Mr. Lamont's budget seems designed to accelerate the decline

 

Connecticut's Blue Politicians Spill an Ocean of Red Ink

CT GovernorBy Bob Stefanowski - 

After eight years of uncontrolled spending and two of the largest tax increases in the history of the state under former Gov. Dannel Malloy, Connecticut desperately needs a new economic direction. Unfortunately, the biennial budget soon to be signed by new Gov. Ned Lamont doubles down on policies that have produced abysmal results.

The state's economic indicators are grim. Connecticut routinely ranks near the bottom in surveys of economic competitiveness. Residents and businesses have been voting with their feet. According to the National Movers Study, only Illinois and New Jersey suffered more out-migration in 2018. General Electric left for Boston in 2016. This week, Farmington-based United Technologies Corp. announced it too will move its headquarters to Massachusetts when its merger with Raytheon is completed. UTC is currently Connecticut's largest employer.

Mr. Lamont's budget seems designed to accelerate the decline. It increases spending by $2 billion while extending the state's 6.35% sales tax to everything from digital movies to laundry drop-off services to "safety apparel." It adds $50 million in taxes on small businesses, raises the minimum wage by 50%, and provides the country's most generous mandated paid family medical leave. Florida and North Carolina must be licking their lips.

Mr. Lamont has promised a special summer legislative session to approve highway tolls projected to raise $900 million. His budget includes more than $9 million in "other" spending, including a new position for the former chairman of Connecticut's Democratic Party that pays $240,000 (including benefits). The state employee pension plan is underfunded by $100 billion—$75,000 per Connecticut household. A responsible budget would try to start filling the gap; the Lamont budget underfunds the teachers' plan by another $9.1 billion, increasing the long-term liability by $27 billion.

The proposed budget includes $2.3 billion in grants to Connecticut's struggling cities for jobs and education, but billions of dollars in similar grants over decades haven't done much to turn places like Bridgeport around. In 2018 only 15% of Bridgeport's students tested at grade level in math, and only 26% met the standard in language arts. More than 20% of Bridgeport's population lives below the poverty line, and unemployment in the city is close to 10%, double the rate in the rest of Connecticut. Goods and services in Bridgeport cost 30% more than the national average.

Many remember the days of New York City executives propping up real-estate values in Fairfield County. The wealthy and successful were attracted to Connecticut because it had no state income tax, great schools, and vibrant communities. Today, Connecticut has property tax rates among the highest in the country and is one of the few states where home values haven't recovered from the 2007-09 recession. Mr. Lamont proposes to slap a 2.25% penalty on people who sell a high-end home and move out of state. Having given up on attracting affluent families, he's trying to prevent the ones who are here from leaving.

If Connecticut were a business, it would be bankrupt. But states can't file for bankruptcy, so Democratic legislators have stayed in power by making ever-larger grants to big cities, ignoring the insolvent state pension plan, and providing visible perks to key voting blocs. It's worked so far, but the reckoning will come. Eventually, taxes in Connecticut will become too high for most people to pay. A smaller tax base will be asked to absorb larger tax burdens, forcing more taxpayers to head for the exits.

Mr. Lamont could have used his first budget as an opportunity to face reality and reverse the pattern of economic destruction. But like his predecessor, he chose instead to kick the can down the road. Subsidies for special interests may help Democrats get votes, but they hurt the quality of life for ordinary Connecticut residents. Deferring payments on a bankrupt teacher pension plan only delays the system's inevitable collapse. Pouring ever more taxpayer money into an unaccountable public education system hasn't breathed life back into Connecticut's once-prosperous cities. The budget may even be unconstitutional as it assumes $450 million in savings from state employees that the unions have yet to concede.

The booming national economy demonstrates the power of lower taxes, reduced regulation and a business-friendly environment to promote growth. A command economy will eventually drive away businesses, jobs and taxpayers. Maybe that message will reach Connecticut before it's too late.

Mr. Stefanowski was the 2018 Republican candidate for governor of Connecticut.

Appeared in the June 15, 2019, print edition.

 

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