Arora Says Lack of State Fiscal Strategy Leads to Possible Treasurer Race
Connecticut needs a more effective long-term fiscal strategy, and the state treasurer should take a more active role in shaping it, said state Rep. Harry Arora, a potential candidate for treasurer. , in a recent conversation with CT Examiner.
“The state faces serious financial challenges regarding debt and pension liabilities, and I believe we need a strategy to get Connecticut back on the path to long-term financial stability that would lead to economic growth,” said Arora, R-Greenwich. , a career investment manager who formed an exploratory committee for a possible candidacy for the position of treasurer.
Arora said he believes there is an opportunity to provide a solid long-term solution to the state’s financial problems, which he says are currently “just bandaged” between cyclical positives in the markets and the recent federal pandemic aid that provided several billion dollars to the state.
Specifically, Arora said cutting the roughly $8 billion a year — out of an annual budget of $22 billion — paid for various state debts would allow funds to be reallocated to areas such as economic stimulus programs and even tax relief for residents.
“If you have a good fiscal policy where you don’t spend 40% of our budget on past challenges and issues, then you would be able to do much better on every other point,” Arora said.
And, he said he would reduce that debt with better returns on state investments and by advocating for greater scrutiny of funding for projects that require borrowing, like building schools.
He says the state’s $43 billion pension funds haven’t generated the best possible returns under outgoing treasurer Shawn Wooden for a number of reasons, including underinvestment in U.S. stocks that produced solid returns.
Arora would at least double the current 15-20% allocation to stocks he says Wooden has made in favor of more global investments that carry more risk and international exposure.
“It’s not about being bold and what we call making bets,” he said. “It’s about having a conservative investment strategy and that’s one of the reasons why we kind of underperformed.”
Arora is the founder of investment firm Alphastrat, which specializes in researching and identifying market opportunities created by the shift from fossil fuels to clean energy, and has also worked for hedge funds Enron and Amaranth, which both failed.
He said he would also explore streamlining the state pension system by allowing state employees to opt out and use their annual contributions for their own private investments.
Arora says he would also draw on the expertise of Connecticut’s broad financial and investment community to help shape the policy — perhaps through a task force.
“Right now, we’re not focused on using the best resources our state can provide,” he said. “Many of these professionals are very keen to help the state think through its financial problems.”
More due diligence
On major borrowing expenditures like building schools, Arora said he would use the treasurer’s seat of the State Bonds Commission – which licenses school building projects – to demand financial analysis. more rigorous.
“We have high schools being built for $200 million when the typical spending in the United States is $50 million,” he said. “There needs to be more due diligence on these projects that are funded with long-term debt and surety bonds. Someone from the Bonds Commission needs to ask questions to ensure that these are funded at the right price or with some degree of reasonableness.
Wooden has not announced his candidacy for a second term, and Arora is the only other potential candidate to express interest in the position so far.
Arora was elected state representative in 2019 after winning a special election to fill the seat previously held by Greenwich First Selectman Fred Camillo. He was re-elected to a second term in 2020 and is the top Republican member of the Legislature’s Labor and Public Employees Committee and a member of the Energy and Technology and Human Services Committees.
In 2018, he ran for Connecticut’s 4th congressional district seat in the United States House, losing to longtime incumbent Democrat Jim Himes.
Arora said he expects to make a decision on whether to officially declare himself a candidate for state treasurer in about two weeks.
“The idea is to make sure that within the party I have a lot of discussions, not just with the leadership, but with the base with various groups,” he said. “I do this and have generally had a very positive response because people understand that you need a financial person with a financial strategist background for this job.”
Editor’s Note: Due to an editing error, the second half of this story, beginning with “More Due Diligence”, was not included in the initial published version.