Democrats celebrate in Connecticut. What can they create?
Democrats now control the governor’s office, all state-wide elected offices, the house and the senate in Connecticut.
Although Ned Lamont won by a narrow 1.4 percent advantage over his Republican opponent, in Connecticut’s General Assembly and Senate, the Democrats now have significant majorities: 92 Democratic seats in the General Assembly compared to 59 Republicans – a 55 percent advantage. Connecticut Democratic senators have a two-to-one advantage: 24 to 12 Republicans.
As the new office-holders converge upon us, Connecticut is facing a projected $4 billion deficit, a continuing exodus of taxpayers, and lackluster job creation.
What can we expect the Democrats to do with their now complete control of Connecticut’s government?
Here are top items on their agenda:
Minimum wage. Raising the minimum wage to $15/hour was a favorite of Democratic candidates this campaign season, and Ned Lamont has made it a cornerstone of his incoming administration.
According to the National Bureau of Economic Research, when Seattle raised the minimum wage to $13/hour in 2016, the city lost 9 percent of entry level jobs; hourly wages in these jobs increased by about three percent. Thus, there was a significant loss of jobs, and total payroll for such entry level jobs also fell.
It’s likely that this data from the NBER understates the opportunities which entry-level workers will never see because it can’t include new jobs that were never created because of the higher wage. Connecticut is the only New England state that still has fewer jobs than in 2008. Our economy has shrunk by three percent over the last nine years, while the economies of neighboring states, Massachusetts and New York, have grown by 14 percent and 9 percent respectively.
The Connecticut Department of Labor reported that during all of 2017 Connecticut gained approximately 1,800 jobs statewide — about 1/10 of one percent. Jobs in the rest of the country grew an average of 1.6 percent — 16 times as fast. Losing another 9 percent of entry level jobs here in Connecticut will hit the poorest among us hardest. And, the higher wage will be another reason for struggling employers to move to other states where business is welcome, not vilified.
Tolls. Democrats favor tolls reportedly to create a source of funding for much needed highway and bridge repairs. Pundits among us say that these charges aren’t taxes, they are user fees.
Tell that to a single mother commuting from Bridgeport to Stamford who would have to pay another $50/week — $2,500 to year — just to get to work. Some Democratic candidates in the run-up to the November 2018 election claimed that there is just no way to estimate how much an ordinary commuter would pay.
Fact check: That $50/week toll figure comes from the September 2016 tolling study prepared by DOT consultant CDM Smith. This is the same consulting report that promises finger-licking revenue.
Democrats and all other toll-lovers must be honest enough to acknowledge that the revenue to the state and the cost to taxpayers go together. Many proponents of tolls say that ordinary citizens won’t be affected; we will only charge truckers and out-of-state drivers.
Because of money Connecticut has taken from the federal government, this selective taxation of out-of-staters-only is illegal; Rhode Island is now in court litigating truckers who say that a trucks’-only scheme violates the Commerce clause of the constitution.
The 2016 CDM Smith study for the DOT looked at numerous options for adding tolls to I-95 and the Merritt. Ultimately, they preferred a scheme that would widen I-95 and toll both I-95 and the Merritt. The CDM Smith study reported that the money generated by the tolls could pay “most (if not all) of the cost of widening the highway.”
So, here we have it. Politicians eager to burden taxpayers with more taxes; in this case via a project that may not pay for itself, and has little likelihood of generating revenue for infrastructure maintenance or necessary repairs.
The politicians who tell you that tolls aren’t taxes and that ordinary citizens won’t pay, may be the same politicians who offered Connecticut citizens a low, flat income tax in 1991 and promised that the income tax would solve all our problems.
Remember also that just a few weeks ago Connecticut voters resoundingly approved a constitutional amendment to create a transportation lock-box because our legislators did not have the integrity to obey existing law which directs transportation funds to be used for transportation purposes only. Any guess how long it will take a determined legislature to confound a constitutional mandate?
Instead of seeking more and more money from taxpayers, Connecticut’s elected representatives would better serve the state by eliminating unproductive excess costs from our Department of Transportation – one of the least efficient and effective in the nation.
Pensions. Democrats didn’t say much, if anything, about pension debt during the campaign, but if they were being honest with voters they should have. It’s Connecticut’s biggest problem. According to an August 2018 analysis from Moody’s, Connecticut’s unfunded pension debt is the second highest in the country — $71.2 billion, equal to 370 percent of the state’s annual budget.
Connecticut’s financial crisis is driven by over-promising pension and other benefits to state employees and teachers whose benefits are administered by the state.
Payments for current state employees and retirees – about three percent of the population – consume more than 10 percent of the state’s annual budget, and are draining money from basic services which benefit everyone. This is why lifeguards are fewer, highway rest stops are open fewer hours, state education benefits to municipalities have been cut, and why many roads, like the Post Road aren’t being maintained. Think about the soaring cost of those pensions every time your tires rip through a pothole in the Nutmeg State.
But soon, not only taxpayers will be suffering, if the failed pension system isn’t fundamentally restructured. State employees and retirees may be among the biggest losers.
Professors Olivia Mitchell from Wharton and Leora Friedberg from the University of Virginia have studied the problems of unfunded public pensions nationwide. They have straightforward advice for public sector employees – realize that the benefits they’ve been expecting may not be there.
It’s just easier for politicians to obfuscate and delay – as they have in Connecticut for years. Then, ultimately, taxpayers can’t or won’t pay for debts incurred 30 or 40 years earlier – that’s one big reason Connecticut has a declining population. People are voting with their feet.
Union leaders as well as state employees ought to be the biggest boosters for fundamental public pension restructuring.
In essence, state employers should get out of the pension business:
* Immediate transition from defined benefit plans to defined contribution plans, with buy-outs for accrued obligations.
* Limit compensation that qualifies for pension calculations with strict salary caps and no overtime.
* Eliminate the self-dealing that occurs when union representatives are also office holders committing taxpayers to more and more pension benefits and debt.
* Eliminate double-dipping on public pensions.
Only by eliminating the black hole of ever larger pension payments and debt can Connecticut regain financial health and prosperity. And, state employees will get real, portable cash in hand every year of their job tenures. No more empty promises.
While Federal bankruptcy law currently has no provision for state bankruptcies, many scholars believe that the number of states facing de facto insolvency from pension debt may change that – particularly if a state petitions for the process – yielding its sovereignty. Bankruptcy is likely the worst solution for all. Pensioners get less, state governments yield control that may never be recovered. Property values will fall; borrowing rates will rise. Individuals and businesses will continue to flee.
Democrats in Connecticut, with nearly total control, must seek to govern for all not just a favored few.
Further tax hikes will accelerate the exodus and intensify Connecticut’s financial crisis.
Democrats and all Connecticut residents will be able to truly celebrate only when growth and opportunity have been restored.
The first step is to better understand our priorities and options.
Marisa Manley of Westport was an independent candidate for governor.
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