Connecticut has a serious problem. As America’s economy booms, Connecticut continues to suffer. Its financial woes have become cannon fodder for national news media and have legislatures around the country warning their members: “Don’t become like Connecticut. It had it all and is now losing it all.”
Face the facts
Tax increases have put the brakes on our economy. The state is not growing. Its GDP is negative while other New England states are positive. In 2015-16, it lost 29,880 people, more than double the previous five years.
Many residents gave up and left when they saw the controlling party turning on them to take more out of their pockets. Connecticut’s high tax burden is consuming the disposable income of residents, leaving fewer able to make purchases. As a result sales tax revenues are down 8 percent. In addition, more than 3,400 jobs left the state in the first quarter of 2019.
This exodus of high wage earners has not only resulted in lower revenues and prolonged budget deficits; but, a reduction in home values — by nearly 50 percent –and less business formation.
Realtors plead: “Give us a state we can sell!” Incredibly, state leaders have responded by proposing even higher taxes and tolls!
Why? State government keeps spending more than it takes in. The state’s employee costs are so high that historic tax increases can’t keep up. Our state employee wages are higher than either New York or Massachusetts. They enjoy platinum level fringe benefits that include healthcare and pensions which were increased by 13.6 percent in 2018 and are now up to 86 percent of payroll. Their total compensation is 42 percent higher than similar private-sector workers –the highest differential in the country– and nearly 50 percent of the state budget after debt payments. A head-in-the sand approach can be seen in recently voted on contracts that increase wages 5 -11 percent further.
The state’s unfunded pension liability is ranked 48 out of 50 worst in the U.S. and has vacillated between 32-40 percent funded while New York is 90 percent funded.
There was false hope that the party controlling the administration and legislature would usher in a new day. However, now everyone is reeling from an avalanche of new anti-jobs and anti-taxpayer proposals that a previously politically balanced senate would ever have let see the light of day.
Republicans were able to broker a bipartisan budget agreement last year when they had equal numbers in the state senate. Their influence is now greatly diminished in the face of an emboldened progressive Democratic caucus that is flexing its tax muscle. The majority party privately debates not if but which new taxes they would inflict on a wounded economy. Should they enact a new payroll tax, wage mandates, paid leave, tolls, regional schools, pot, gambling, tuition hikes, goods and services?
But, what they will not touch is the real reason behind all these tax proposals –administrative costs that are eating up every state agency’s budget. The Connecticut DOT costs alone are up to nine times greater than the national average.
So now what?
The solution is staring Connecticut in the face. State unions should come back to the table to negotiate or the legislature could change their bargaining rules.
Forty six states do not have collectively bargained contracts for state level employee groups. They negotiate benefits through the state’s budgetary process. Connecticut’s contracts limit flexibility and hamper honest efforts to enact the reforms that are severely needed. It has a legislature that includes a heavy representation of state union members. They control the process, votes and budget for the very unions that benefit from their votes. This has raised more than a few eyebrows.
Here are some ways our legislators could address the problem and put our state back on a path to prosperity:
· Reduce taxes to generate economic activity, create jobs and return purchasing power of state residents
· Halt further tax increases and mandates on wage rates
· Reduce income tax and eliminate inheritance and gift taxes
· Phase out tax on pensions, Social Security, cars and real estate conveyance
· Remove tax on business inventory and equipment
· Reduce business regulations
· Reduce administrative costs to lower the need for tax increases
· Reduce State Spending and Agency Costs, Pension and Healthcare Reform
· Phase out defined benefit pensions and phase in 401 K plans for new employees
· Increase pension contributions 6 percent and increase retirement age to 65
· Temporarily halt colas increases and new hires until Connecticut recovers
· Increase health/drug insurance beyond $5 and annual deductibles of $2,000 for individuals, $4,000 for families
· Review and audit agencies to streamline and eliminate waste, abuse, fraud, duplication
· Contract with cost effective nonprofits for social services
· Privatize certain transportation services and ports where appropriate
The legislature has to make the changes needed to dig Connecticut out its deep financial hole. It must acknowledge that massive tax increases cannot match soaring state costs; and, that going back to taxpayers will only drive them out and hurt the state more. Our leaders should have an honest conversation with the state’s unions and get their cooperation to put Connecticut back on its feet. They must have the courage to face these facts to fix Connecticut.
