Boucher: Hartford situation is a warning for the state
For several months, I added my voice to the calls by business leaders, economists, and national publications who warned Connecticut that it is dangerously close to mirroring the situations in New Jersey, Illinois, and Puerto Rico.
Perhaps now that the specter of bankruptcy shadows the state’s own backyard, the Governor and legislative leaders will wake up to Connecticut’s fiscal reality.
Earlier this week, Hartford Mayor Luke Bronin announced that the city retained the services of a law firm that specializes in municipal restructuring and bankruptcy. Within days, Standard & Poor’s and Moody’s downgraded the city’s debt to junk bond status.
Are Connecticut’s leaders listening now?
Connecticut closed the 2017 fiscal year on June 30 with a $107.2 million budget deficit and has $74.3 billion in long-term debt obligations. Of that, $50 billion is unfunded state employee and teacher pensions and unfunded retiree health and life insurance.
The new fiscal year started June 1 without a budget because of the failure by Democrat House Speaker Joe Aresimowicz to call legislators into session. Undeterred, I joined my colleagues on the Finance, Revenue, & Bonding Committee for an informational forum: Access to Public Markets; Operational and Budgetary Efficiency; and Pension Plan Improvements.
Invited speakers at the forum included a pension and retirement expert from Boston College Center for Retirement Research, A.J. Aubry, and a senior director of a consulting firm specializing in public sector financial turnarounds, Michael Imber. Their presentations were enlightening.
Mr. Imber said the drivers of Connecticut’s budget problem are declining tax collections, accelerating legacy obligations, and a slow economic recovery. He said the state’s total debt and unfunded pension equal $49,000 for each taxpayer in the state. Both speakers advised reducing the plans’ cost of living adjustment and lowering the long-term assumed return on investment.
Depleting reserve funds, deferring pension payments, transferring transportation funds, and other one-shot solutions only exacerbate our problems.
If Connecticut truly wants to revive our economy, elected leaders must be committed to real, long-term change in the way we do things such as streaming duplicate functions and departments and centralizing procurements. We must look five years into the future, pay down debts, and rebuild our reserve funds.
To become competitive, Connecticut must phase out its onerous taxes. It can do this by reigning in spending instead of increasing it as was done during the worst recession in our lifetime. This addiction to runaway spending resulted in historically high taxes and year after year deficits as taxpayers flee.
We can face these challenges and create a brighter future for our state if we act now. The City of Hartford’s situation is a clear warning of Connecticut’s future if we fail to resolve our budget problems.
During the past year, Connecticut’s credit rating was reduced at least three times and is one of only three states with a rating under AA. Thankfully, we are not at junk bond status, but that is where we could be headed.
Senator Len Fasano expressed my strong belief that “Connecticut is at a crossroads and now is the time to send a strong message that our state is committed to policies that create stability, predictability and growth. We need to make it clear that the policies that have driven our state into the ground have to end, and we need to adopt a budget that moves our state in a new direction.”
Senate Republicans proposed a budget committed to policies that will steer Connecticut away from the financial doom of bankruptcy. Learn more about our proposal at NewDirectionCT.com and tell your elected leaders that we must stop the tax and spend policies of the past if Connecticut is to survive. Unlike other states, Connecticut has still not recovered from the 2008 downturn. It cannot endure another that may be just around the corner unless we take immediate corrective.
Hartford is the clarion call of the state’s possible future. Let’s hope the Governor and legislative leaders have heard it.
State Senator Toni Boucher is Vice-Chair of the legislature’s Finance, Revenue, & Bonding Committee, and Co-Chair of the Education and Transportation committees. She represents the 26th Senatorial District, which includes the communities of Bethel, New Canaan, Redding, Ridgefield, Weston, Westport, and Wilton.