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The Red Line

Lamont Busts the Fiscal Guardrails — Talking with Lee Elci on News Now, 94.9FM

Lee Elci: All right welcome! Every Wednesday, we bring on Red Jahncke.

You ready to rock and roll today.

Red Jahncke: I'm ready to rock and roll.

Lee Elci: All right. So, Governor Lamont once called Connecticut's Fiscal Guardrail “sacrosanct.” How significant is his decision to modify the Volatility Cap! And do you think this sets a dangerous precedent.

Red Jahncke: Yes, I do. There are a couple of income tax revenue streams that are capped at a certain level, above which all revenue is redirected into the state employee pension fund. He has raised the cap. So, $300 million less is going to go into the pensions. That's the 1st violation of the fiscal guardrails.

The budget normally takes the surplus from the prior year and transfers it into the next year's budget. That's about $300 million. If he let the $300 million into the budget, plus the $300M extra from raising the level of Volatility Cap, that $600M would send spending over the Spending Cap.

So what's he doing with that year-end surplus from last year that should go into this year’s [budget]. He's intercepting it and creating an off-budget spending program. That's violation number 2.

That's just a violation of good budget practice. If you're going to have a budget, you should have everything in it. What's the point of having discipline within the budget, if every time you want to spend more money, you just go off-budget?

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Once “Sacrosanct,” Fiscal Guardrails Are Not So Holy Now in Lamont World

Governor Lamont is violating the fiscal guardrails, converting them from a regime of budgetary discipline into a slush fund to pay Connecticut state employees higher wages than in 48 other states and, secondarily, to fund a few priorities of progressive Democrats.

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To Preserve the Fiscal Guardrails, Freeze State Employee Wages

The best way to defend Connecticut’s fiscal guardrails is to freeze state employee wages that are 33% higher today after six consecutive annual pay increases under Governor Lamont.

February 3, 2025

The guardrails are under attack by Democrats who want to increase spending. They want to lay their hands on the $6 billion in income tax revenue that the guardrails have diverted from spending and channeled into the state employee retirement fund (SERF) over the last six years.

Yet, cumulative annual dollar increases in state employee wages over the last six years total an aggregate of about $3 billion, according to data in the latest report of SERF’s actuary. In addition, since pensions are based on wages, SERF pension liabilities have increased $9 billion over those six years. That’s $12 billion that has been, or will be, spent on increased pay and benefits for state employees that could have been spent on the Democrats’ priorities.

In the simplest terms, had wage increases been limited to half the actual level, the aggregate wage increase would have been about $1.5 billion and, logically, the increase in pension liabilities only about $4.5 billion, freeing up $6 billion within the guardrails for the additional spending desired by Democrats.

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A Double-Whammy: Lamont’s 33% Wage Hike for State Employees Means $1.1 Billion In Higher Annual Payroll Cost AND $9 Billion In Extra Pension Liabilities – Talking with Lee Elci on News Now, 94.9FM


Lee Elci:
We're doing okay. So up on your website, is your latest piece. Lamont is paying state employees a billion more than Malloy, and we talked a little bit about this last week, but you want to jump back into it again.

Red Jahncke: I want to jump right back in. I will repeat my mantra, which is Lamont has awarded state employees a 33% wage increase. That means some employee making 100,000 when he took office at his first inaugural is now making $133,000. That is unfair and unsustainable. Those wages are far in excess of what's being paid in the private sector. It is unsustainable for the State. This state is not growing. Real economic growth is less than 1%. You can't sustain that kind of pay for State employees with the anemic economy that we have.

There's this debate in Hartford, right? The nonprofits are beating the drum that they are 450 million dollars behind, because their funding has been squeezed over the last decade, and they've lost ground. Workers in the nonprofits who provide many of the social services that the State extends to the needy are vastly underpaid compared to State employees. So they want that 450 million put in the budget this year so that they can catch up. What they don't understand is: in going after the fiscal guardrails, they're going after the wrong problem.

Lee Elci: All right. Well, what's the right problem?

Red Jahncke: Well, the right problem is when you increase wages by 33%, wage costs skyrocket. When…

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State Employee Raises, Not Fiscal Guardrails, Put Squeeze on Spending

There’s a fight brewing within the ranks of Democrats in Hartford over what changes to make in state budget policy so they can spend more money.

January 13, 2025

Progressives want to bust the “fiscal guardrails” which both limit spending and redirect billions into the state’s drastically underfunded pension funds. They want to get their hands on the money going into pensions. They want to use that money to spend beyond the guardrails, which are designed to keep spending in line with the state’s economic growth.

January 15, 2025

Progressives have misdiagnosed the problem. Lamont has caused the problem. The obstacle to more spending is not the fiscal guardrails, but rather the 33% increase in wages that Lamont has lavished on state employees.

Under Lamont, unionized state employee wages have grown $1.1 billion from $3.4 billion annually when he first took office in 2019 to $4.5 billion last fiscal year, as catalogued in the latest report of the pension fund actuary.