Toni Boucher is a Connecticut businesswoman, former State Senator, State Representative and Vice Chairman of the Revenue, Finance and Bonding Committee.
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I like every one of her suggestions but to late for us.Ct has won and is driving us out We only have a couple,more months here then were in sunny florida.
One thing that Ms. Boucher doesn’t mention is the inept Republican party in Connecticut which has fielded bad candidates in Gubernatorial and Legislative campaigns that should have been a slam dunk. The party is being eaten alive but an aggressive ground game (early voting anyone?) from a well oiled Democrat machine. I don’t see this changing anytime soon.
The fiscal death spiral has begun for Connecticut. Because of the unfunded retirement liabilities and debt overhang, Democrats will just continue to tax, spend, and borrow until they literally run out of other people’s money. They will never address these problems head-on without more taxes and spending. Its a shame to have to leave this state and I can’t speak for others, but even if I could afford all these taxes, why would I want to continue being complicit in this fiscal madness? I think that is the calculus by many who are deciding whether to stay in Connecticut.
You are completely correct. When there is only one party to all budget “negotiations”, the public service unions, they will get what they want every single time. Their notion of “givebacks” are pennies in return for no layoffs, free health insurance for life and pensions which were eliminated in the private sector (which pays for theirs) 25 years ago. And which as retired state workers, they’ll gladly spend from their Florida retirement home.
It’s just theft.
The GOOP is just Demomrat/lite,swamp dwellers all,but Stefankowski is not one of them and would have won easily if the GOOP really got behind him.
Former Sen. Boucher simply repeats the same tired old soundbites the citizen’s of this state have heard for far too long and too many times. Reality is that nothing in this state will ever change until we address the root cause of everything that ails this state. That root cause is the operational dysfunction and rampant corruption infecting all three branches of our state “government”. Which former Sen. Boucher turned a deaf ear and blind eye to – as most legislators from both parties have. Until this is first and effectively addressed, nothing in this state will ever change and it doesn’t matter which party is in control.
A lot of the possible suggestions in this article have already been tried. The current situation includes those efforts.
CT has had a ~$20 billion budget for some time now. But deficits keep occurring despite the apparent restraint. So taxes have to keep going up to cover the shortfalls.
The available reductions to expenditures can’t involve costs fixed by contract. That doesn’t leave much, and every cut will hurt people who can be described as deserving. And those expenditures can be expected to grow because the state workforce is aging in the absence of new hires, with service provision affected. Hiring enough new people to replace experienced and overworked employees is probably going to produce a substantially higher total, even while pension payouts to retirees are increasing. Other costs won’t be stagnant.
Eventually, because the budget has to be balanced every year and tax increases can reach maximum, the state is likely to have to start failing to help deserving people. Because ultimately the only way to reduce expenditures is to do less.
Great suggestions here but I disagree on some of your points concerning Union State workers. While they have an impressive benefits package and the Legislature has been negligent in funding their pensions, it is the non-Union layer of the State that is excessive. We seem to have forgotten the term Civil Servant. Most state workers have no budgetary oversight or control, it is not fair to savage them for the misdeeds of the legislature and their non-union cohorts. If the Unions resist further concessions it just may force the State’s hand in cutting the real waste, the over paid non-Union workers who control the spending and budget over runs. It is convenient to vilify Unions but they have shown their willingness to make concessions. The days of giving million dollar bonuses to the bosses while cutting workers benefits has to stop or soon no workers will have benefits and only the rich will survive.
The real thieves are those high 3 year big wheels who retire with $100,000 plus per year.
