states have improved their spending transparency web portals significantly, earning perfect scores in this year’s report, while others are still barely achieving the minimum standards.

Based on an inventory of the content and ease-of-use of states' transparency websites, the report assigns each state a grade of “A+” to “F.” The leading states with the most comprehensive transparency websites are Ohio, Michigan, Indiana, Oregon, and Connecticut, with each receiving an A+ grade.

“This A+ is great news – and comes at an important time as Connecticut navigates new fiscal challenges and prickly public policy debates. Facts and truth – not shadowy special interests – should be driving our discussions here at the capitol. The only way to ensure an honest discussion about our financial future is to open government and deliver the truth to the public," said State Comptroller Kevin Lembo. "We are doing everything we can to deliver state financial information in bigger and better ways each year. With a few keystrokes, all of us can find out where state money is going and where it came from. Most recently we have been working to extend that transparency to our quasi-public agencies, as well as towns and cities across the state. We are grateful that ConnPIRG recognized our efforts – and promise that we will treat this grade as a starting point, not a finish line, in making Connecticut the most open and accountable state in the country.”

The Comptroller’s Office website providing state government financial data is www.osc.ct.gov/openCT

The report indicates the cost to maintain the website at $18,000, with start-up costs from existing budgetary resources.  Among the state programs cited as providing easily accessible data to the public are the Enterprise Zone and Urban Jobs Tax Credit, Film and Digital Media Tax Credits, Jobs Creation Tax Credit, Manufacturing Assistance Act, and Small Business Express programs.

Connecticut’s most significant improvements include the addition of a page that details what data is excluded from the site, allowing citizens to better understand the universe of information the state is providing, according to the state Comptroller's Office. The state also added more information about the projected and actual public benefits of some of its largest subsidy programs. The state could continue to improve its transparency efforts by expanding its site to include spending information from municipalities and more local government bodies, the report noted.

USPIRG officials point out that states that have created or improved their online transparency have typically done so with little upfront cost. Top-flight transparency web portals can save money for taxpayers, while also restoring public confidence in government and preventing misspending and pay-to-play contracts.

“Citizens deserve to be able to follow their tax dollars, from the most minor state expenditures to the most major development subsidies,” said Michelle Surka, program associate with U.S. Public Interest Research Group Education Fund. “This year, it’s clear that several states made a commitment to meeting the high national standards for spending transparency. Other states continue to lag behind, unable to overcome some of the barriers that prevent comprehensive spending disclosures.”

“States’ online spending transparency efforts are paying off in better informed citizens and a more efficient government,” said Elizabeth Ridlington, policy analyst with Frontier Group and co-author of the report. “Our research found that top-ranked states have been making steady improvements to their transparency websites over the years, giving citizens in most states unprecedented access to information on where their tax money goes.”

While many states continue to improve, the states that most distinguished themselves as leaders in spending transparency are those that provide access to types of expenditures that otherwise receive little public scrutiny. Only 11 states- including Connecticut - provide checkbook-level information that includes the recipients of each of the state’s most important subsidy programs.

This year, most states have met basic standards for providing online access to information about state contracting and an increasing number provide information about economic development subsidies and off-budget agencies.  Several states have made substantive upgrades to their transparency sites or added new features that give the public unprecedented ability to monitor how their government allocates resources. Of particular note, as highlighted in the report:

• Michigan streamlined its transparency data and added functionality to its transparency website, including allowing bulk download of all its data.
• West Virginia launched a new site with data on projected and actual public benefits of the state’s major subsidy programs.
• Utah and Arizona have joined several other states in adding data from localities, municipalities and school districts to their state transparency portals. This provides an inexpensive way to improve the transparency of the spending that often affects ordinary citizens most directly.
• Indiana, Minnesota, Nebraska, New Hampshire and Washington now prominently feature data on quasi-public entities with web pages dedicated solely to these agencies, boards, authorities and commissions.

State spending transparency is a non-partisan issue, USPIRG stressed. The report compared transparency scores against party control of Governors’ offices and the state legislatures. For neither measure did higher levels of spending transparency correspond to Republican or Democratic control, according to the report.

Structural Problems Seen in the Connecticut Economy

In an analysis highlighted by the Connecticut Institute for the 21^st Century, well-known economist Don Klepper-Smith, in a newsletter to clients of economic forecasting consultancy DataCore Partners, is voicing concerns about Connecticut’s economic prospects, short and long-term.  His views come as the legislature grapples with approximately a billion dollars in projected deficit, and the Institute is signaling a heightened profile in the state, with a new director visibly sharing the organization’s economic concerns. Klepper-Smith’s latest findings, headlined “Troubling Trends,” are the result of comparisons between economic activity in different parts of Connecticut and Massachusetts conducted over the last several years, the Institute website reports. Although both states share many of the same characteristics, Klepper-Smith notes the Massachusetts labor market is notably healthier than the Connecticut market and that seems to be a key factor holding back the Connecticut economy.

The job recovery rate in Connecticut since 2006 is 76.6 percent, according to DataCore, compared with the Massachusetts job recovery rate of 240.3 percent. The significantly lagging job recovery rate in Connecticut has “led to negative impacts in other parts of the Connecticut economy.” Examples cited include that the median price for single family homes in Connecticut dropped 3 percent in 2015, while it went up by 3 percent in Massachusetts during the same period.

Similarly, over the last six months, Connecticut’s unemployment rate has edged upwards, while the Massachusetts rate has dropped slightly. Technically, according to DataCore, this is a sign of a growth recession in which the local economy is not strong enough to prevent a rise in the jobless rate, the Institute indicates.

The website goes on to state that “The DataCorp findings, when combined with other recently published reports, provides continuing evidence of a fundamental shift in the basic foundations of the Connecticut economy.”

Scott Bates, a Connecticut native, has recently been named as executive director of the Connecticut Institute for the 21^st Century.  He previously served in the administration of Virginia’s Governor, for the U.S. House Select Committee on Homeland Security, and as president of The Center for National Policy in Washington.

In an article appearing in this week’s Hartford Business Journal, Bates describes Connecticut’s fiscal dilemma as both a spending problem and revenue problem, indicating that “our state will only return to a sustainable fiscal model when incremental changes - taken together – substantially reduce the cost of government.”

Bates adds that “the tax problem is a major issue that may take years to sort out,” suggesting that available savings be pursued immediately.  Among the suggestions, moving to embrace a policy of “aging in place,” a change in approach that could save more than $650 million over the next 20 years according to a recent report from the Institute and the Connecticut Economic Resource Center.

The Connecticut Institute for the 21st Century is a non-partisan non-profit organization of businesses and civic groups dedicated to identifying effective and efficient ways for state and local government to deliver services while reducing cost to the taxpayer and making Connecticut’s economy strong.

The organization researches best practices, publishes reports, and educates policymakers and the public on key spending and policy issues including transportation, public pensions, smart growth and social service spending.