Boucher: Emergency steps
Last week, Connecticut residents received two discouraging pieces of information. First, the state lost $2.6 billion in revenue during 2015 as high-earning individuals left Connecticut. Second, the Special Transportation Fund used to maintain and improve the state’s aging highways and rail lines is broke. The two are not entirely unrelated.
For years, the legislature siphoned money from the Special Transportation Fund to fill potholes into the General Fund. Without funding to repair and improve the state’s infrastructure, decay was inevitable. Neglecting transportation infrastructure negatively impacts economic development. Successful businesses must move people and products efficiently.
With money in the Special Transportation Fund dwindling and General Fund deficits exploding, the administration looked for other revenue sources. Since 2011, Gov. Malloy gave Connecticut the two largest tax increases in the state’s history. Instead of resolving the state’s budget problems, each fiscal year, except 2013, ended in deficit.
Earlier this year, the Census Bureau released information that Connecticut loses about 500 residents each week. People moving into the state don’t make up for the loss of 26,000 people each year. Last week, the IRS noted that residents earning $200,000 a year and more were the largest group leaving. Between 2015 and 2016, Connecticut lost 2,050 high-income earners with a total adjusted gross income of $2.5 billion. During this same period, 84,000 people left Connecticut taking $6.6 billion in income with them.
High taxes impact state businesses, their ability to hire employees, and their ability to stay in Connecticut. In September and October, our state lost 8,600 jobs. Aetna and GE left our state and more businesses will follow, further shrinking the pool of taxable income.
However, one area not shrinking is state employee pay and benefits. This past summer, Democrats approved a generous contract with state employees, resulting in their pay and benefits accounting for 30% of the state budget.
Yankee Institute calculated the average Connecticut state employee salary at $70,970, plus benefits. Benefits, either received or accrued toward retirement, are worth between $54,561 and $75,641. Benefits account for 56% of the state’s payroll for typical employees and jumps to 83% for hazardous-duty employees. Comparing, Massachusetts state employees earn an average of $10,000 less and in New York, it’s $5,000 less.
Combine total salary and benefits and the average Connecticut state employee receives between $125,531 and $146,611. A comparable private sector employee earns about $96,177. State employee pay and benefits average 25% to 46% higher than private sector employees.
This is unsustainable! Connecticut cannot afford to keep paying such generous benefits and salaries. We need to have the guts to do something extreme. Otherwise, the only taxpayers will be state employees, paying taxes to pay their own salaries.
We can fix this. By prioritizing bonding and spending, we can renew the Special Transportation Fund and repair our decaying infrastructure. No more stadiums or unwanted beach projects. We must go back to state employees and end longevity payments and remove overtime from pension calculations. We can convert pensions to 401(k)-type plans and employees can pay more for their health care.
The alternative is higher taxes. That scenario only results in more Connecticut residents leaving while the state crumbles behind them.