First off, issue must be taken with the statement “…This exodus of high wage earners has not only resulted in lower revenues and prolonged budget deficits; but, a reduction in home values — by nearly 50 percent – and less business formation….” High-wage earners aren’t leaving the state! It is the unemployed and low-wage workers (essential labor for FUTURE economic growth) that are leaving in search of jobs… HIGH-WAGE WORKERS DON’T LEAVE THEIR JOBS. THE JOBS LEAVE AND THEN THE UNEMPLOyED WORKERS LEAVE!…
But, back to the main topic: Connecticut — as a whole — is at the bottom of the barrel, with respect to state economies and social mobility (per the income/education chasm…). But we must keep in mind that the reason for Connecticut’s failure to thrive, as a whole, especially in regard to its necrotizing urban centers, is mainly because of the misdirection of state resources, a la the greed-based, misguided, skewed development policy of directing all significant economic develop into Stamford/the Stamford region along with what essentially amounts to the theft of resources from the rest of the state to accommodate the tax-base hording and exclusive residential zoning of the Stamford/Gold Coast region.
To be clear, the aforementioned policy has prevented significant economic development in the rest of state by denying resources to the rest of the state for development/job creation, while holding the regional, COMMUTING workforce hostage as such, and creating the SW CT traffic bottleneck (that chokes off commerce for the rest of the state in the process…). And our new, “big ideas” governor, has charted a course of more-of -the-same for us in this regard, along with new taxes to pay for the maintenance of the state’s traffic-morass (via tolls and other added taxes).
So there is really no hope of a Connecticut economic resurgence as long as Gold Coats primacy reigns in Hartford via the Gold Coast Oligarchy (headed by Plutocrat-in-Chief, Ned Lamont, of Greenwich…).
And, furthermore, the other side of Connecticut’s economic deconstruction is the fact of highest-in-the-country utility costs that discourage new business development and chase away extant businesses while precluding their expansion… And our insanely-high public-utility rates (especially for electricity) are just more oligarchic policy created to ensure high-paying jobs and profits for the regulated utility executives and politician stock-holders (alternately, these are one-and-the-same) per the incestuous relationship between government and the regulated utilities allowed by the corrupt cover provided by the contraindicated creation of the illogical governmental construct known as superagency DEEP. This bastion of corruption was created to provide cover for what is probably one of the dirtiest government situations in the country… And our new, plutocrat/oligarch governor seems fine with this agency and the economic and environmental havoc that it promotes in our dying state…
So, Senator Boucher; Connecticut’s problems aren’t unions, taxes, or high-paid workers leaving the state: It is Gold Coast primacy, and greedy, oligarchic government and licensed, sanctioned, economic rape by the incestuous, oligarch-public-utility political consortium that is killing Connecticut.
When the people take back the government and control of their essential utilities/resources, then the state will thrive again…
CT’ faces 2 major problems. First, the well known Budget problem extending back several decades. Second is the far more formidable, but much less discussed, stagnant economy for an entire decade amidst the nation’s most vigorous post-War expansion. Even if the Budget problem was resolved the economic problem will take a decade if not much longer. To understand why look at CT’s cities. Save Stamford our major cities are severely depressed without modern hi-tech industries. Together they have almost 1/3rd our population. Our largest, Bridgeport, with a population of about 150,000 has a per capita income of only about $17,000. Far below CT’s figure of almost $70,000. It’s 3 largest employers are 2 hospitals and City government. In comparison NY and Mass. have amongst the nations’ most prominent major hi-tech modern cities attracting talent far and wide offering high well paying jobs. NY and Mass are booming.
Putting aside our cities CT’s population is spread over 160 odd towns and small cities in a suburban setting with relatively few high income sources, e.g. Stamford’s finance, Hartford’s insurance, New Haven’s Yale complex and the 3 Defense firms. In a nutshell CT is not an “industrial State. And the high cost of providing municipal services to its 169 towns and cities discourages business investment from outside. As does an oft noted lack of skilled labor. Even our 3 world class defense firms generally secure new hires from outside CT.
CT is the nation’s wealthiest per capita State, just ahead of NY, Mass and NJ. But that mostly reflects roughly 10% of its Gold Coast population located adjacent to NYCity. Other than finance the Gold Coast, insurance in Hartford and the 3 defense firms we’re not involved in any “national industry”. Setting aside the Gold Coast puts the rest of CT as a mostly average income State that doesn’t participate in national industries. But it taxes itself as if it was a very wealthy State.
