Posts published in “Connecticut Newspapers”

April this year brought a nice surprise for federal and state tax collectors. Uncle Sam enjoyed unexpectedly robust net income tax receipts of $483 billion, amounting to a $103 billion or 27%, increase over April 2023, according to the Congressional Budget Office. Uncle Sam can use the revenue, but even a $100 billion surprise will hardly make a dent in ongoing massive federal deficits.

The increase was driven by a $77 billion, or 26%, increase in final payment of non-withheld income taxes, namely net taxes paid in estimated installments throughout the year. A large portion of non-withheld taxes are taxes on capital gains.

Connecticut enjoyed the same unexpected serendipity. Net non-withheld individual income taxes in April hit $1.7 billion, amounting to a $275 million, or 19%, gain over April 2023. Yet towering deficits loom.

During his re-election campaign - and ever since, Governor Lamont has claimed credit for a Connecticut Comeback and for “progress on pensions.” Yet long-term debt has increased $3 billion. The unfunded liability of the state employee pension fund (SERS) has barely improved, despite that the state has put a whopping $5 billion in special deposits into it. The latest news on the economy is that Sikorsky will be laying off 400 workers. Where’s the Comeback? Where’s the progress on pensions?

When did you last hear of a major business moving into Connecticut?

This week every Democrat in the General Assembly voted for Governor Lamont’s 4.5% state employee wage increase for next fiscal year that will bring wage increases during Lamont’s time in office to an eye-popping 33% total increase. A state employee making $100,000 just prior to Lamont’s inauguration will get $133,000 next year. Nice pay if you can get it, and 46,000 unionized state employees will get it.

Last week, there was a hearing in Hartford reviewing the investment performance of the state’s two big public pension funds. There was much self-congratulation. Hearst newspapers published a headline: “CT’s pensions hit $55B with a strong ’23 but debate rages over how we stack up.”

First, hitting $55 billion in assets is meaningless. What matters is whether those assets are sufficient to cover future pension costs. They are not.

Second, there’s no debate about “how we stack up.” The article confirmed once again the inadequate funding of the state’s big public pension funds, which rank – again – in the bottom five of the 50 states.

There was no mention at all of one major factor impacting “how we stack up"...

Last weekend at my granddaughter’s birthday party, a parent asked me where Connecticut’ income tax revenue goes. He had gone online and compared the financials and government programs of Connecticut and New Hampshire, which has no income tax. He said he could not discern much difference in the services that the two states provide.

I replied that Connecticut income tax revenue goes to fund the overgenerous pay and the gold-plated benefits of Connecticut state employees. As if to illustrate the point, Governor Lamont has just inked a contract awarding employees another 4.5% annual wage increase next fiscal year. The contract is awaiting General Assembly approval.

The U.S. and the State of Connecticut are sinking deeper into debt. The skyrocketing national debt receives widespread media attention, Connecticut’s almost none. Uncle Sam’s growing debt is highlighted and explained by huge budget deficits, while Connecticut’s increasing liabilities are hidden behind budget surpluses.

Yet, Connecticut’s growing debt is also ignored, because it is caused mainly by overgenerous and underfunded state employee compensation. No one, certainly not union-friendly Democrats, wants to offend public sector unions by exposing this reality.

Governor Lamont claims to be engineering the Connecticut Comeback. Not so fast. Immediately before he first took office in 2018, the state’s long-term debt was $83.4 billion. The latest state financial statements show $87.2 billion. The state is $3.8 billion deeper in debt.

Lamont claims to have improved the health of the drastically underfunded state employee pension fund (SERS) with $5.0 billion of special deposits to the fund. In 2018, SERS unfunded liability was $21.2 billion; last June 30th, it was $20.1 billion, indicating a meager improvement of $1.1 billion.

What happened?