As if we needed more evidence, yet another sobering nonpartisan report came out last week projecting a bleak economic future for the Nutmeg State.
OP-ED | Interested In The Truth? Listen To Carstensen and Lembo
by Terry D. Cowgill | Apr 26, 2013 5:30am
(6) Comments | Log in to Post a Comment
Posted to: Economics, Labor, Opinion, State Budget
(6) Comments | Log in to Post a Comment
Posted to: Economics, Labor, Opinion, State Budget
TERRY COWGILL
At the Capitol, Gov. Dannel P. Malloy’s chief budget flak Ben Barnes has, since his boss took office, consistently underestimated the size of the budget deficit and painted a rosier picture of the state’s economic future than analysts who don’t report to the governor. And partisan leaders in the General Assembly obviously have their own political agendas. They either want to make the governor look good, or in the case of Sen. John McKinney and Rep. Larry Cafero, they’re considering a run for the Republican nomination for governor next year.
CTNEWSJUNKIE FILE PHOTO
Prof. Fred Carstensen
Last week, CT News Junkie reported that Carstensen and former U.S. Comptroller David Walker, who heads the Comeback America Initiative, found that Connecticut has “some of the highest — if not the highest — total liabilities and unfunded obligations per taxpayer of any state in the nation.”
Those liabilities mostly take the form of state employee pensions, retiree health care coverage, and bonded debt: “Beginning in the 1990s, state employee retirement programs were expanded considerably,” the report said. “For several years now, elected officials have not made the necessary contributions to fund the promised benefits.”
CTNEWSJUNKIE FILE PHOTO
State Comptroller Kevin Lembo, left
“Do we cut a vital service or underfund the pensions?” the independently elected Lembo asked.
We all know the answer to Lembo’s rhetorical question. Rather than make the tough choices about spending, elected officials kicked the proverbial can down the road.
The problem is especially acute in states like Illinois and Connecticut, where lawmakers are closely aligned with public employee unions. While Connecticut had assets to cover only 53 percent of its pension obligations in 2010, North Carolina, South Dakota, Washington, and Wisconsin were able to cover 95 percent of their obligations. The deadbeat state of Illinois clocked in at 40.4 percent, the worst in the nation.
State employee salary increases, on the other hand, have remained reasonable. The governor’s office, which in Connecticut is charged with negotiating state labor contracts, realizes that large raises would make for big headlines. So they sweeten the pot with generous pension benefits that go largely unnoticed and which do not have to be funded until decades after the ink is dry on the labor agreement.
Most state employees can retire with full pension benefits after only 25 years. Employees who work in what the state classifies as “hazardous duty” (mainly correction officers and police) can retire after only 20 years. Compounding the problem is that many hourly employees pile on the overtime in their last three highest earning years in order to artificially boost retirement benefits. Sadly, the Connecticut Mirror’s Keith Phaneuf told Dankosky he has seen no indication that lawmakers are considering ending such abuses.
I don’t begrudge the right of any employee to enjoy a decent retirement. I’m not too far away from calling it a career myself. But paying retirees not to work for 40 years is the embodiment of fiscal insanity.
One can only hope that Gov. Malloy realizes this and ultimately provides the necessary leadership. After Moody’s downgraded Connecticut’s bond rating early this year, based in part on the state’s appalling pension liabilities, Malloy proposedto achieve 80 percent funding by 2025 and 100 percent by 2032.
But it will take more than funnelling additional taxpayer money into those retirement funds. When the current John Rowland-negotiated labor agreement expires in 2017, the state’s elected officials should rein in the pension abuses, enact reforms, and hammer out a sustainable deal. Otherwise, we’ll be little better than Chicago writ small.
Terry Cowgill blogs at ctdevilsadvocate.com and was an editor and senior writer for The Lakeville Journal Company. He can be found on Twitter @terrycowgill.
Tags: terry cowgill, Pension, labor agreements, governor, economics, Fred Carstensen,David Walker, Malloy, cafero, McKinney, Lembo, Connecticut Center for Economic Analysis,dh
(6) Comments
posted by: HandyManny | April 26, 2013 8:13am
Amen. This is not a Democrat or Republican issue. This is simple and disturbing math. These future liabilities will swamp us all if we don’t take action soon.
posted by: Noteworthy | April 26, 2013 9:47am
This is exactly right and in the meantime, this state needs to reign in hiring and limit its additional debt. However, there is no indication that Malloy or the Democrat controlled legislature has any intention of do that any time soon. Their goal is to keep painting a rosy picture and hope.
posted by: ASTANVET | April 26, 2013 11:09am
we will continue down this road of economic failure until the good people of CT realize it is a result of decades of a failed philosophy. You cannot over tax, you cannot over spend, you need to be mindful of the public treasury. You may want all manner of committee, councils, programs, entitlements - but that is what got us here. It is time for a real conversation about the condition our state is in. When funds are earmarked (i.e. gas tax) for infrastructure maintenance and improvement - but those funds get diverted, you need to connect those dots. So much for the deep blue paradise that so many have bought into… unlike the previous comment, i do believe this is a liberal/conservative issue. Small governments are just not as expensive. More money in your pocket is good for the people - and attracts more people/business. The trick is to not be fooled by the ability to grow government at every turn. It takes discipline, and fortitude to keep govt small enough to manage the state, but not big enough to swallow it. We do not have those kinds of people in Hartford today. We haven’t had them in a long time.
posted by: ALD | April 26, 2013 2:03pm
Terry you say:
“The governor’s office, which in Connecticut is charged with negotiating state labor contracts, realizes that large raises would make for big headlines. So they sweeten the pot with generous pension benefits that go largely unnoticed”
I have long suspected exactly what you say here. The pensions have not been properly funded with the agreement of the state worker labor unions or at least their leadership. A private company in the real world could not get away with this. But we are talking the state here, and unlike a private company there is virtually no risk the state will default on these pensions. The unions know the state will drain the taxpayers dry of every last dime first.
Best yet if your part of this deal you get your raises now, your pensions latter, and the general public, always ready to put it’s head in the sand and not pay attention, does not have the slightest idea just how much we are really spending per state worker, because those who make these deals can avoid the tax increases now to pay for them latter.
It’s a perfect example of what happens when you put the foxes in charge of the chicken coop, and the trusting farmer takes a long nap.
posted by: Not that Michael Brown | April 26, 2013 2:05pm
Sure that’s Lembo and Cartstensen, but what do Reinhart and Rogoff have to say about CT’s debt (read snark). The former US Comptroller has no legitimacy. He is paid handsomely by the Peter G. Peterson Foundation to spout this nonsense. I’m checking on who funds Cartstensen. Lembo is the most credible because he doesn’t do that silly ratio [expletive].
posted by: BrianO | April 26, 2013 3:22pm
Fiscal conservatism is not political conservatism.
Lose the labels and don’t blame one party over another. Republicans funded prisons, UConn expansion, the Juvenile Justice Facility in Middletown, the LOB, very sweet Union contracts…etc. while cutting taxes, borrowing and working around debt ceilings. How do you cut taxes and spend more? Democrats watched it happen and always want higher taxes to fund admittedly growing social service needs. Neither party understands long term fiscal planning tied to projected revenues.
The best social service program is a job.
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