Focusing attention on CT’s depressed cities as a major State issue isn’t a new idea and hasn’t gained much traction. Every college freshmen economics student learns economic growth in modern economies takes place in cities. Sadly the modern hi-tech computer revolution has by passed CT. So we’re in a long term fix. Without modern hi-tech oriented vigorous cities competing in national markets CT will remain a low performing State.
Short term the best that Gov. Lamont can do is begin to resolve our well known State Budget problem whose dimensions are such that it will take likely a half dozen years at best to resolve.
Creating modern vigorous cities so essential to restoring CT’s economic growth will take much longer. And require an appreciation of its crucial importance. So far that discussion hasn’t begun.
I was the las person who ever d
Said they would leave. But even I now look around and can’t find a reasons to stay here any more. I’m originally from NY and when i came here, you could have a much more for less here than in NY .The taxes are now closer and other than long commutes (maybe now with tolls too!!!) Why stay. I understand NY has its own issues and so dose our other neighbor Massachusetts but they have much more booming economies than we do .I’m not even one who cries for lower taxes but show me I can make money here. If you go to N.Y. or MA you will cranes, new buldings going up etc. How many large cranes do you see in our cities .None . If you all want the Texas and the Floridas. Just in Fla. 10+ cranes in ft Lauderdale alone .
If the State Budget was “fixed” this year how would that improve our major cities such as Bridgeport where hospitals and City Gov’t are the largest employers and per capita income is below $20,000 ? Maybe the State Budget is only one of the major problems faced by CT ?
First off, issue must be taken with the statement “…This exodus of high wage earners has not only resulted in lower revenues and prolonged budget deficits; but, a reduction in home values — by nearly 50 percent – and less business formation….” High-wage earners aren’t leaving the state! It is the unemployed and low-wage workers (essential labor for FUTURE economic growth) that are leaving in search of jobs… HIGH-WAGE WORKERS DON’T LEAVE THEIR JOBS. THE JOBS LEAVE AND THEN THE UNEMPLOyED WORKERS LEAVE!…
But, back to the main topic: Connecticut — as a whole — is at the bottom of the barrel, with respect to state economies and social mobility (per the income/education chasm…). But we must keep in mind that the reason for Connecticut’s failure to thrive, as a whole, especially in regard to its necrotizing urban centers, is mainly because of the misdirection of state resources, a la the greed-based, misguided, skewed development policy of directing all significant economic develop into Stamford/the Stamford region along with what essentially amounts to the theft of resources from the rest of the state to accommodate the tax-base hoarding and exclusive residential zoning of the Stamford/Gold Coast region.
To be clear, the aforementioned policy has prevented significant economic development in the rest of state by denying resources to the rest of the state for development/job creation, while holding the regional, COMMUTING workforce hostage as such, and creating the SW CT traffic bottleneck (that chokes off commerce for the rest of the state in the process…). And our new, “big ideas” governor, has charted a course of more-of -the-same for us in this regard, along with new taxes to pay for the maintenance of the state’s traffic-morass (via tolls and other added taxes).
So there is really no hope of a Connecticut economic resurgence as long as Gold Coats primacy reigns in Hartford via the Gold Coast Oligarchy (headed by Plutocrat-in-Chief, Ned Lamont, of Greenwich…).
And, furthermore, the other side of Connecticut’s economic deconstruction is the fact of highest-in-the-country utility costs that discourage new business development and chase away extant businesses while precluding their expansion… And our insanely-high public-utility rates (especially for electricity) are just more oligarchic policy created to ensure high-paying jobs and profits for the regulated utility executives and politician stock-holders (alternately, these are one-and-the-same) per the incestuous relationship between government and the regulated utilities allowed by the corrupt cover provided by the contraindicated creation of the illogical governmental construct known as superagency DEEP. This bastion of corruption was created to provide cover for what is probably one of the dirtiest government situations in the country… And our new, plutocrat/oligarch governor seems fine with this agency and the economic and environmental havoc that it promotes in our dying state…
So, Senator Boucher; Connecticut’s problems aren’t unions, taxes, or high-paid workers leaving the state: It is Gold Coast primacy, and greedy, oligarchic government and licensed, sanctioned, economic rape by the incestuous, oligarch-public-utility political consortium that is killing Connecticut.
When the people take back the government and control of their essential utilities/resources, then the state will thrive again…