It is a challenge to speak to you this morning about a strategy for the future growth of the Hartford Region. I am going to be frank because I am a believer in the principle that "The Truth shall set you free" - though responding effectively to the truth can cost a lot of money, time and talent. I also believe the Hartford Region has a great potential for an better future quality of life. But it will take extraordinary and concerted leadership to achieve that potential. It is up to you people in this room and your colleagues to provide it.

The Hartford Region has several major assets that it needs to capitalize upon.

Most of the population has very high incomes and strong purchasing power, and many of your workers are highly skilled. In 1999, Connecticut had the highest disposable income per person in the nation at $31,797. The highest incomes are probably concentrated in the New York area, but most of this region is rather well-off also.

Moreover, the Hartford Region contains many higher-education institutions, including Uconn, University of Hartford, Rensselaer's Management School, and Trinity College. If you extend the region up into Massachusetts, there are over 20 schools with more than 20,000 students in this "Knowledge Corridor." These schools could be the nucleus for research and incubation of new high-tech firms if enough incentives are created to get graduates to stay around and start new firms. It could also contribute to improving the quality of the City of Hartford's school system.

Hartford is the state capital, which gives it a stable economic base of government workers and should give the state legislature special sensitivity to the problems of this region - though this has not always been the case.

Hartford is a beautiful region located close to recreational areas in this state, Vermont, Massachusetts, Rhode Island, and New Hampshire. This plus strong educational institutions should be an attraction to highly-skilled persons as a place to live.

But the Hartford Region has five major problems that its leaders and people must confront.

First, Hartford is a slow-growth region in jobs and population. In this respect, it reflects the condition of both New England and the Northeast as whole. Both have been exporting people to the South and West for over 50 years, mainly because of high living costs, relatively high wages, and especially the weather.

The total population of Connecticut rose 3.6% in the 1990s, vs. over 13.2% for the entire nation. The non-Hispanic white population of your state in fact declined by 4.2%, or by 2.2% if one-half of all Hispanics are counted as white. The Hartford Metro Area gained only 2.2% or 25,525 in the 1990s. The city of Hartford lost 18,000 residents, or 13%, while the suburbs gained 43,700, or 4.3%. You are losing your most talented younger people to other regions.

The total gain in the Hartford Region's population consisted of nonwhites; I estimate that the non-Hispanic white population declined by 12,600. Even in just the suburbs, the total population gain was nonwhite and Hispanic, since the non-Hispanic white population fell by 5,400. If this region had net immigration from abroad of about 21,000 in the 1990s, then your total of out-migrants to the rest of the U.S. was about 74,250 whites, or 7.9% of your 1990 white population.

These 2000 Census data should be a wake-up call concerning your ethnic future. You must become more aware of the future significance of your non-white population, now mostly in the city but spreading. Non-whites, including Hispanics, will comprise all of your future population growth if these trends continue. So the skills and motivations of your nonwhite population are critically important to you.

Second, your region has an unusually stark separation of the rich and poor. It is based upon the isolation of poor minority households within the City of Hartford, which contains only 10.2% of the entire metropolitan area population. The per capita income level in Hartford in 1998 was only $13,271, considerably less than half that of the state. Hence the extra resources needed to overcome poverty are not present in the part of the region that has the most poverty. That undermines the city's school system and weakens the region's overall labor force skill level. It also causes people and firms who can do so to keep moving out of the city into the suburbs or into other regions.

Because Hartford is such a small fraction of the region in population and area, the high-income outer neighborhoods normally found within a big city are in the suburbs. Moreover, Hartford is only 27% white, but is 38% black and about 40% Hispanic - so its citizens are much poorer than those in the suburbs. However, poverty and its maladies are starting to move into close-in older suburbs.

The political and economic isolation of the City of Hartford is accompanied by severe racial segregation in the region's housing markets. The City is 73% minority, but the suburbs are 87% white. Racial segregation in housing is a nationwide problem caused in part by white unwillingness to live in neighborhoods containing more than 25-33% African-Americans. Race is closely related to the reluctance of your region's suburbanites to recognize their interdependence with the City of Hartford, even though the region's main economic engines are here.

