Not-For-Profits Plead: Stop The Cuts

More than 80 heads of local not-for-profits got state lawmakers in a room to urge them to stop the budget blood-letting that’s stretching their operations at a time of great need.

The directors and some of their employees and clients gathered at the ConnCAT education and training center in New Haven’s Science Park Thursday morning to issue the plea at a time when recurrent state budgets have led to rounds of painful cuts to social service providers statewide.

The providers said that services for children, the disabled, the mentally ill, the addicted, the homeless, the formerly incarcerated, the unemployed and the working poor are all at stake.

New Haven State Sen. Martin Looney, Hamden/Ansonia State Sen. George Logan, New Haven State Reps.Juan Candelaria and Roland Lemar, and Milford/Orange St. Rep. Pam Staneski participated in Thursday’s forum. The not-for-profit leaders called on them to recognize that such agencies provide not only services, but lots of jobs.

The meeting took place a day after the lawmakers returned to the state Capitol in Hartford for the beginning of a legislative session where they are expected to spend much of their time grappling with a $245 million hole in the budget they just passed and the potential for a nearly $2.2 billion hole in fiscal 2020.

Gian-Carl Casa, president and CEO of the Connecticut Community Nonprofit Alliance, said that not-for-profits across the state are reporting that demand for their services are up even as state funding for such services has continued to trend down. He said the biggest challenge is that not-for-profits in the state are funded from the 47 percent of the state budget that is not reserved for fixed costs — meaning that, say, when a big deficit suddenly emerges, those are often among the first line items to get cut.

Casa urged lawmakers to treat not-for-profit services as fixed costs in the budget, especially in the wake of a recent change in federal tax law that many believe will discourage giving to charitable organizations.

“Unless this changes, unless funding for nonprofits is considered essential and necessary, unless it is considered essentially the same as fixed costs and taken off the table for budget cuts, we’ll be looking at a Connecticut that isn’t going to be providing for people with intellectual disabilities,” he said. ​“We’re going to be looking at a Connecticut that is not providing for the mental health and addiction needs, a Connecticut that does not provide re-entry support for our communities, a Connecticut that won’t have arts and culture.

“And that’s not just the frippery, not just something that makes life nice, but also very essential for certain things including when our state has to go out and compete for business against other states,” Casa added. ​“It makes us attractive, we need this investment. If nonprofits falter, are weakened and they close, we’ll have a Connecticut without those things.”

Casa said given that not-for-profits can’t raise their own taxes, or increase what they charge for their services, there is a real danger in seeing such dire predictions come to fruition if the state doesn’t step up to do its part.

“All you can do is cut stuff,” he said. ​“All you can do is close programs and lay off staff. That’s not the Connecticut we want. That’s not the Connecticut you want.”

“I employ 200 folks in New Haven,” said Alice Forrester, who runs New Haven’s Clifford Beers Clinic. ​“We are the innovators, and we should be part of the economic development conversations. We are the people who can turn this state around. We have a lot of ideas that could help during this terrible crisis in our state.”

State Rep. Staneski, one of two Republican lawmakers present (in addition to Logan), said she’d like to see the state shrink government by turning over many of its own social service programs to not-for-profits.

Staneski, who serves on the legislature’s Appropriations Committee, said she helped found a not-for-profit and worked for the United Way of Milford. In those roles she became convinced that the state might be better off as a convener of the funding of social services and not-for-profits should be the conduit for delivering those services.

“This isn’t about dissing our state employees,” she said. ​“They can’t help that we built a system that is broken.”

Marrakech Inc. employs some 850 staff members. President and CEO Heather LaTorra said she supports Staneski’s idea in principle. She said that currently there are three conversions underway in the state that would transfer some state social services to not-for-profits like hers.

Those conversions are anticipated to save the state $3 million a year in perpetuity. But there is a problem. If some of the cost savings don’t come back to Marrakech, LaTorra said, she can’t afford to pay her employees a living wage. If she can’t pay a living wage, she can’t recruit people to provide the services the state will entrust her agency with.

“If this is not well thought out, it could set up more citizens to be under the living wage standards in Connecticut and more without adequate services,” she said. ​“You must reinvest a portion of the savings so that we can increase our capacity and increase the wages of hardworking people.”

State Rep. Lemar encouraged the not-for-profit leaders to make their voices heard in Hartford, noting that some 75 people once came to testify against a proposed increase in taxes on luxury yachts. He told them to bring their stories and their ideas, particularly to the Appropriations Committee.

State Sen. Looney and State Rep. Candelaria both agreed that the state won’t be able to cut its way out of the deficits ahead, noting that some 10,000 workers have been dropped from state government in the last eight years. They advocated raising new revenues through legalizing the recreational use of marijuana and instituting highway tolls, among other controversial ideas currently under consideration in Hartford.

Looney spoke about the state’s difficulty in relying heavily on income taxes from the extremely wealthy, especially in the financial industry, whose incomes vary widely from years to year. He noted that someone who makes $100 million or more might pay $7 million in taxes one year and then reduce their income by half the next, with a concomitant drop in taxes.

“There is such a difference between the merely wealthy and the super, super wealthy,” he said.