Lee Elci: All right, here we go. Red Jahncke is joining us. National columnist, our Wednesday guest. Good morning sir. How are you today?
Red Jahncke: Hey. I’m good. Well, let’s kind of jump into it, okay? You know, the juxtaposition is just jarring. The talk in Hartford, as we know, has been all about surpluses, surpluses, surpluses and why can’t we, the Democrats saying why can’t we spend the surpluses? And, of course, the surpluses are not surpluses. They are necessary payments into the state pension fund because without the surpluses the pension fund would go backward.
So, the public hears all about these surpluses, surpluses, surpluses. Then what does Ned Lamont do on Monday morning? He declares a financial emergency.
If you’re John Q Public just catching snippets of the news here and there, how do you think about, in the same sentence, surpluses, surpluses, surpluses and financial emergency?
Lee Elci: I don’t have an answer for that Red. How can it be?
Red Jahncke: Well, we do know what’s going on. Hartford is a Keystone Cops operation. How can you conclude anything else when you hear in one minute of the news broadcast that there are surpluses, and in the second, that the emergency has been declared.
Lee Elci: Yeah. Well, I mean, that’s the shell game that this administration seems to play.
Red Jahncke: Well, they’re calling a surplus what is, round numbers, $2 billion that has been captured by what’s called the volatility cap. And the volatility cap captures tax revenue basically on investment gains from the wealthier citizens of the state. Now above a certain level, tax revenue from those investment income is captured and deposited into the pension fund, which is drastically underfunded and otherwise would be going swiftly backwards in terms of funding. So, it’s a leap to call that money going into the pension fund, a surplus. I call that a necessary expenditure. Not a surplus.
So, Lamont first tried to head things off at the pass in mid-March when he imposed a hiring freeze on state employees because they saw that they were going potentially over the constitutional spending cap. In fact, the hiring freeze and other measures that were adopted along with the freeze were insufficient to restrain spending. And the reason he had to declare a financial emergency is the state is spending over the constitutional spending cap this fiscal year. So Lamont has to declare a financial emergency so that overspending becomes legal. It becomes legal to go over the spending cap.
Lee Elci: Where most of this money is going, Red? Where is this going, this extra money?
Red Jahncke: Well, you know, you can be smart as a whip and, still not understand what’s going on in Hartford. Because the people in Hartford don’t know what they’re doing. They say one thing one minute and another thing the next minute.
So, the reason they had to do this is a Medicaid benefit distribution that they could not fund without going over the spending cap. They had to solve that issue or Medicaid beneficiaries statewide would not get their money. That’s the proximate cause of this declaration.
Lee Elci: We’re talking with Red Jahncke. The-Red-Line.com. That is his website. You can read him a number of different places, including our very own Connecticut Examiner. You wanted to give a preview of Connecticut’s scandalous and precarious hospital tax. What’s going on there?
Red Jahncke: Well, 25 words or less. In 2018, a Senate committee under Senator Ron Johnson issued a report on Medicaid in which they said characterized the hospital tax as a shell game, and they fingered Connecticut as the worst perpetrator of the shell game. This figures into the debate and the process underway in the U.S House to adopt the Big Beautiful Bill. Medicaid is in the crosshairs.
Remember, Medicaid is a joint federal state program. Uncle Sam funds part of it. The states are supposed to fund part of it. This goes to the hospital tax. As things have evolved, Uncle Sam has been funding more and more of it. Medicaid is a huge, rapidly growing entitlement program. It’s gone from $600 billion to $860 in 5 years. That kind of growth again, it’s another one of those many things that we talk about and you use the adjective “unsustainable,” right. That’s unsustainable.
The whole legitimate purpose of the big beautiful Bill is to bring that all spending under some kind of control. So Medicaid is in the crosshairs. This state is the “worst perpetrator” of one of the schemes that has been ballooning Medicaid.
Secondly, it suggests that that is a pretty precarious position to be, if you’re relying upon that source for a major part of state revenue. The hospital tax is equal to the corporate tax in this state in terms of generating revenue for the budget. That’s a very, very risky position to be in.
Lee Elci: I know.
Red Jahncke: We’ll discuss this more next week. The other preview is we have state employees who are retiring with pension plans that are higher than their last salary.
Lee Elci: I know. You and I had talked for almost an hour one day about both. So I can’t wait that column, they blow the lid off of some stuff that, that’s going on here in the state of Connecticut.
One last thing. Where are we with the world of hockey right now? What’s who’s left?
Red Jahncke: Well, we’re in the two conference finals. The Eastern Conference final. The first game last night, Florida took it, very handily from, from Carolina. The Oilers play the Stars tonight in the Western Conference final. First game.
Lee Elci: Edmonton, your team, right?
Red Jahncke: Yeah. Well, they’re exciting to follow. And they’ve got the two best players in the league, Connor McDavid and Leon Draiseitl who’s, a German immigrant. So it’ll be interesting. Yeah. Florida is a powerful team. You can’t really single out a one player or another, you know, in contrast with Edmonton, which has the two stars of the league. So I’ll leave you with that.
Lee Elci: Barkley says. Charles Barkley, basketball commentator and former NBA. He’s a Hall of Famer. I think, said that, the difference between the NBA and the NHL is the NHL players never complain. They just go out and play.
Red Jahncke: They are true warriors. You’ve got Max Pacioretty playing for the Maple Leafs. In staving off elimination the other night, Pacioretty scored one of those two goals. He has had three Achilles tendon surgeries. Wow. He’s 35. He’s still playing. Couldn’t be a better example of the warrior mentality in the league.
Lee Elci: All right. Thank you, Red. I’ll talk to you next week. I appreciate it.
Red Jahncke: That sounds good.
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.