Connecticut’s minimum wage is set to rise to $12 per hour in September, even as businesses in the state remain limited to 50 percent indoor capacity or are struggling with a loss of customers due to the pandemic. Connecticut’s reopening plan remains stalled at Phase 2 as a resurgence in ...
What is Danbury doing right?
The city of Danbury has been experiencing a renaissance in the past few years, which has the city moving in the opposite direction as the rest of the state. Although Connecticut has been experiencing a net loss of population, Danbury has increased its population by 8 percent since 2000; while Connecticut’s credit rating has decreased, Danbury recently earned a AAA rating; Connecticut’s state employee pension system is among the most underfunded in the nation, while Danbury’s is nearly fully funded into the foreseeable future.
Danbury isn’t the only Connecticut city or town that has been moving against the tide of bad news in the state. Ansonia had its bond rating increased by Standard & Poor’s rating agency and is set to have all its existing debt paid off by 2020.
“We try to anticipate,” said David St. Hilaire, finance director for the City of Danbury. “We have to look at our budget year but we’re always thinking ahead. We look at the short term gain and the long term benefit on whatever decisions are made. Sometimes we have to sacrifice some things for that to occur. We just ask for some patience and the long-term benefits will come to you.”
One of the sacrifices Danbury has made for a long-term benefit is changing the retirement packages of new city employees. New Danbury employees are now enrolled into a defined contribution retirement plan rather than a pension system and no longer receive medical coverage although they are eligible for COBRA benefits if they choose.
St. Hilaire says that many towns have tried to fight long, drawn out battles with existing employees that often amount to little gain for a lot of “friction and heartache.”
Pensions remain for police and firefighters, however, overtime payments are not included toward their pension payment calculations, a provision of the city’s contracts that has been in place since before the current administration. Police and firemen cannot retire until after 27 years of service and pension payments are limited to 68 percent of their pay.
Danbury has also begun to set aside money for future capital projects in an effort to limit borrowing and interest payments. “We’re still borrowing,” St. Hilaire said, “but we’re putting money aside so we have to borrow less in the future.”
Overall, St. Hilaire says, the increasing – and increasingly diverse – population is driving growth. The city has shifted its focus to small businesses noting that Danbury’s large corporations already have their own advocates at the state capitol and the city’s resources would be better used on small start ups. “Small businesses can’t afford those kind of resources so we try to help advocate for them.”
“I think there are two things that have made a distinction for this community,” Mayor Mark Boughton said. “One, is that we are an incredibly safe community, our crime number usually led the state every year,” he said. “The second thing is we spend everyday working and helping businesses grow.”
Danbury changed its Office of Economic Development to the Office of Business Advocacy, in an effort to refocus on smaller and mid-sized businesses.
“The huge white-whale of recruiting a huge company to relocate from Germany to western Connecticut, those days have probably passed,” said Mayor Mark Boughton. “But we have a bunch of young, terrific entrepreneurs out there every day with ideas. They turn a small business into a medium business and start hiring people.”
A 2016 study by WalletHub – an online financial and credit database – ranked Danbury as the best city in Connecticut for a startup business.
Boughton said the city now offers an innovation center known as its “Hackerspace” where people can bring their business ideas and meet with experienced business professionals, learn, and use the provided computers and technology to get started with their business plans.
The population boom has come with housing developments as well. Greystar, a real estate development firm, recently completed on a 370-unit apartment complex at the corner of Kennedy Avenue and Rose Street. The $80 million project transformed an area formerly known for its blight and abandoned parking areas into a massive apartment complex with $2,000-a-month apartments and a pool.
But such population growth does come at a cost. Danbury schools have to accommodate a large growth in enrollment that is straining school resources. Superintendent Sal Pascarella told the Danbury News-Times that the school district is “strained” and “crowded.”
Recent fiscal problems with the state have meant that Danbury is seeing a reduction in its education funding, which threatens to transfer costs back onto the residents. In his 2015-16 budget address, Boughton proposed raising property taxes by 2.39 percent, calling it “a direct result of the State of Connecticut not honoring its commitments; particularly in the area of education.”
St. Hilaire says the city is now seeing even less help from the state for education spending, will be difficult with such a fast rate of population growth. “We’re trying to fight for our fair share of the state revenue for that. We’re disproportionately funded for our schools,” he said. “It unfairly penalizes the taxpayers here.”
Boughton says that education funding continues to be a problem in the city but city officials have no control over the contracts made by the board of education. But overall Danbury’s financials and fundamentals appear strong, at least to the ratings agencies, and the city continues to move forward in a state that all-too-often appears to be moving backwards.
“Businesses are growing, the population is growing and the ratings agency sees that,” St. Hilaire said. “I think you have a stable local environment here. Businesses and people don’t want to go into an environment that is unpredictable.”
The newest annual Rich States, Poor States report from the American Legislative Exchange Council dedicates an entire chapter to “Connecticut’s Economic Freefall,” citing Connecticut’s high-tax environment, high pension and debt liabilities and its government labor costs. The high-profile authors include economists Stephen Moore, who has served in the Ronald Reagan ...