The Hartford public school system, with 95% minority students - mostly Hispanic - has been under state supervision since 1997. Though it has improved markedly, the system still has a 50% drop-out rate and test scores about half those of many suburban systems. This is after the state has supplied 70-75% of the system's funding. Low school quality is a key reason Hartford's population is declining.

Families with children who have any choice will not move into the city or even stay there. Only radical reform of Hartford's schools will change this, but no one knows how to create such reform as long as almost city children are from very poor families. This problem is nationwide, but other big cities have more non-poor students to offset low student performance.

Third, the division of the suburbs into many separate communities all competing with each other for tax bases and local prestige has prevented an effective regional approach to addressing growth problems, most of which are regional in nature. The strong parochialism of these localities prevents any truly effective cooperative approaches.

Many suburban towns have high school costs and low tax bases, especially if they have high loads of special needs students. There is no parity between the social needs of individual communities and their tax bases; hence they compete fiercely.

Fourth, Hartford's past economic strength has heavily depended upon aerospace and a relatively slow-growth industry - insurance. But control of most of Hartford-founded insurance firms has shifted to other regions, except for three companies.

In reality, there is nothing wrong with the insurance industry as an economic base, because it is evolving into the broader financial services industry, which is not a slow-growth industry at all. This is clear from what has happened to Cigna, the Travelers, and the former Connecticut Mutual - all now parts of larger firms that have achieved significant growth and prosperity, but are no longer locally based.

Fifth, the Hartford downtown area is weak in retailing attractions, cultural attractions, and housing, even though it has a lot of office space and large firms. The city is not economically, politically, or socially competitive with its outlying suburbs; hence it cannot attract enough new jobs or retail spending to lift itself economically.

These five problems pose a daunting challenge to your region. The reality is that you cannot cope with these problems without making major political, economic, and institutional changes in entrenched conditions. Few U.S. regions have ever done so unless they believed they were facing serious crises. Only when citizens feel threatened by a crisis have they been willing to make the basic changes in long-established traditions necessary to deal with these issues effectively.

You do not face the types of crises that have galvanized other regions into accepting major changes. Your growth does not impact environmentally-sensitive lands as in the Florida Everglades; your air quality is not so bad as to cause the federal government to withhold highway funding as in Atlanta; and your courts have not imposed affordable housing on your suburbs as in New Jersey.

Instead you have a creeping crisis. Continuing your present policies will cause further decline within the City of Hartford, with more losses of jobs and people. The reputation of your city will deteriorate even more, and that will diminish the viability of the entire region, which depends on the vitality of its central city. The region will continue stagnant growth and will experience further losses of young people because of no opportunities. Poverty will spread to more suburbs. That is what will happen if you simply continue present arrangements.

What strategies can you adopt to deal with these formidable problems? Concerning slow growth, your strategy should be to regard it as a positive factor rather than to bemoan your lack of dynamism. Nothing you can do will transform you into Phoenix or Atlanta. But slow growth can be seen as a virtue. It means less congestion of all types, especially on the roads and in the schools. It also means a healthier pace of life, less upward pressure on housing prices and the cost of living, and greater community stability. This fits in with what should be your general emphasis on the quality of life in this region.

Take housing prices. The median price of a single-family home here was $159,900 in the fourth quarter of 2000, compared to $329,500 in Boston, $233,300 in the New York-New Jersey region, $196,700 in the Washington area, and $470,200 in the San Francisco area. This is not good for current homeowners, but it is for new families.

The presence of all those colleges and universities nearby should be a major part of this theme, because high-tech workers need culture and lifetime learning. You also need to develop some state and local economic incentives to encourage the founding of new industries by graduates and faculty members in these institutions, as well as investors.

The most important single thing you need to do is to create a regional spirit and civic focus among both public-sector and private-sector leaders and citizens. If every resident keeps thinking of himself or herself solely as a resident of Simsbury, or West Hartford, or Glastonbury, or South Windsor, rather than as a resident of the Hartford Region, then you cannot establish the political consensus to make the institutional changes you need.

The region's leaders - including the elected officials of all those towns and the Governor, state legislators, and key civil servants - need to recognize that this region cannot regain its past strength and dynamism unless its many parts all work together to accentuate your strengths and minimize your weaknesses. Even your telephone books did not merge communities until this year. This parochial spirit must be overcome.

