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The Cost of Poor Leadership
Connecticut State Capitol, Hartford.
In the past week, the State of Connecticut’s bond rating has been downgraded by three separate credit rating agencies. New revenue projections show sharp declines, resulting in a current-year deficit of $400 million and a projected deficit of $5.1 billion — approximately 11% — for the upcoming two-year budget cycle. Because much of the state’s spending is not discretionary, closing the gap hinges on renegotiating state union contracts, and the unions are unwilling. So the governor has begun sending layoff notices to state employees. Meanwhile, both the state employee pension system and the state teachers’ pension system are severely underfunded and nearly in crisis.
So the state legislature has naturally focused its attention on banning gay conversion therapy and debating a tax on sugary drinks.
It’s hard to do justice to the level of delusion among state Democrats. Revenues have fallen because the state’s highly progressive income tax relies on a handful of wealthy residents to pay most of the state’s bills, and those taxpayers are not stupid. They are moving out of state. In response, legislators first proposed — you can’t make this up — higher, more progressive taxes. They quickly backed off and instead are looking for new things to tax: casinos, highway tolls, marijuana. The governor, slightly more savvy, has proposed cutting state payments to towns — which looks like a spending cut on the surface but is actually a backdoor property tax increase. Both the governor and his party respond to the pension problems with buck-passing and empty platitudes.
And yet, can you really blame them? Politicians respond to incentives, and the voters don’t seem to care. None of my neighbors has any idea about the rating agency downgrades. Drive-time radio hosts apologize to their audiences for discussing budget issues, exhorting them that “it’s important,” as if desperate to keep them listening. At a recent townhall-style meeting in Milford with Rep. Rosa DeLauro, her constituents were up in arms … about the James Comey firing (though in fairness, she is a federal and not a state official).
But if Connecticut’s residents don’t care now, they will certainly be made to care eventually, when the hard choices are unavoidable. The only US territory in worse financial shape is Puerto Rico. Under federal oversight, Puerto Rico’s government spending is being cut by 28%. Worker pensions are being transitioned to a 401(k). Current retirees are having benefits cut 10%. Creditors are fighting over claims in bankruptcy court, which will limit the island’s access to bond markets for many years to come. If Connecticut’s legislators do not act now, this is our future too. Issues of state finance are difficult and complicated and boring, but it would behoove the public to devote some attention to them.
Meanwhile, it’s time for state legislators to grow up, stop following and start leading. Sure, the problems are messy and complex, but isn’t that precisely why we elect representatives? Not everyone has the time or the intellectual capacity to understand the problems and work out solutions. Our representatives have sought out a public trust that requires them to delve into the issues of public policy and make the tough tradeoffs. It’s their job to be leaders. And it’s time for them to do their job.
Published in Politics
Happened here in Canada in the 1990s. The federal government cut all spending by 40 percent. 2/3rds of the civil servents were let go. And I mean 40 percent cuts to Health Care, Defense, Foreign affairs everything goes.
Having lived in Woodbury many years ago, I remember CT fondly for its beauty and heritage. However, I have absolutely no sympathy for its citizens. They voted for the pols and the programs that got them here. As Mencken said: “Democracy… is the theory that the common people know what they want, and deserve to get it good and hard”
I lived in CT from 1998 to 2013, when I “achieved exit velocity” (TM Scott Adams) and escaped to Texas. Beautiful state, awful politics.
They never learn.
Its hard to grow up and find out that reality is really tough… and if you are liberal just deny it and make someone else responsible.
Are the big hedge funds moving their offices and homes out of Connecticut? I read the “Mansion” section in the Wall Street Journal every Friday, and there are a number of estates on the market right now. Maybe the state is indeed killing the golden geese. I also seem to have read that Florida is a popular destination.
Yes, that is part of the reason state income tax revenues are falling. The state actually individually tracks the finances of about 30 top earners because their fortunes are so critical to how much the state takes in each year. Rick Scott has been actively recruiting at hedge fund industry conferences.
And it certainly doesn’t help when legislators float the idea that you can close your budget gap by slapping a new 22% tax on investment fee income. Even when the governor sensibly slaps that down, you see the writing on the wall.
The madness in some of the states is accelerating. Connecticut will start looking, in parts, like Detroit – abandoned.
And absolutely zero will be learned. It might have to happen state by state. There will be federal bailouts because the USG can borrow at will at (currently) low rates. Then the states will re-hire the people they go, and use the dollars to fund pensions for their most loyal of constituencies – the state employees.
I was in Connecticut from 1988 to 1994. It was great living a mile from the Sound. Well, it was except for when Hurricane Bob managed to blow water through two doors and into my apartment.
Things were already starting to come apart at the seams. There were a lot of vacant businesses in West Haven — including at least one manufacturing plant that was closed the entire time I was there.
