Rell: State Economy Remains Fragile

By Noreen Gillespie Associated Press

HARTFORD — State economists delivered a frank report to Governor M. Jodi Rell about the state’s financial health Tuesday, and urged her to make jobs a priority for her administration.

Following weeks of high-profile job cuts across the state, Ms Rell met behind closed doors with four economists to get a sense of where Connecticut stands in its economic recovery.

“I think I can sum it up fairly well and tell you that we are still in a very fragile economy,” Ms Rell said. “We are still losing jobs, and frankly, any time we lose one job, it’s one too many.”

Connecticut’s unemployment rate held steady at 4.6 percent in June, about one percentage point below the national average.

But the past several weeks have not held good news for the state, as several companies with Connecticut ties announced job cuts.

St Paul Travelers Cos., Kimberly Clark, and Wachovia Bank have all announced job cuts in recent weeks that will affect Connecticut workers, prompting concern for the state, Ms Rell said.

Wachovia said it was shutting down a customer call center in Shelton and eliminating 275 state jobs, while Kimberly Clark said 350 workers would be laid off from its New Milford plant. St Paul Travelers Cos., which has offices in Hartford, said last week that it would cut 3,000 jobs, though it has not released specifics.

“The bottom line is it’s all about jobs,” Ms Rell said. “What we need to do is focus on how to keep jobs in this state, and how we draw good jobs and businesses back to the state.”

Connecticut has seen positive growth in areas like health care, engineering, pharmaceutical, and biomedical industries, said John Tirinzonie, an economist with the state Department of Labor.

But the state needs to focus on creating a business-friendly environment to lure industry to the state and keep it here, economists said. One way is developing a predictable tax system in the state, economists said.

While specific data is not available, economists believe that taxes play a role in companies’ decisions to stay or enter the state, economists said.

As the state tried to work its way out of a multimillion-dollar budget deficit last year, lawmakers decided to put a temporary 25 percent surcharge on the corporation tax.

“Businesses can deal with just about anything as long as they have an idea of what the future holds. Constantly changing the nature of the playing field is the problem,” said Ed Deak, head of the economics department at Fairfield University.