Climate change is undoubtedly an issue to be concerned about and must be addressed, but when will Connecticut feel its effects to such an extent that the state becomes uninhabitable – 2100, 2200?
We face a threat in the much nearer term in the form of the state’s de facto bankruptcy.
Connecticut is under water by $67.8 billion (not including debt for infrastructure), representing a debt burden of $51,800 for every taxpayer or $19,000 for every resident. This ranks Connecticut 48th of the 50 states, leading only Illinois and New Jersey.
The primary drivers of this deficit are $35 billion in unfunded pension benefits and $20 billion unfunded post-retirement health benefits for state employees and teachers. This deficit has accumulated for decades and has been the result of decisions made by administrations from both parties and by the state employee unions themselves, who have twice approved the underfunding of their own benefits. Despite recent efforts to fund this deficit, the state employees pension fund is only 38% funded and the Teachers fund is only 52% funded.
Before we address this problem, it is important to note where we are starting. Connecticut is ranked the second worst state for taxes after New York.[5] Connecticut’s current state and local taxes take 9.7% of our citizens’ income.
High tax rates have hindered Connecticut’s recovery from the 2008 financial crisis and are driving an exodus of population from the state, which began in 2016. If the state’s population continues to shrink, a smaller and smaller group will share the burden, thus increasing the reason to leave for those who are asked to foot the bill.
Under current policy, the state government is attempting to set aside funds so that these pension benefits will be fully funded by 2047. Getting there requires tax increases averaging an estimated at $ 1.3 billion, or approximately 6% of current tax revenues, each and every year from 2021 – 2024, which will result in taxes 18.5% higher than today. Even greater deficits can be expected into the future. So get ready for tolls, the hated grocery tax, increased income taxes, local property taxes and whatever other unique forms of confiscation our government can dream up.
Further tax increases will accelerate the exodus from the state, leading to lower property values, higher mill rates for local taxes and a downward spiral of our state and local finances.
This existential threat is a math problem not a political problem. It is critical that we address this mess by involving all of our citizens, vote for elected officials who are focused on long-term solutions, rather than the next election, and initiate some sensible solutions.
James Miller, a resident of Lyme, was an investment banker at Merrill Lynch from 1984 – 1996.
It is time to face the reality of the situation here in the State of Connecticut. State Union Labor Agreements, and it’s terms and conditions must be revisited and modified. If not, the State of Connecticut will fail and poverty and crime will be the new normal in our Urban Centers.
Hey Jim- where are most of these people leaving to? Areas that will be hardest affected by climate change- Greater Miami after 2035 will see 125 days 100 degrees or higher- greater Hartford 10-15. Lets get facts and data together about debt. How much debt has Trump added to our country? You seem biased and not very informed.
They are leaving in large measure because CT has seen weak job creation (we are still well below our employment level of early 2008) and the quality of jobs we have been adding have been lower wage/lower quality. CT’s pattern has been sharply at odds with our neighboring states, all of which has grown lots of jobs above their previous peak and seen their state GDP full recover and go significantly higher. CT’s economy has shrunk in real terms–and thus the fiscal challenges have increased. Add in the weaknesses in the revenue system, and you have a good picture of why things look bleak. BUT restoring growth and other initiatives would change the dynamic.
Connecticut’s climate will be vastly different as early as 2030- not 2100- you seem unable to grasp the details if the science, predicating your assertions on the past. Once we reach 450ppm C02 in the early 2030s- good luck!
Peter – Your ad hominem attack is misplaced, self righteous, and “biased and not very informed.”
Do you dispute that Connecticut is effectively bankrupt? If so what facts do you dispute that I cited in the article?
You falsely assume that I am not concerned with climate change. This article is not about climate change – which I agree is something that must be addressed. There is a difference between “vastly different”(your words) and “uninhabitable”(mine). In fact, I am personally doing something about it. I live in a very small house and I am installing solar power as we speak. As for policy solutions – I am in favor of a carbon tax equivalent to about $1 per gallon of gasoline( with a methane tax to account for its significant impact on carbon dioxide levels).
You falsely assume that I am not concerned with the Federal Government deficits and that I must be a Trump supporter (I didn’t vote for him and am daily appalled by his actions).
What is your plan to address Connecticut’s fiscal issues?
Yes, we face serious challenges. But a significant contributor to facing such massive obligations is the combination of no economic growth (the CT economy is now about as big as it was in 2005, adjusting for inflation, having shrunk from 2008 to 2018, a year that finally saw modest growth), despite strong national growth and all neighboring states doing well. So Connecticut has been an anomaly both regionally and nationally–and no one seems willing to have a serious discussion as to what drove this negative dynamic.
Compounding the “growth” issue has been the deterioration of CT’s tax system. It may be true that CT residents carry a heavy tax burden, but it is also true that our primary taxes–income and sales–are not collecting as much revenue relative to household income and consumption as they did. Indeed, in aggregate, the income and sales taxes collected $710 MILLION less in 2018 that they did five years earlier, measured as a share of household income and household consumption, respectively. Again, as with understanding the drivers of shrinking economic output, there seems to be no interest in understanding why our principal taxes, despite increases in some rates and coverage, are collecting less revenue. Remarkably, I haven’t seen a single effort in the Executive or the Legislature to recognize this dynamic, let alone to understand it.
The bottom line seems to be a continuing pattern of flying blind. Perhaps our state mascot should be Alfred E. Newman, and our motto “What, me worry?”