Peter1469
03-09-2017, 07:10 AM
Blue state model fails in Connecticut (http://www.nationalreview.com/article/445530/connecticut-pension-crisis-state-budget-taxes-democrats-governor-dannel-malloy-republicans-legislature)
Here is an interesting article that reminds us why deficit spending is bad. As if we need the reminder.
Many Connecticut conservatives cite the adoption of an income tax in 1991 as the beginning of the state’s woes. Up to that point, the Land of Steady Habits had an inspired run, poaching businesses and residents from overtaxed New York. Connecticut governor Lowell Weicker, a former Republican who served as an independent, worked out a deal with lawmakers: Government would impose a spending cap in exchange for the tax hike. But the state never fully implemented the former.
After having been raised four times, the top marginal income-tax rate now stands at 6.99 percent, almost two points higher than the 5.1 percent in neighboring Massachusetts. The income tax has generated a flood of new revenues — $126 billion over 25 years, according to the Hartford-based Yankee Institute for Public Policy — but somehow state lawmakers neglected to direct adequate funds to the pension system. As a consequence, Connecticut’s state employees’ retirement system is funded at only 35.5 percent, one of lowest rates in the nation. Despite a slew of recent tax increases, state government now faces deficits of $1.5 and $1.6 billion in the next two fiscal years.
No one seriously believes that the state can grow its way out of its fiscal troubles. In four of the last six years, the Connecticut economy has ranked among the five slowest-growing of all American states. Wounds are still raw from General Electric’s announcement in January 2016 that it would relocate its corporate headquarters from Fairfield, Conn., to Boston. State officials are anxious that Aetna, a large insurance company that’s been based in Hartford for over 150 years, might decamp as well. In 2016, the state registered a net decline in population for the third year in a row. Families and corporations are right to speculate over what Connecticut’s fiscal future means for them. Ever-escalating pension liabilities and a structural budget deficit make it seem like only a matter of time before even New York looks like a bargain compared with Connecticut.
Read more at the link.
Here is an interesting article that reminds us why deficit spending is bad. As if we need the reminder.
Many Connecticut conservatives cite the adoption of an income tax in 1991 as the beginning of the state’s woes. Up to that point, the Land of Steady Habits had an inspired run, poaching businesses and residents from overtaxed New York. Connecticut governor Lowell Weicker, a former Republican who served as an independent, worked out a deal with lawmakers: Government would impose a spending cap in exchange for the tax hike. But the state never fully implemented the former.
After having been raised four times, the top marginal income-tax rate now stands at 6.99 percent, almost two points higher than the 5.1 percent in neighboring Massachusetts. The income tax has generated a flood of new revenues — $126 billion over 25 years, according to the Hartford-based Yankee Institute for Public Policy — but somehow state lawmakers neglected to direct adequate funds to the pension system. As a consequence, Connecticut’s state employees’ retirement system is funded at only 35.5 percent, one of lowest rates in the nation. Despite a slew of recent tax increases, state government now faces deficits of $1.5 and $1.6 billion in the next two fiscal years.
No one seriously believes that the state can grow its way out of its fiscal troubles. In four of the last six years, the Connecticut economy has ranked among the five slowest-growing of all American states. Wounds are still raw from General Electric’s announcement in January 2016 that it would relocate its corporate headquarters from Fairfield, Conn., to Boston. State officials are anxious that Aetna, a large insurance company that’s been based in Hartford for over 150 years, might decamp as well. In 2016, the state registered a net decline in population for the third year in a row. Families and corporations are right to speculate over what Connecticut’s fiscal future means for them. Ever-escalating pension liabilities and a structural budget deficit make it seem like only a matter of time before even New York looks like a bargain compared with Connecticut.
Read more at the link.