The tax-and-spend impulse is so deeply embedded in Connecticut Democrats, it should be considered a genetic trait.
Take Gov. Ned Lamont. At the beginning of his budget address Feb. 20, he warned of a $3.7 billion two-year deficit, saying, “The fiscal crisis before us is not just a short-term hole in the budget. We are digging that hole deeper by $400 to $500 million annually due to fixed costs, such as pensions.”
After that opening, he gave lip service to solving the fixed-costs problem, and, then proposed a paid family-and-medical-leave program, “funded via a payroll tax on employees of approximately 0.5 percent, which will raise an estimated $400 million annually” – in other words, a new program costing the equivalent of those fixed costs.
The tax-and-spend impulse is so deeply embedded in Connecticut Democrats, it should be considered a genetic trait.
Take Gov. Ned Lamont. At the beginning of his budget address Feb. 20, he warned of a $3.7 billion two-year deficit, saying, “The fiscal crisis before us is not just a short-term hole in the budget. We are digging that hole deeper by $400 to $500 million annually due to fixed costs, such as pensions.”
After that opening, he gave lip service to solving the fixed-costs problem, and, then proposed a paid family-and-medical-leave program, “funded via a payroll tax on employees of approximately 0.5 percent, which will raise an estimated $400 million annually” – in other words, a new program costing the equivalent of those fixed costs.
After that opening, he gave lip service to solving the fixed-costs problem, and, then proposed a paid family-and-medical-leave program, “funded via a payroll tax on employees of approximately 0.5 percent, which will raise an estimated $400 million annually” – in other words, a new program costing the equivalent of those fixed costs.
The real issue and challenge concerning fixed costs is to address the fundamentals that are driving them ever higher. Lamont largely ignored the drivers. Instead, he proposed to rejigger the state’s payment schedule, reducing payments in the short term and stretching them far out into the future. His scheme is no different from the credit-card borrower who cannot restrain spending, and, instead, reduces his monthly payment to the absolute minimum, and, in doing so, incurs enormous interest costs over the long term.
Lamont plans to extend the period to fully fund the Teachers’ Retirement System (TRS) from the current 13 years to 30 years. This lowers the state’s contribution to TRS by about $370 million in his proposed budget, but Lamont simultaneously is diverting $385 million into a dedicated “reserve fund.” This would back up TRS to comply with covenants on outstanding state bonds requiring the state to fully fund TRS while those bonds are outstanding. So, the scheme is a wash.
Lamont plans to do the same with the State Employees Retirement System (SERS). His predecessor, Democrat Dannel P. Malloy, delayed the date for 80 percent of SERS to achieve full funding. Lamont is doing the same for the remaining 20 percent. These moves are classic cases of kicking the can down the road.
Lamont proposed one pension reform for state employees, but it will go nowhere. Malloy extended the State Employees Bargaining Agent Coalition agreement to 2027, protecting most unionized state employees’ benefits. This also protects most unionized state employees from layoffs through 2021, and provides raises that take effect in 2020. So, labor needs nothing, and labor negotiators don’t give something for nothing.
Lamont is reshuffling, not reforming. To be fair, Malloy left him little room to maneuver. But why would Lamont propose a new spending program?
Paid family and medical leave actually is two programs. Paid family leave is fundamentally a self-defined program: a baby is born, and for a specified period thereafter, a parent or guardian goes on leave to provide care. The state pays all or part of the adult’s salary.
Paid family leave is provided by New York City to its 120,000 public-school teachers starting this year. The city covers full salary for six weeks, at an estimated annual cost of $51 million, according to The New York Times. The city estimated 4,000 teachers will participate each year, which works out to a per-person cost of $12,750. That number implies an average salary of $110,000.
Lamont and his fellow Democrats want to cover most of Connecticut’s workforce of about 1.9 million workers. Using New York City’s estimates, and assuming an average Connecticut salary of just $55,000, or half of what city teachers make, then leave for six weeks would cost more than $400 million – and $800 million for the 12 weeks Lamont and company want to offer. Add the other half, paid medical leave, and the whole program becomes a billion-dollar-plus spending program – funded by $400 million in new taxes.
This is folly for a state in crisis. Connecticut Republicans should oppose the Democrats’ plan. It is not that Republicans should oppose paid leave. After all, the United States’ top Republican, President Trump, has endorsed the idea. Actually, this provides state Republicans an ideal position to take: endorse the president’s position and support paid leave at the federal level, but oppose it at the state level.
Red Jahncke (Twitter @RedJahncke) is president of Townsend Group International, a Connecticut-based business consultancy.
Red Jahncke is a nationally recognized columnist, who writes about politics and policy. His columns appear in numerous national publications, such as The Wall Street Journal, Bloomberg, USA Today, The Hill, Issues & Insights and National Review as well as many Connecticut newspapers.