Connecticut’s job growth remains flat. Total employment in the state has yet to return to pre-recession levels, while surrounding states seemingly have caught wind in their sails.
In Ted Thompson’s first novel “The Land of Steady Habits”, a nickname for the affluent, communities of Connecticut that dotted his commuter rail line, mounting debt costs, eroding tax receipts, perishing assets, and a declining population have become the new normal.
Connecticut’s job growth remains flat. Total employment in the state has yet to return to pre-recession levels, while surrounding states like Massachusetts and New York seemingly have caught wind in their sails.
According to the latest Tax Foundation “Facts & Figures” report, Connecticut ranks second in the nation for state and local tax burdens as a percentage of state income. Using 2014 data, the combined state and local individual income tax collections per capita is $2,162, ranking Connecticut No. 2 in the country.
Separately, Connecticut’s individual income tax collection comes in at $2,279 per capita, higher than the national average of $967. The corporate income tax collection of $192 per capita exceeds the national average of $144.
Connecticut also ranks first for state individual income tax collections per capita, but 43rd on the state business climate index. The business climate index considers five components: corporate taxes, the individual income tax, sales tax, unemployment insurance tax and property tax.
Added to this growing tax mecca are almost eight decades worth of unfunded pension liabilities for state employees and teachers unions which led the state’s budget director, Ben Barnes to recently comment, “We have entered into a period of permanent fiscal crisis in state and local government, it seems.”
In a February 2017 report, the Office of Fiscal Analysis predicted the state would end the year with a $65.2 million deficit. The budget that Gov. Dannel P. Malloy presented to the legislature this past February attempted to close $3 billion in deficits over the next two years. Driven by debts accumulated from prior governors and legislators, the menu of options to solve the state’s structural problems are politically toxic and not everyone can win.
Connecticut is in real danger of damaging its economic future by failing to address the tax burdens it’s putting on its citizens and dealing with budget obligations in a responsible way. Without such action we will see further exodus of wealthy citizens and corporations like GE, who will rightfully reconsider the viability of living here or, continuing major operations of their business here.
The quality of life in Connecticut and shaping the state’s economy for growth in the future are at stake. Let’s hope the current crop of lawmakers will show flexibility and the capability to solve these budget problems on a bipartisan basis. For Connecticut to truly compete with bordering states for economic prosperity, we need to shed some bad habits, specifically inequitable taxation and entrenched political beliefs.
Please join us on May 8th at TPC River Highlands in Cromwell, CT for CFA’s 30th annual Golf tournament. Portions of the funds raised at the outing go to the Connecticut Food Foundation Scholarship, available to students of CFA member companies.