Editorial: A Plan To Save The State
This state is fortunate to have some of its sharpest minds determined to get Connecticut out of its financial pickle. They’ve given Gov.-elect Ned Lamont a handful of terrific ideas, and the cover, to fix the state’s financial problems.
The Commission on Fiscal Stability and Economic Growth could have disbanded in March, when it delivered its report to the governor and legislature. But the 14 members continued working on their own. They've narrowed and refined their ideas to six priorities in a report released Wednesday.
Now all that’s needed is for Mr. Lamont to have the political courage to break through the likely resistance of a majority Democratic legislature reluctant to change much in this Land of Steady Habits and implement the ideas.
At the risk of oversimplifying the commission’s latest report, those six ideas laid out in detail are, in short:
Hire an outside expert to find $1 billion in cuts.
Right-size pay and benefits for public employees.
Make taxes more competitive.
Focus on transportation projects.
Educate more STEM graduates.
And fix the property tax/municipal spending problem.
Who is this group of citizens to tell the state Capitol what to do?
They include leaders of iconic Connecticut businesses, people who love the state and have a big stake in it. Among them are Cindi Bigelow, president and CEO of Bigelow Tea; Christopher Swift, CEO of The Hartford; Bruce Alexander, who led downtown New Haven's renaissance while at Yale; Roxanne Coady, owner of R.J. Julia Booksellers; and co-chairmen Bob Patricelli, former CEO of Women's Health USA, and Jim Smith, former CEO of Webster Bank.
At times, the report is scary. A sampling of its bad news:
Fixed costs, such as retirement benefits and Medicaid, are growing so high that they will reach "a staggering" 53 percent of the budget in a few years. "Our budget deficits are growing by $500 to $600 million per year. This is simply unsustainable."
The money the state owes, both in debt and in promises made without the funds to fulfill them, is "equivalent to an approximate $100,000 mortgage on every home in the state.”
Average pension benefits for state retirees are almost $38,000, "well ahead of the average in the Northeast and U.S." Post-retirement benefits are worth another $43,00 to $71,000 a year. The state spends 13 percent of its general fund just on required pension contributions. "These numbers are more than our budget can bear.”
But "while our problems are severe, we are convinced they are fixable," the report says. Among the fixes:
Reopen the 2017 state employee labor agreement. "Achieving fiscal stability for Connecticut simply cannot happen without a re-opener."
Raise teacher pension contributions from 7 to 9.85 percent, and stop paying a third of teacher retiree health care benefits, "since the state has no control over health plans at the local level."
Increase state employee pension contributions to 6 percent. The Tier II contribution of just 2 percent "is the lowest contribution rate in the country."
Lower the top income-tax rate from 6.99 to 6.7 percent and ease the burden of other taxes while broadening the sales-tax base to services that are now exempt, such as dentistry and tax preparation.
Sell or lease or enter into a joint venture for UConn's John Dempsey Hospitalto "eliminate the hospital's drag on the state's operating budget of close to $100 million a year."
To say the fixes won't be easy is a great understatement. Unions will resist reopening the 2017 agreement, saying they've sacrificed enough. But the commission's report points out that Connecticut public employees are among the best-paid in the nation, with benefits that are unknown in the private sector — and that are unsustainable for a state that will soon face more bills than it has the money to pay.
The commission has done an invaluable service with its intelligent blueprint for fiscal sanity. Let’s hope the new governor has the fortitude to do what it makes clear is needed.