If progressives want to spend more money, they need to freeze state employee wages. 

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Lamont is Paying State Employees $1 Billion More Than Malloy – Talking with Lee Elci on News Now, 94.9FM

Lee Elci: Welcome back. I’ve been talking about this all day—since January 6th was on Monday. There are still reports of people being held without trial. What’s your take on this situation?

Red Jahncke: Anyone held without charges is a clear violation of the Constitution—it’s entirely unjust. They should be released immediately. As for the broader situation, I think many innocent people got caught up in something they never intended to participate in. Things just spiraled out of control. I’m sure President-elect Trump will pardon some of them. However, those who led or planned the attack on the Capitol shouldn’t be pardoned or released. That’s my stance.

Lee Elci: Fair enough. Thanks for sharing your thoughts. Let’s switch gears—today marks the opening of the legislative session. I figured you’d be out there waving a flag that says, “Lower State Employee Pay.” Were you?

Red Jahncke: You know the mantra by now, right? Can you repeat it?

Lee Elci: You go ahead—give it to us.

Red Jahncke: Thirty-three percent.

Lee Elci: Oh, yes.

Red Jahncke: State employees, under Governor Ned Lamont, have received a 33% wage increase, which amounts to an additional billion dollars across the workforce. And that’s just within the executive branch—not everyone on the state payroll. To put it in perspective, state wages have risen from $3.4 billion in 2018 to $4.5 billion for fiscal year 2024. Calling this unsustainable is an understatement.

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CT Democrats’ Internal Warfare Over Lavish State Employee Pay

Connecticut’s public sector is the most heavily unionized of the 50 states. Under Governor Ned Lamont, public unions have secured state employees six consecutive annual pay raises, cumulating to a stunning 33% compound increase.

December 27, 2024

They are the second highest paid state workers in the 50 states.

Their health care benefits are the most robust by far, according to studies in 2021 and 2023.

January 3, 2025

Their pensions ranked in the top quartile of states in the 2021 study.

But how does the state employee union (SEBAC) maintain its unique power?

December 28, 2024

How does it protect such lavish and unaffordable compensation in a state that is in the worst financial condition of the 50 states?

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Medical Debt and Interest Rates – Talking with Lee Elci on News Now, 94.9FM

Lee Elci: Alright! I want to ask you before we get into some of the things I'm sure you want to get into. I wanted to quickly ask you, we have a guest coming up who's done extensive research again. But the idea is this, 30 million dollars forgiveness of medical debt. What's your thoughts on that here by the governor.

Red Jahncke: This a function of the combination of immigration non-enforcement, and the national policy, that, if someone appears in the emergency room, you can't deny them if they can't pay. This is what's called non-compensated care. It piles up at the hospitals. Hospitals have to eat it. It sits on their books. They load that debt onto all their other charges in order to recover it. So, the governor is transferring that to a nonprofit [Undue Medical Debt, aka Medical Debt Resolution Inc.] that will officially forgive the debt. It's $30 million that's leaving the books of the hospitals. But what the hospitals are actually getting for that. Maybe you know the figure, but it's nowhere near 30 million. In essence, we [Connecticut citizens] are going to pay for that. People who have medical insurance, are responsible enough to have some kind of coverage. Our bills are going to go up. The nonprofit involved here is not taking on this debt dollar-for-dollar. It's $30 million face amount. They're probably giving the hospitals $2 million [actually, the norm is 1 cent on the dollar].

Lee Elci: Okay? Alright! Yeah. I'll find that number out when we come back. Switching from that, Red, to interest rates. They're going to drop the interest rates again here, thoughts on the drop of our interest rates.

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Trouble Hiring CT State Employees? Really?

Governor Lamont and the Democrats have increased the wages of Connecticut state employees by a stunning 33%, awarding them six consecutive annual wage increases (two 5.5% raises, then four 4.5% pay bumps).  A 2023 study found Connecticut state employee wages to be the second-highest of the 50 states.

December 5, 2024

Yet, Democrats in Hartford claim the state is having trouble recruiting new employees. How so? The active workforce grew from about 47,000 to 49,000 in the last fiscal year, according to the just-released 2024 Report of the Actuary for the state pension fund.

Why the “trouble?”

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Opposite Day in Hartford: The Myth of “Pension Progress” – Talking With Lee Elci, News Now Radio, 94.9

Lee Elci: A lot of glad-handing and patting each other on the back the other day up in Hartford, right?

Red Jahncke: Yeah, it was quite a session—making a mountain out of a molehill.

Lee Elci: All right.

Red Jahncke: They had the Governor, the Comptroller, and the Treasurer all patting themselves on the back for the improvement in the State Employee Pension Fund, which inched up from 52% funded to 55% funded. Only in Connecticut do you pop the corks on the champagne bottles to celebrate a 3% improvement.

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