Episode Information

WWL: Legislative Preview
Where We Live - with John Dankosky
Aired:
02/03/2010
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In this episode:

Previewing the upcoming legislative session

 

Episode Audio

49:00 minutes (23.52 MB)
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If the state fired every employee, closed every office and terminated every aid program, legislators would still have to appropriate $3.3 billion this year to meet its past obligations.

That report from Mark Pazniokas from the Connecticut Mirror. Journal Inquirer reporter and budget guru Keith Phaneuf has similarly dismal news: He says the governor and state legislature are playing a game of “kick the fiscal can” – siphoning nearly one point $6 billion away from the next decades worth of budgets. Perhaps solving short-term problems right now - but leaving a mess for whoever takes her place.

This fiscal year the governor and legislature are tasked with closing a widening budget gap—now estimated at $515 million.

Today, we’ll be joined by these reporters, and others to preview the start of the legislative session, which begins today with Governor Rell’s State of the State address.

 

 


 
Related Content:

Past Politicians are to Blame for Today's Unfunded Obligations

There is a long history that needs to be told demonstrating how CT ended up with its retired state worker pension and healthcare obligations. It's a story that goes back three decades, and the problems facing today's taxpayers are largely due to decisions made by politicians who have been out of office for around a quarter of a century.

Before state workers' pensions were collectively bargained (1981), previous governors and legislators routinely failed to make the needed retirement contributions to fund its retirement system. Since the unions representing State workers began negotiating pensions 29 years ago, we have required the state to pay the normal costs of pension benefits by contract with its workforce.

The current state pension plan (effective in 1997) costs less than 4.7% of payroll for the typical worker -- far less than many large corporations pay. And there is virtually no unfunded liability for any employee hired after July 1, 1997.

The reality is that nearly all of the pension plan's current unfunded liability is attributable to State workers hired before 1984 -- most of whom have already retired.

The history matters in light of Governor Rell's budget speech yesterday, and the comments of candidates who seek to replace her this fall. Some are suggesting replacing state workers' pensions with privatized 401(k) plans.

401(k) plans carry high administrative costs and any savings they may produce take 10 to 15 years for their governing entities to realize. Individual savings accounts are also subject to the vagaries of market cycles, putting the retirement security of individual workers in the hands of the same folks who nearly destroyed the American economy in 2008.

Pensions, on the other hand, work through economies of scale. They produce higher returns on investments than can be realized by the average individual worker, and can withstand the ups and downs of the stock market.

It is true that the unions in the State Employee Bargaining Agent Coalition (SEBAC) did agree last spring to the Rell Administration's proposal to defer pension fund payments if state revenues continued to fall. It was a tough decision, but one we felt was better than standing by while more vital public cervices were cut and more private sector jobs were lost here in Connecticut.

Matt O'Connor
Communications Coordinator, State Employee Bargaining Agent Coalition (SEBAC)

Listener Email from Steve

Throughout this financial crisis both the public and private sector have been cutting jobs to costs.  This is entirely the wrong tack.  Particularly in the public sector.  Cutting teachers, police officers, firefighters, and any essential public service worker not only puts people out of jobs, but puts additional pressure on those who have kept their jobs, leaving them with work that they cannot accomplish.  Plus those who got laid off, have nowhere else to get jobs.   Cutting pay across the board in the public sector, with greater pay cuts for the higher earners, would keep people in jobs, allow the work to get accomplished, and still allow income taxes to be collected. 

Listener Email from Sean

I must object to the manner in which the debate about the state's finances is being framed this morning, which is precisely the way that conservative Republicans want it framed: that the problem is one of too many state employees, too much spending, and too much borrowing. That argument is based on false premises.

The state's 55,000 full-time equivalent employees, as a percentage of our population, puts us right in the middle of the fifty states on that ratio. Our municipal employees to population figure is even lower. In short, our state ranks as one of the most efficient in the country in terms of government workers. Our taxes as a percentage of state income is also quite modest. And borrowing is not the problem. Nobel prize winning economists Paul Krugman and Joseph Stiglitz both point out that it is better for the economy overall for the states to borrow in this period of economic decline rather than to aggressively cut spending. And our half billion dollar deficit represents less than 2% of our two-year budget, a virtual rounding error.

The problem is that the tax rate on the wealthiest Connecticut residents is too low. Greenwich, Darien, and New Canaan pay property tax rates that are a fraction of those in Bridgeport and other hard-pressed municipalities, and our income tax rate on the wealthiest Nutmeggers is also far lower than prevails elsewhere in our region. But the Republicans, rather than do what is prudent and fair, i.e., raise taxes on those, especially in the finance industry, who can afford it, prefer to pretend that we are spending too much, and cut services for those who most need it.

We need a fair and balanced discussion of our state's fiscal situation, not a rehash of inaccurate Republican talking points.

Listener Email from Rich

Today Rell will be giving a eulogy for our late, great State of CT.  There seems to be no voice in the wilderness, no leadership from either party and NObody with any backbone!  We need a Lowell Weicker type to take over the executive branch and make some tough, intelligent decisions!