Hartford Business Journal

24 Hartford Business Journal • May 18, 2015 www.HartfordBusiness.com OPINION & COMMENTARY EDITORIAL Congress should reauthorize Ex-Im Bank T here's a nasty political fight going on in Washington D.C. over the reauthoriza- tion of the Export-Import Bank, which provides loan guarantees, insurance, and other financial support to U.S. companies that ship goods overseas. We urge Congress to find common ground on the issue and renew Ex-Im Bank's charter. Now is not the time to cut off financing to exporters that may not be able to find capital elsewhere. Congress's failure to act will leave Ex-Im Bank unable to guarantee new loans start- ing this July. That's creating unnecessary uncertainty for Connecticut businesses at a time when exports are already being negatively impacted by the strong U.S. dollar. The debate has pit business interest groups against conservative Republicans, whose anathema to anything resembling corporate welfare has some GOP lawmakers pushing for Ex-Im Bank's extinction. The U.S. Chamber of Commerce, New England Council, and myriads of other industry groups are lobbying to keep Ex-Im alive, arguing that thousands of American jobs and billions of dollars in exports hang in the balance. To be clear, Ex-Im Bank isn't perfect. It should focus more on helping small and mid- size companies; large corporations, which may not need the assistance, are currently among the biggest beneficiaries. For example, in Connecticut, which has about 100 companies identified as export- ers, United Technologies and General Elec- tric are big users of Ex-Im Bank financing. Ex-Im Bank has also come under scru- tiny for accusations of fraud and waste. In April, it was reported that there were 31 open fraud hearings pending against the bank. As a result, it's right for Congress to ask tough questions and try to reform the institution so that it operates in a more efficient, fair and ethical manner. But shuttering Ex-Im altogether doesn't make much sense. While we've been critical of the significant spike in state government aid to Connecticut businesses, Ex-Im Bank's loan guarantees aren't quite as offensive. They help U.S. companies compete with international rivals, whose own governments, in some cases, tilt the rules in favor of domestic producers. China's penchant for currency manipulation, for example, has increased the cost of U.S. exports, contributing to America's blos- soming $51.4 billion trade deficit, which reached a 6 ½ year high in March. And as Hartford Business Journal staff writer Matt Pilon reported last week, the strong U.S. dollar is already dragging down export sales of small and large Connecticut companies. Threatening to cutoff their financing at this time would only exacerbate the problem and stunt economic growth. We understand Republicans' distaste of the federal government playing a credit agency role, but many traditional banks, especially community lenders that cater to small and midsize companies, lack the appetite and/or expertise to finance export businesses. That's why it's important to maintain Ex-Im Bank's role, particularly at a time of continued economic uncertainty. n OTHER VOICES State must rely more on private social service providers Barry M. Simon S ince the start of the 2015 legislative ses- sion, Connecticut lawmakers have been considering action on a wide range of issues impacting the state, none more pressing than the budget. With each passing week, the challenges present in the state's budget situa- tion become more and more apparent. As Gov. Malloy and the legislature begin the difficult work of crafting a bal- anced biennial bud- get, they face an esti- mated $190 million deficit for the current year, a $1.3 billion def- icit in the 2015-2016 fiscal year and a $1.4 billion shortfall in the following fiscal year. One troubling outcome of Connecticut's repeating cycle of budget shortfalls is cuts to key nonprofit community health and human service programs that support the state's most vulnerable citizens. From supporting children and adults with intellectual or developmental disabilities to helping residents with mental health or substance use disorders, these pro- grams provide critical services to those that need them most. U n f o r t u n a t e l y, budget cuts in these areas are worsened by the increasing cost of providing services in a setting such as South- bury Training School. The state Department of Developmental Ser- vices (DDS) is gradu- ally moving residents to community place- ments such as group homes, but in a recent Hartford Courant article, national dis- abilities expert Allan Bergman predicted that annual costs — currently about $365,000 per resident — will surpass $600,000 in three years. These cost increases have implications not only for near-term budgets, but also for future budgets for the state's long-term debt obligations in retirement and pension costs. By contrast, private providers offer state-of- the-art levels of care without obligating the state to pay millions in future worker retire- ment and pension costs. The difficult budget environment repre- sents both a challenge and an opportunity. As a provider of services for the disabled, it is very difficult to do business in Connecticut and pay a living wage. We are a viable alterna- tive to more costly and restrictive levels of care and are fully prepared to provide high-quality services for all of Connecticut's individuals with disabilities; the question is whether the state is willing to purchase those services. Connecticut's leaders can choose to con- tinue business as usual and allow costs to provide services in a state setting to grow, or they can choose another path, one that leads to structural reform and reduced short- and long-term costs, without sacrificing quality of care. These changes can be achieved over time through increased contracting of ser- vices with private providers. In a 2012 study, the legislature's Program Review and Investigation Committee found that, on average, costs to provide care in a pri- vate setting were less than half of providing care in a public setting. The study also found that while care in public settings costs more, the quality of care provided was not superior to that of private settings. We should not pit one part of the system against another, since there is need for all parts to perform certain functions, and it can transform over time if strategic management decisions are made. Now is a critical moment in time as higher costs and the lack of state support will mean program and service reductions and layoffs at the very moment we should be looking for less costly and more productive alternatives. Non- profit community providers are part of the solu- tion for the future of the service delivery system and preserving the investment made in quality, cost effective, com- munity care. We are innovative providers that improve indepen- dence and quality of life while also being a part of the solution to provide positive eco- nomic impact and to attack the unfunded liability issue for the state. C o n t r a c t i n g services with pri- vate providers is employed with suc- cess in Connecticut, and leading organi- zations have called for its expansion. In a recent letter to Gov. Malloy, the Metro- Hartford Alliance raised increased contracting with private providers as a much needed reform to bring stability to the state's budget. If done strategically and managed properly, imple- menting these reforms can deliver near- and long-term cost savings without laying off state employees or compromising quality of care. Rather, these reforms will enhance the sustainability of care for those in need of vital services today while ensuring that the state's budget situation is sufficiently improved to allow those on a waiting list or in need of ser- vices tomorrow to be cared for as well. n Barry M. Simon is the president and CEO of Oak Hill, Connecticut's largest provider of services for the disabled. HARTFORDBUSINESS.COM POLL Should Congress reauthorize the Export-Import bank? ● Yes ● No To vote, go online to HartfordBusiness.com. Last week's poll results: Do you consider downtown Hartford a safe place to live, work and play? 51.4% Yes 48.6% No Barry M. Simon ▶ ▶ One troubling outcome of Connecticut's repeating cycle of budget shortfalls is cuts to key nonprofit community health and human service programs that support the state's most vulnerable citizens. Send Us Your Letters The Hartford Business Journal welcomes letters to the editor and guest commentaries for our opinion pages. Electronic submissions are preferred and welcome at: editor@HartfordBusiness.com. Or you may fax submissions to Editor, Hartford Business Journal, at (860) 570-2493. ▶ ▶ We understand Republicans' distaste of the federal government playing a credit agency role, but many traditional banks, especially community lenders that cater to small and midsize companies, lack the appetite and/or expertise to finance export businesses.

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