How to fix Con­necti­cut

The News-Times - - OPINION - By Toni Boucher Toni Boucher is a Con­necti­cut busi­ness­woman, for­mer state Sen­a­tor and state Rep­re­sen­ta­tive.

Our state 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.”

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 also 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 health care 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-to-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-to-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 never 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 Depart­ment of Transporta­tion 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 — 46 states do not have col­lec­tively bar­gained con­tracts for statelevel 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 to state res­i­dents. ⏩ Halt fur­ther tax in­creases and man­dates on wage rates.

⏩ Re­duce in­come tax and elim­i­nate in­her­i­tance and gift taxes. ⏩ Phase out taxes 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 health care re­form

⏩ Phase out de­fined ben­e­fit pen­sions and phase in 401K plans for new em­ploy­ees.

⏩ In­crease pen­sion con­tri­bu­tions 6 per­cent and in­crease re­tire­ment age to 65.

⏩ Tem­po­rar­ily halt Cost of Liv­ing 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.

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