Hartford - "There are two groups of people in Connecticut," says Fergus Cullen, the enthusiastic director of the state's leading conservative think tank.

"Those who enjoy the job security, relatively high pay and very generous benefits that come with public-sector jobs - government jobs - and the rest of us who pay for that."

It's been an us-versus-them kind of year at the Yankee Institute for Public Policy, Connecticut's largest advocacy organization for smaller state government, less taxes and a full embrace of free-market principles.

Since its founding in 1984, the nonprofit and ostensibly nonpartisan organization has aimed to draw attention to what it sees as government folly and waste. It saw itself as a lone voice of conservative reason up against legions of big-spending legislators and at a least one fiscally misguided Republican governor.

But until recently, few had heard of the small think tank on the Trinity College campus that was still denouncing the evils of former Gov. Lowell P. Weicker's income tax.

Then it hit a growth spurt in 2009 with the arrival of Cullen and his young-gun policy director, Heath Fahle. The institute has since added more staff (they're up to 3.5 positions), revved up its Internet activities, launched a government employee salary database, conducted its first opinion polls and unsheathed a new advocacy arm - Yankee Action.

Now Yankee Institute has arguably gained more recognition in the past 2½ years as its first 2½ decades. Thanks to its nemesis de jour - Connecticut's state employee unions - most of that has come in just the past couple of months.

"I don't want to dismiss a lot of the good work the previous folks did, but I think they've taken it to a new level," Chris Healy, past chairman of the Connecticut Republican Party, said.

But the newfound attention - some deliberate, some unsolicited - may have come at a price. As the Yankee-and-unions controversy reached a peak this summer, Trinity said it could no longer renew the institute's lease, forcing Yankee to vacate its campus headquarters by year's end. College officials say the decision was based strictly on space needs, but Cullen suspects union involvement.

"The unions can file harassing complaints with the attorney general to try to silence us. They can pressure our landlord to rescind our lease. But we will not be intimidated from defending Connecticut's taxpayers," Cullen vowed last week.

On Thursday, Yankee Institute won its highest-stakes battle to date against the leadership of Connecticut's public-sector unions when state Attorney General George Jepsen cleared the think tank of any illegal interference in the unions' failed effort to ratify their contract concessions agreement with Democratic Gov. Dannel P. Malloy.

The State Employees Bargaining Agent Coalition representing 45,000 state workers had accused Yankee of hacking into the state's employee email database to spread misinformation and trick rank-and-file workers into voting down the deal. Yankee's motive, the unions alleged, was "to further its agenda of shrinking state government through layoffs."

Yankee called the allegations unfounded and preposterous. Still, the institute hasn't been shy about its No. 1 target.

"Our focus right now is on the government labor unions," Andrew Cowin of Greenwich, Yankee's board chairman, said in an interview.

"Particularly on the leadership of the unions, which I think is doing a disservice to their workers. And our other focus is on protecting the working people of Connecticut, who are not members of the government unions."

Cowin is a former fellow at The Heritage Foundation, a Washington, D.C.-based conservative think tank, and a past director of the Center for Civic Innovation at the Manhattan Institute.

Robert Rinker, executive director of state employees union CSEA/SEIU Local 2001, scoffed at the chairman's remarks.

"Public employees are convenient targets not just here in Connecticut, but nationwide," Rinker said last week in a statement.

"'Think tanks' like the Yankee Institute call middle-class workers 'privileged' while their billionaire backers benefit from tax breaks and send good jobs overseas. All the while they finance campaigns to steal workers' collective bargaining rights and silence the last remaining check on the corrupting power of Wall Street and big banks - and that's our unions."

Office at Trinity College

Yankee can claim what most modern, right-of-center U.S. think tanks can't: a French connection.

Its founder, a French inventor-entrepreneur named Bernard Zimmern, had set up a research and development firm in Norwalk and became intrigued by the work of American think tanks such as the Heritage Foundation, which had no equivalent in France.

So Zimmern established a nonprofit organization as a missionary for private enterprise in his home country. One of his local engineers got involved and suggested a separate division to focus on Connecticut public policy. Richard Sweetser, the engineer, also came up with a name for that division.

"In my mind Yankee was a great reference to the free and independent spirit embodied by the citizenry," Sweetser recalled last week.

Yankee Institute's first headquarters was Sweetser's family room in Newtown. One early board member was a future Republican governor, John G. Rowland.

Its big issues early on were school choice and the potential benefits of privatizing some government services. On the eve of Weicker's income tax, it issued a policy paper that warned of years of stalled economic and jobs growth.

But few outside of some political circles were familiar with the institute.

