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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.
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.