How do you do this? By stressing the economic and social interdependence of all parts of this region. What many do not realize is that the reputation and allure of any region depend heavily upon the reputation and amenities of its core central city. If the city deteriorates, so will the attraction of the entire region for firms and people.

Also, your suburbs need the jobs centered in Hartford in the state government and many other enterprises. Your firms need well-trained workers from the minorities who are making up your population increase, even in the suburbs; so Hartford's schools and families need more help. In the future, many white suburban homeowners will need to sell their homes to rising minority households moving out of Hartford if they want to get reasonable prices, so there will have to be economic gains for those advancing households.

Thus, a crucial regional goal is to focus effort and resources on improving the City of Hartford as a place to live and do business. This cannot be done without major inputs from the state government. The city needs to slash business taxes, develop land banks with low land prices for new projects, subsidize downtown housing for households without children, and create tax incentives for new businesses and homebuyers. It must do these things in order to become more competitive with the suburbs. Yet it cannot finance these actions alone. Only the state government can provide the needed funds for Hartford and other like cities. This requires a major new state commitment.

Also, the city needs to create a hospitable atmosphere in which firms can do business. Past antagonism between local government and business must end. The city should create one-stop project approval processing, lower taxes, and other mechanisms to encourage firms to locate here. And the state and city governments should locate all their offices within the city to stimulate employment in Hartford.

Institutional change is equally important among the suburbs. It is destructive to have each town fighting to capture more commercial and industrial taxes and reject low-cost housing because it is a fiscal loser. You cannot attain decent balances between social costs and tax bases by continuing isolated financing of each community on its own.

The concept of fiscal zoning by each locality is a regional loser because every community then rejects added low-cost housing, especially multi-family housing. But your economy needs low-wage workers to serve your industries and residents, and those workers have to live somewhere. And young people must have access to affordable housing too if they are to remain in this area. Some towns have even zoned for only one-bedroom new housing to prevent families with children from moving in. This is virtually suburban white genetic suicide, since suburban children will have no place they can afford to live or rear their own children. You need to share resources more equitably among localities for rational growth.

This change of perspective is extremely difficult in view of your long tradition of home rule and town autonomy, and the suburban suspicion of any real relationship with the central city. Has anyplace achieved this goal? It has been done in Portland, Oregon, in the Twin Cities in Minnesota, and it is emerging in Seattle.

And all across the nation there is greater recognition that the day-to-day problems caused by growth and change cannot be solved without regional approaches, because those problems are basically regional in nature. Examples are traffic congestion, air pollution, reductions in open space, shortages of affordable housing, overcrowded schools, and increasing taxes to pay for infrastructures.

Ultimately, this change of perspective must be expressed in some type of regional governance arrangements. This need not, and should not, be one regional government. This need not, and should not, attempt to replace key roles of localities in land use planning and revenue. But some means of coordinating land-use planning and local finance must be provided at the regional level, with the power to modify the decisions made at purely local levels. This is most obvious for transportation, but it applies to other functions too.

The most powerful examples are the Metro in Portland, which is elected at the region-wide level, and the Metropolitan Council in the Twin Cities, which is appointed by the governor. A few regions have merged city and county governments, such as Nashville, Indianapolis, Jacksonville, and Miami. How well this has worked is not very clear.

In your case, these regional arrangements need three key dimensions. One concerns the coordination of land-use planning, ground transportation, and new infrastructures through a regional coordination body similar to that newly created for Atlanta, but with broader power than just transportation. Your existing Council of Governments is not nearly strong enough to carry out this function. A truly effective coordinating body needs power to alter local government's plans, and also needs to be run by persons who have a region-wide perspective, not just local representatives.

The second dimension is sharing taxable resources across the entire region like that in the Twin Cities. There, each addition to the commercial-industrial property tax base is shared among all localities, with 60% going to the place where the improvement is built, and 40% into a pool shared by all the communities on the basis of population and other factors. This has led to much greater parity in tax bases among localities, easing tax burdens in those with many residents but few commercial properties.

Tax-resource sharing should lessen the competition among localities for taxable commercial properties, reduce their resistance to accepting more affordable housing, produce a more even distribution of tax burdens for schools, and help overcome the fiscal deficit suffered by the present low-income communities. All these results should improve the quality of life and economic opportunities here.

Many suburbs could be significant gainers from such an tax-resource sharing, so it might attain majority support in the state legislature from representatives of those communities that would be better off if it were enacted.