"In the early years it was two steps up from a hobby, but three steps down from a very high-visibility, sophisticated organization," recalled Larry Cohen, Yankee's volunteer executive director through the 1990s who ran the organization out of his Glastonbury office. He is a Hartford Courant columnist.

"They did some very good work, but it was basically for the 10 or 15 or 50 or 100 people right around them," Cohen said.

Yankee Institute began occupying space at Trinity College in the mid-1990s, first on Crescent Street and later at its present Allen Place headquarters in a second-floor apartment on the northern edge of campus.

It gained some attention from state lawmakers with a 2004 proposal to pay high school students to graduate early (a policy to actually save money). It also conducted an analysis on the effects in Connecticut of state income taxation. Titled "Fifteen Years of Folly," the report drew a conclusion:

"A decade and a half after its passage, it is now clear that the income tax has failed."

Yankee was especially tough on former Republican Gov. M. Jodi Rell, an involuntary recipient of the institute's then-annual "Fiscies" awards for the "best and worst" in Connecticut public policy. She took home "Enemy of the Taxpayer" dishonors in 2005 "for signing a big-spending, tax-hiking budget."

Cowin, Yankee's board president, recruited Cullen to be the new director in March 2009. A native of New Hampshire, Cullen, who is now 39, had just finished a term as chairman of New Hampshire's state GOP, but he had Connecticut politics all over his resume.

Cullen was a senior at Yale in 1994 when he accepted an offer to join Rowland's first gubernatorial campaign. After the election he briefly worked in the governor's office, and later for the Connecticut GOP. He reunited with Rowland and became his deputy campaign manager during his 1998 re-election bid. Cullen then left the Rowland orbit and returned to New Hampshire.

"I was young, I wasn't from Waterbury, I wasn't Italian, I was never going to be the Rowland insider," Cullen recalled. "So I left amicably."

Cullen brought in Fahle, a 2005 University of Connecticut graduate who was executive director of the Connecticut GOP while still in his mid-20s.

Their goal was refocusing Yankee on the "applied and practical." In early 2010, they launched CTSunlight.org, a searchable salary and pension database of state and local-level government employees. Cullen says the website averages 4,000 visitors a week. Later that summer they hired a young newspaperman to be Yankee's in-house "investigative reporter."

"We felt there were a lot of stories from a fiscally conservative standpoint that were not getting covered," Cullen said.

One of Yankee's recent big stories detailed how two dozen retired state employees enjoy pensions that are bigger than the governor's $150,000 salary last year.

Direct political activity

This year the institute rolled out its "advocacy arm" - Yankee Action. Unlike the institute, an IRS 501(c)(3), Yankee Action is a nonprofit 501(c)(4) social welfare advocacy group, allowing it to engage in more direct political activity. Donations to 501(c)(4) groups are not subject to public disclosure, although they're also not tax-deductible.

Cullen used Yankee Action to buy radio ads urging support for Malloy in his negotiations goal of wringing $2 billion in givebacks from state union workers over two years. (Malloy settled for $1.6 billion.) It also bought a newspaper ad criticizing paid sick leave legislation.

This spring, Yankee Action helped conduct a "Tele-Town Hall" phone bank operation that involved calling large numbers of voters within districts of the state Senate's more fiscally conservative Democrats. The goal was to urge the rejection of the tax increases in Malloy's budget.

The targeted districts included state Sen. Andrew Maynard's. Maynard, of Stonington, ultimately voted for the budget.

Even Yankee's critics concede it has achieved striking growth.

"Mr. Cullen is an experienced, sophisticated political operative who has done an impressive job making something out of nothing," said Tom Swan, executive director of Connecticut Citizen Action Group.

But Swan and state union leaders also think the growth is tied to Charles and David Koch of Kansas-based Koch Industries, brothers who are known for contributing to many conservative political activities.

Cullen said Swan's assertion is simply untrue.

"The left has a misplaced paranoia about the Koch brothers," he said.

Yankee's IRS filings show the institute receiving larger overall contributions in recent years. The board chairman says the budget is now slightly above $500,000. Cullen says that less than 2 percent is corporate support, with the vast majority of its funding from about 1,000 individual contributors who mostly live in Connecticut.

According to a union dossier, the institute received a $68,000 grant in 2006 from the Cato Institute, a libertarian think tank funded by Charles Koch.

Unions' spokesman Matt O'Connor suspects that Trinity's request that Yankee leave campus was a result of the institute having ramped up its operations, particularly the new advocacy arm.

"Trinity probably doesn't want a tenant that's engaged in such overt political activity," said O'Connor, who represents the coalition known as SEBAC.

Yankee's director isn't fretting over what the unions think.

"I am genuinely perplexed by SEBAC's decision to go after us and to continue to do so," Cullen said. "It has helped crystallize who are the good guys and who are the bad guys."

j.reindl@theday.com