New Canaan resident running for governor
Many argue that the State of Connecticut is on fiscal life-support, facing an uncertain future.
But the City of Stamford is recovering from the same financial problems, and the man who administered the tough fiscal medicine that helped heal that city is now running for governor, saying the same course of treatment can put Connecticut on the road to recovery.
The fiscal doctor and gubernatorial candidate, known around New Canaan for his emergency medical work, is Mike Handler, who lives in town with his wife and four daughters.
Major issues that have plagued the state and Stamford, both while under the direction of Dannel Malloy, were unfunded state employee retiree health care and pension obligations, insufficient cash reserves, and employee labor contracts that were unsustainably generous, Handler explained to the New Canaan Advertiser in an interview in late-November.
Another financial problem that Stamford had was caused by leaders restructuring debt so that a current budget year would see savings, and the real obligations would be pushed out for future taxpayers to pay, Handler said.
“These same ‘shell game tricks’ were brought up to Hartford, unfortunately,” Handler said, “and now the entire state is paying for it.”
Handler has been director of administration in Stamford since 2012, and in that job he serves as chief financial officer, chief administrative officer and chief operating officer of the city. He is a Republican who was hired by Mayor Michael Pavia and continues to serve under Democratic Mayor David Martin.
Handler has a master’s degree in business administration from Columbia University. In prior private sector employment he worked at what he calls “the biggest, most dynamic financial management firms in the country” including Goldman Sachs and the SAC Capital hedge fund. In those jobs, he said, he got “great experience on how to run businesses, contain costs, maintain long-term liabilities,” and also he “learned a lot about about how to allocate capital, how to manage risk … .”
“I am the only candidate with private sector success and experience, and relevant government success and experience,” said Handler. “I just spent five-and-a-half years fixing the exact same problems. That’s why I have the confidence to know I can fix it [in Hartford], because I just fixed it [in Stamford].”
As a volunteer, Handler serves New Canaan as a member and former captain of the Volunteer Ambulance Corps and as director of Emergency Management. He is the calm, deliberate voice on the pre-recorded calls going out to the community during storms and other emergencies.
Handler said he saw to it that kicking employee benefit obligations down the road was outlawed in Stamford. He said he agrees that governments agreeing to provide employee benefits and then not funding them “should be illegal.” He said he will take that philosophy to Hartford.
In addition to outlawing the practice of not funding employee retirement benefits, the Stamford mayors’ administrations with which he has worked have stopped the practice of restructuring debt that results in current year savings and larger costs later.
Additional fiscal fixes that Handler and the mayors Pavia and Martin used in Stamford, which Handler said would also fix the fiscal problems for the state, include tripling cash reserves in five years, cutting expenses, and operating with a year-end surplus.
Even more, Handler said he renegotiated labor contracts personally — not by hiring a negotiator — so that employee benefits are more in line with the private sector and are at a sustainable level.
At the state level, employee benefits are reported to be 25% to 46% above private sector benefits, he said. “We know those benefits are unsustainable.”
He said it is not fair to employees “to give them a benefit today that will not be there when they need it the most.” He believes in educating the workers to realize they will be better off agreeing to what can be paid for.
Force cities to improve
Handler said as governor he would use the state’s leverage to force cities to fund their liabilities, renegotiate contracts and stop restructuring debts further to the future just as Stamford did.
“I would not be bailing out Hartford until they restructured their liabilities,” Handler said.
An expense problem
In addition to the structural changes needed at the state level, Handler says a key part of the fiscal fix is some basic budget discipline too.
“Cutting expenses is the solution,” he said.
“We fooled ourselves to think we had a revenue problem,” said Handler. “The need for revenues is a symptom of an expense problem.”
Handler said this overspending problem has persisted at the state level because a group in the government believed that raising taxes on Fairfield County was the solution. “You can’t make that argument today. Even Dan [Gov. Malloy] would agree that didn’t work.”
People moving out
“Somehow we think we can just raise taxes, and we see people are voting with their feet,” he said. They are moving out of the state.
“Revenue is not the answer,” he said. “The more you raise taxes the less revenue you have,” because people move out.
With income tax, sales tax, estate tax and the state shifting some expense burdens to municipalities, which drives up property taxes, it all comes out of the taxpayers’ pockets.
Of “the 1,680 people I have talked to in last six months, they all feel that government has lost sight of the money coming out of their pocket means less things for them to do, less job growth, less opportunities to grow their business, and less opportunity to invest in their home,” Handler said.
“We’re making it so people don’t respect themselves for staying.”
As if rising taxes are not enough, Handler said that the inability to know where tax levels will be in the future is driving businesses and individuals out of the state.
“We’ve lost predictive value of tax in our state,” he said. For example, Handler said it is a very real possibility that the state’s unfunded pension liabilities for teachers will shift to the towns, “which means for all of us living in New Canaan we are facing a very real 12 to 13% property tax increase.”
This uncertainty of what property taxes will be is unsettling to people, and they want to live where they can predict their taxes.
Businesses, too, want to be able to model out their tax costs to know if they can grow their business, he said.
Businesses want to be in a place where there is “predictive value” for their costs.
“Companies are taking high paying jobs and walking out of our state,” he said.
Without relying on new tax revenue to solve the state’s fiscal crisis, cost cutting is required, Handler says.
An example of Stamford improving its balance sheet by cutting expenses is the Smith House Nursing and Rehabilitation Center, which was owned and operated by the city and now has been privatized. Handler said the the city “was in a business we should not have been operating in.”
He said they were not providing a quality service and the costs were prohibitive.
There are places “where the private or nonprofit sector could have done it a lot more efficiently.”
He said the city made the goals to keep employees employed, keep residents there and keep it as a nursing home.
“All three have happened,” Handler said, “The city is saving $5.5 million a year every year, and the home is thriving.”
“That’s what we should be doing,” Handler said of city and state government.
He said the state had a great, low-cost arrangement where drivers could renew licenses at AAA locations, yet they dropped the program. The state is going in the opposite direction from where it should be going, he said.
People want to be here
With reduced expenses, a cleaned up balance sheet and restored “fiscal stability” Stamford has been able to invest in things that make people want to be there, Handler said — things like building a new school, investing in parks and paving streets.
The result, he said, is “private sector growth and development, which is why Stamford is the only city that is experiencing growth despite the overhang from the state.”
No other solution
For the state’s fiscal crisis, “There is not a creative solution other than addressing structural problems,” Handler said. The state needs to get out from under the unstainable debts and get its fiscal house in order so that it can invest in things that make people want to be here — like education, infrastructure and transportation, he said.
“This is personal,” Handler said. He wants his daughters to be able to move back here to live after college.
He describes his wife, Sarah, a New Canaan native, and children as “one of the most understanding and supportive families,” considering the time he is now spending on the campaign trail.
Summarizing his position as candidate for governor of Connecticut, the city administrator said, “You have a toothache, you go to a dentist.”
Connecticut has “a fiscal problem; I am a numbers guy.”
Handler acknowledged that while the solutions to the state’s fiscal problems “are not overly complex,” it can be a challenge to communicate the financial remedies in simple terms to a broad audience.
“What people need to know is I fixed Stamford,” and the state has the same problems.
“The difference between me and the others with government experience is I’ve actually done the job,” he said.
“This is a beautiful state, and we’ve got every opportunity to make this a state where people want to be."