The home of the University of Yale, with its $25 billion endowment, a large number of high-flying hedge funds and top-drawer celebrities nestled in a lush estates worth tens of millions of dollars, Connecticut has a great wealth and has the highest per-capita income of any American state.
But look a little closer and it is a fiscal train wreck. The State Constitution is one of the worst states when it comes to business costs, economic climate, growth prospects and regulatory burdens. Ground zero for this train wreck is the capital city of Hartford.
The administration of Gov. Dannel Malloy, a Democrat who has been in office since 2011, projects with a budget deficit of more than $5 billion in the next two years, thanks to generous pension benefits and the expenses of the maintenance of his large debt, plus declining tax revenues as a result of the exodus of large employers and the residents of the retirement age.
The budget of misery, as well as concerns that they will be repeated year after year, helped General Electric in 2015 to consider the move of the headquarters of the state. Last year did exactly that.
The state’s population to fall: The net domestic emigration was nearly 30,000 from 2015 to 2016. In 2016, the loss of a little more than 8,000 people, leaving the population at 3.6 million. Indeed, recent national removal company studies underline the trend, that more people leaving Connecticut than moving in. In 2016 the state also saw a population decline for the third consecutive year, according to Census Bureau estimates.
One of the companies, United Van Lines, reported that all of their Connecticut customers, 60 percent had left, compared with 40 percent who were moving. Only three other states had higher rates of people moving out of New York, New Jersey and the state of Illinois. One in five of those leaving said that they retire.
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More people are leaving Connecticut, then the.
Truth in Accounting, a non-profit organization whose mission is to provide the information about the finances, gave Connecticut a grade of “F” on his fiscal condition.
“Connecticut is $11.3 billion available assets to pay the $74.9 billion of the bills,” report on the state said. “Connecticut would be more than $20,000 from each of the taxpayers to pay its bills.”
Some of the most prominent economic experts, the debt of the past and the political leaders for the crisis, saying that they were lulled by Connecticut wealth, and felt no urgency for the renewal of the financial system and trying to bring spending and revenue in line. They say that the political leaders are short-sighted, lurching from crisis in the past few years have been reluctant to consider new ways of dealing with Connecticut finance and to diversify its economy.
“We are rich and happy, we are the Alfred E. Neuman” What me worry?’,” said Fred Carstensen, a professor of finance at the University of Connecticut, who has advised on the state of the political leaders. “There were missed opportunities and poor policy. The state has never paid attention to the collection of good quality administrative data. We have very poor information. When you don’t have GPS, your car has no headlights, and then you are surprised that you have run into a tree?”
As a partial solution, Malloy has proposed laying off unionized state workers if they do not oblige to the making of a number of $700 million in concessions for the fiscal year in 2018, and another $800 million for fiscal year 2019.
To call that controversial would be an understatement.
Employees International Union Local 1199, which represents 7,000 state workers, has a very pronounced stance against the governor’s proposed budget cuts and employee layoffs. The union has denounced the governor’s proposed cuts as heartless, and says that it will hurt those who already fight and are the most vulnerable groups, such as children and the disabled.
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SEIU members take part in a march.
The SEIU recently aired a tv ad taking aim at the governor and the legislature, and to get them to look at the state of a high income as a source for closing the budget gap.
“They ask a lot of middle-class workers,” said Jennifer Schneider, an SEIU spokeswoman.
“You have a lot of rich people in the state. Democrats and Republicans have proposed concessions of the state of the workers. It comes out to about $ 30,000 per person. That is the salary in combination with health insurance and other benefits. It is an amazing amount for just middle-class workers to handle. Everyone should be a part of the solution, not just the middle class.”
There have been calls from various segments of the state say Connecticut can’t afford to continue granting such generous benefits – including health care and retirement packages to governmentworkers.
State Senate Republican leader Len Fasano, said his GOP colleagues are ready to work with Democratic lawmakers to address the crisis, but before there is a drug, there must be an admission by Democrats about the role that their flawed policies have played in Connecticut’s financial mess.