The third dimension is requiring all new housing developments to contain some fraction of affordable housing - so-called inclusionary zoning - to open up more opportunities for low-and-moderate income households to live in suburbs where the new jobs are. You have a law that requires towns to justify refusals to accept affordable housing, but it has produced only 260 units per year. Inclusionary zoning has been done well in Montgomery County, Maryland, for 20 years, and you should adopt it here.

You may ask: if these arrangements are such good ideas, why have so few other places adopted them? Because existing arrangements, which are unjust and inequitable to a large share of each region's population, serve the majority of residents who vote - especially suburbanites - reasonably well - until they encounter serious problems.

But then, under the existing fragmented structures of our local governments, no political leaders have any incentives to change these arrangements toward more effective regional ones. They all benefit from present structures and risk losing their jobs if they change those structures. In each region, we are like the 13 original states before the Constitution was adopted, with a weak Confederation and no real powers of coordination or centralized action. What this region needs is a Constitutional Convention with people who have the courage and foresight of our Founding Fathers running it. Are you up to this task? Only you can answer.

That is why it will take courageous leadership to meld the disparate communities of your region into an effectively cooperating team that can take advantage of your strengths to overcome your weaknesses. And among the most important such leaders must be the Governor and the state legislature. Your present governor has shown that he understands the need for a strong capital region and a strong city.

The Adrian's Landing project is a good start at putting state money into Hartford. But what is now needed from the state goes far beyond anything anyone here has contemplated up to now. Only large-scale subsidies to firms and households can make the City of Hartford at all competitive with the suburbs and other cities. Yet unless it becomes competitive, it cannot create the economic opportunities for its residents - and the residents of the whole region - that the region needs to sustain even moderately robust growth.

Moreover, all the new arrangements affecting the suburbs I mentioned require new actions by the state legislature that go against the grain of home rule. Relying on purely voluntary cooperation won't work, because elected officials will not have enough incentives to take responsibility for what happens to the region as a whole.

What about the economic base under these governance arrangements? After all, it is the dynamism of your economy that will finally determine the quality of your future.

A truly regional approach to economic development - perhaps under your Metro Hartford Regional Economic Alliance - will improve your ability to retain existing firms and attract some from elsewhere, with your communities cooperating with each other, rather than competing over added property and sales tax revenues. Greater fiscal parity among them will strengthen their ability to deliver good schooling to your residents regionwide, which is vital to your future prosperity.

Rather than viewing Hartford as the Insurance Capital of the Nation, you should view it as an emerging Financial Services Center. You should stress a broader approach to providing the business services and workforce training that will attract financial service operations to this region. You already have three major insurance companies still headquartered here, and several others with major operations here. Other types of financial firms can be lured by possible synergies with this financial complex.

A key part of the financial services industry consists of "back-office" or "call-center" operations that can locate anywhere. Why not try to become the New England center for such operations, using the city's relatively low-wage workers? You have already created a training program on customer service, and you might add tax incentives. Such efforts should be regional to avoid local competition.

If you have some type of regional governance, you could create region-wide economic incentives for the establishment of new firms related to the excellent colleges and universities you have in this area. Those incentives could be used anywhere within the region, thus reducing competition among localities for taxable properties. Also, you could try more closely tying teaching in your secondary schools - including suburban ones with higher-scoring students - to the job needs of the financial services industry.

In summary, I may seem radical and overly optimistic even to suggest some of the institutional innovations I have recommended. But continuing your present policies, or adopting a hodge-podge of small changes, will not alter the region's current course.

The Founding Fathers of our nation did not hesitate to institute major changes when they saw that the Articles of Confederation were ineffectual in confronting the problems they faced. They exceeded the charge given to them by their home states because they realized that nothing short of dramatic change would really work in the long run. Do we still possess the insight, integrity, and courage that established our country? Do we dare to eschew modest and ineffective changes in favor of major ones that just might work - as our Founding Fathers did?

I cannot answer that question for you or for your region. But I can tell you that ignoring the types of major change I have described in favor of tinkering around the edges of existing institutional and other arrangements is a guarantee that the Hartford Region will continue to slip into mediocrity and decay. I hope you have the wisdom, guts, and persistence to transform that dull future into a much brighter one. Good luck!