Bringing back the tollways? I think I got there about a week before the Turnpike became a freeway. That would make a mess.
We are moving out of CT as of today. The out of control fiscal situation is one of the factors driving our decision. It is only going to get worse now that CT is literally in the passing the buck phase between state income and local property taxes.
You have no idea how many losing candidates I have voted for over the years. I lived in Hartford for a looong time. Hartford has 8 Democrats for every Republican. I used to be able to see my vote in the paper the next day. My Congressional District hasn’t elected a Republican since before I was born and I’m no spring chicken.
It would be one thing if CT was a well-governed state but the GOP keeps losing to a bunch of fools and liars.
The tolls are coming back because the technology has changed. There will be no toll booths to slow things down. In NY and MA, they snap a photo of your license plate and send you a bill. CT will do the same.
Have I mentioned that the capital city is on the verge of bankruptcy?
In the last election, the racial spoils mayor was thrown out in favor of Luke Bronin, a technocrat friend of the governor who was going to impose some financial discipline. But as soon as he was elected, he decided there was no way to cut enough spending so the only way to save the city is a “regional” tax system. That is, have the state tax suburbs and give the funds to Hartford.
That didn’t happen, but the governor’s budget plan achieves roughly the same thing, cutting state payments to suburbs while making special grants to Hartford. Hartford’s city council has responded by restoring the meager cuts in Bronin’s budget. Suburbs are laying off teachers so Hartford can keep its television station. The city council’s poor judgment is an even worse example of horrendous leadership.
it’s very simple the pols who have done this over the years will not pay a penny for what they have done to their neighbors. The question is why do the people who will pay keep electing them. I’ve friends who have been trying to sell their home for 3 years, have changed realtors three times and have had only a few showings. They’ve decide to just take the giant hit and leave. Look at Washington. The only difference is that it’s even more difficult to leave and without the US playing the role it must, where would you go? We finally elected someone different, just how we don’t know, and the country is going bananas. Is it over?
And you just know it’s all going to be blamed on the Republicans.
Do you know the Wolfes? My friend Sharon is from Woodbury and describes its beauty. Like much of New England, it is stunning, but the progressives will defend their lousy policies no matter who gets hurt.
This is really the heart of the matter. The current liberal leadership is made up largely of aging Baby Boomers who never grew up and think it is still 1968.
There are many other people who either will not pay or will not even know exactly what it is they’re paying for. The former group does not have a reason to care. The latter group is easily hoodwinked by emotional manipulation.
“Vote Yes For Our Kids, Yes For Our Schools.” Instead of “vote for the tax increase to pay for the public sector pension deficits because the teachers union wants it.”
They ought to hand the state over to Yale for a while. Yale has all the same financial problems that a state has. And Yale has the brains on their own staff to figure out how to fix it.
This made me stop and think. We elect “representatives” – they’re elected to represent our views, not to lead us (we can’t all be in the Legislature, so we have to elect substitutes to represent our views). When we’re really fortunate, some really good “representatives” actually do make the attempt to lead us – at least it’s fortunate when they attempt to lead us in the “right” direction! But most of the time they don’t even make the attempt because they’re not really in it to make things better (oh sure, they believe they are and they say they are, but that’s usually pure horse pucky!). And sometimes when they try to lead us, it’s in the wrong direction! And when we have a constituency that’s in profound disagreement on what way we want the country to go, it’s easier for “representatives” simply to adopt viewpoints that will satisfy a majority of their immediate constituents and ensure that they are re-elected. Kind of depressing, really.
I wouldn’t have too much of a problem with road tolls IF there was a way to guarantee that the tolls raised were reasonable and ONLY used to pay for road maintenance. People who used the service the most would pay the most and it would ensure that the roads were keep in good condition. But we know how politicians work: tax anything you can and then use the money to pay for something else you want! The money raised from road tolls would be used to pay for state union employee pensions, or giveaways to some favored group, etc.
In that case, why not have shorter terms? Why the long six-year Senate terms especially? Why not more referenda, or with current technology, put issues up for popular votes?
I’d argue that the founders of our Constitutional framework understood that idea of direct representation — democracy, they called it, after the Athenian model — to be dangerous, unstable, and ultimately unworkable.
Consider California with its low threshold for initiative & referendum. The population at large does not have the knowledge or care to understand that they are routinely passing contradictory mandates. The result is a patchwork system of laws that separates responsibility from authority, and often allows representatives to escape responsibility altogether.
Representatives in a republic have the responsibility to use good judgment in their constituents’ interest, which sometimes means telling their constituents “no”.
“Your representative owes you, not his industry only, but his judgement; and he betrays you instead of serving you if he sacrifices it to your opinion.” –Edmund Burke, Speech to the Electors of Bristol, November 3, 1774
I definitely agree with this! Now if we could just find some legislators with backbones!