We have a significant growth in the fixed costs – things such as Medicaid, the pensions of state employees and teachers. This expenditure will continue to grow fairly quickly.
– Chris McClure, public information officer for the state of the Office of Policy and Management
He said Connecticut needs to the renewal of the financial system. Fasano, who notes that he personally gains the benefits of the state-level public employees, said it is time to look at matters such as public employee contributions to pensions and healthcare plans.
“We address our [pension] liability,” Fasano said, adding that their benefits and contributions “should be in line with the private sector or the local unions.”
Health insurance for a lot of state-level public employees, Fasano said, have no your own risk. Further, the pensions, which are based on earnings, generally take into account overtime earnings during an employee’s last years. Finally, unused sick and vacation days which accumulate, for years, are often paid as a government employee with pension.
“The employees who retired would rack up a lot of overtime to rack up their pension,” Fasano said. “I don’t blame the state employees for the use of these benefits, but we need to change.”
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Democratic Connecticut Gov. Dan Malloy stops at a polling station on Nov. 4, 2014, in Bridgeport, Connecticut.
(Photo by Spencer Platt/Getty Images 2014, Getty Images)
Malloy has threatened to lay off thousands of public workers if he can’t secure concessions from the trade unions.
It is not only the cost of the side of the state ledger needs of the operation; the tax revenue presents just as big as a problem.
Malloy officials say that the volatility of the financial markets making budetary planning difficult, and the decision of a number of Connecticut-based companies to move out of is cut of the revenue.
Chris McClure, public information officer for the state of the Office of Policy and Management, said the causes of Connecticut’s budget crisis “is multifaceted, not a single event caused.”
“We have a significant growth in the fixed costs – things such as Medicaid, the pensions of state employees and teachers. These expenditures continue to grow very quickly,” McClure said.
Though the condition of the richest residents pay a large share of the public revenues: The top 1 percent of the richest inhabitants, McClure said, already account for about 30 percent of the state’s tax revenue.
“But it doesn’t translate into a fixed income for the state, because their income is generated from investments. It is volatile, based on the investment,” he said.
We grab our [pension] liability…[benefits and contributions] should be in line with the private sector or the local trade unions.
– State Senate Republican leader Len Fasano
For example, McClure added, was the turnover of the top 100 taxpayers declined significantly, possibly because they move in their investment, which is not taxable.
“That is an idea that has been suggested,” he said of the drop in tax revenues. “There is no possibility for capital gains is to be generated” if the people do not sell.
“There is a possibility of a sales spike on the road,” McClure added, “when they sell their positions.”
There are a number of tax proposals that not the purpose of the empire, but it is hard to imagine that making a dent in the problem. What the legislator set for legalizing marijuana as a new tax sources, as well as new tolls and a new casino. Other lawmakers and economic analysts say one remedy is to start taxing services, such as dog grooming.
“A too strong dependence of rich people, who for a large part of the personal income tax revenue is dangerous,” Morgan Scarboro, a policy analyst for the Tax Foundation, a non-profit in Washington, D. C., said. “If the state is to levy a lower rate of tax on a broader basis, the volatility of the income partly from high-income taxpayers is not so severe.”
State administrators are convinced that cuts are inevitable.
“We are trying to figure out what has worked and what has not,” McClure said. “We want the state on the best track, with a predictable year-after-year outcome. We try to keep the budget at about $20 billion, even if that means cutting Some programs, [such as] employment, training programme, are fantastic, but to pay for that Medicaid” is not feasible.
Malloy has said, it is good to the legislature to work with him to address the economic crisis. The state Senate is evenly divided between Democrats and Republicans, each with 18 members. In the House, the Democrats in the possession of a 79-71 majority.
Fasano, the Senate GOP leader, said that the state “spark the economy” by “getting older people to remain here, and for rich people to stay in the state.”
Elizabeth Llorente is a Senior Reporter for FoxNews.com and can be reached at Elizabeth.Llorente@Foxnews.com. Follow her on https://twitter.com/Liz_Llorente