Connecticut is now grappling with a fiscal and economic crisis that, according to some leading Democrats, has been caused by ineffective urban policy. In late May, Hartford-based insurer Aetna confirmed long-discussed rumors that it will be moving its headquarters from Connecticut. General Electric announced plans to move from Fairfield, Connecticut to Boston in January 2016. Though the Great Recession officially ended eight years ago, state budget forecasters are projecting a $2 billion deficit for next fiscal year, or 11 percent of the budget. One policy report published in March, when rosier estimates pegged Connecticut’s deficit at only 9 percent, ranked Connecticut as having the 8th largest shortfall among American states. Hartford, the state capital, is on the verge of bankruptcy.
What course should Connecticut take to stabilize government budgets and stimulate the economy? Gov. Dannel Malloy and Hartford mayor Luke Bronin believe that stronger cities are the answer. As Malloy said recently, explaining why his budget increases state aid for cities, “I think there is a body of people who don’t understand urban environments, and I think Connecticut has too long pursued a public policy of insufficient support for our urban environments.”
But there are many questions to raise about just how vital urban Connecticut is to the state’s future. Connecticut’s major cities have their charms, especially Hartford and New Haven. But in terms of meeting the enormous fiscal and economic challenges with which the state is now faced, they are and will remain less important than its suburban regions.
With all due respect to Gov. Malloy and Mayor Bronin, there’s a certain glibness in how they presume that Connecticut’s poor urban areas can be revitalized. It’s not as if their predecessors haven’t been trying. Any visitor to downtown Hartford and New Haven will be struck by several imposing works of mid-20th century modern architecture. Examples include Constitution and Bushnell plazas in Hartford and New Haven’s Temple Street Garage. These projects date back to the “urban renewal” era of the 1950s and 1960s, when massive government resources were devoted towards breathing new life into tired central cities.
New Haven was nationally-renowned for its urban renewal efforts, both because it focused just as much on rehabbing old buildings as demolishing them . Mayor Richard Lee’s “human renewal” social service programs anticipated criticisms that poverty can’t be cured through real estate development alone. But the widely celebrated Mayor Lee failed to hit the mark. New Haven, the “Model City,” was rocked by a race riot in 1967, as was Hartford in 1969.
Despite growing evidence that Connecticut cities were not coming back, urban renewal in modified forms would continue throughout the decades. In 1974, Hartford gained the “Hartford Civic Center,” (now known as the XL Center), a sports and entertainment venue where the NHL’s Hartford Whalers played from 1980 to 1997. The state’s convention center opened in Hartford in 2005, and a minor league baseball park just came online in April. And yet, among American cities with a population above 100,000, Hartford’s poverty rate is 8th highest in the nation. Mayor Bronin himself describes the current fiscal state of affairs in Hartford as “the largest budget crisis in our city’s history.” State government is not much better off. Connecticut’s budget deficit is driven by escalating costs for public pensions, which powerful government unions have balked at reforming, and weak tax receipts despite—or perhaps because of—a series of recent income tax hikes. Gov. Malloy, a progressive Democrat, has recently taken the position that trying to further increase the tax burden on the state’s 1 percent would be counterproductive. Urban revitalization is an unsound strategy for addressing budget deficits because creating strong cities is the work of generations. The secret of Boston’s success is reflected in a famous saying attributed to Daniel Patrick Moynihan: “If you want to build a world-class city, build a great university and wait 200 years." Cities like New York that are now envied as talent magnets have had that reputation going back many years. Even in the 1970s, when New York was plagued by high crime and the threat of insolvency, it was still a national leader in finance, media and the arts.
Bronin and Malloy have said that they understand Hartford can’t become New York or Boston. But among Hartford’s true peers—formerly industrial small and mid-sized cities throughout the northeast and Midwest—it is very difficult to find any examples of an authentic comeback city. In an analysis I recently wrote about Hartford, New Haven, Waterbury and Bridgeport, I found that, since 1970, the number of poor people living in these cities had increased by 56.1%, 40.8%, 153.6% and 86.3%, respectively. Over the same span, all have seen their total populations decline with the exception of Waterbury, which has grown by 1.7%.
Despite all the hype over America’s urban renaissance, cities remain a tough sell for the middle class. However magnetic a city may be in attracting young millennials, as studies by William Sander of DePaul University and William Testa of the Chicago Fed have demonstrated, the more educated you are, the more likely you are to opt for suburbs when you settle down. If, 20 years ago, a given city had an underperforming school system that was unattractive to middle class families, it most likely remains unattractive to them now. According to the most up-to-date Census data we have, within most major metros, suburban areas are growing more rapidly than central cities.
Connecticut is often associated with suburban blandness. But it happens to boast one of the most talented labor forces in the nation. A 2016 McKinsey report ranked Connecticut second among states in productivity (GDP per worker). Statewide, 16.6 percent of adults have advanced degrees, a rate which trails only Massachusetts and Maryland. (Only 6.7 percent of adults in Hartford have advanced degrees.) In coming years, the high levels of productivity and educational attainment among Connecticut’s suburban residents will be essential to any growth the state manages to achieve. Fairfield County Connecticut boasts some of the strongest public schools in the nation, whereas the state’s urban school districts remain troubled.
As Connecticut officials contemplate a policy response to Aetna’s exit, it is crucial that they not lose sight of the following. We don’t know how to revitalize poor old industrial cities, especially small and mid-sized ones. Middle class families with children are opting for the suburbs just as reliably as in prior generations. One of the soundest economic development strategies is for a state to offer potential employers a productive and educated workforce, which Connecticut plainly does. State officials should build on current virtues, avoid chasing fads, focus more on budget discipline, and by all means stop trying to make Connecticut into something it’s not.
Stephen Eide is a Senior Fellow at the Manhattan Institute.