CMS deals blow to unions that had been automatically deducting dues from Medicaid-paid home healthcare workers
Home Care Daily highlights a report from the Yankee Institute on union deductions.
On April 6, 2016, Yankee Institute for Public Policy held a panel discussion on Connecticut’s increasing bond debt in the officer’s club of the state capitol building. Co-hosted by Democratic Representative John Hampton, the panel pulled together some of the best minds finance to debate what Connecticut’s bonded debt means for the future of the state. Joe Savage, Executive Vice Chairman of Webster Financial and Webster Bank; David Walker, former United States Comptroller General; Representative Vincent Candelora who serves on the finance committee and the revenue and bonding committee; Pete Gioia, vice president of CBIA and Eileen Norcross, senior research fellow at the Mercatus Institute at George Mason University all participated in the discussion.
Below are transcripts of some of the panels highlights and a video of the conversation.
Representative Hampton: This is not a Democratic or Republican issue. It is not a Yankee Institute issue. It is not a CBIA issue. It’s really a- a critical issue facing our nation and our state, um, when it comes to our runaway spending, and in Hartford, we have a spending problem. We have a spending problem. I don’t care what anyone else tells you.
Hampton: When it comes to fixing your roof versus buying your new pool, putting it in on the credit card, like most households, we want to fix our roof before we start paying for fun ball fields and art museums.
Hampton: And as representatives and senators, we need to be good stewards. And every day that I come in this building, I am reminded of my father, who is a physician and the Hippocratic Oath is “Do no harm.” And that’s first in my- my mindset when I come here and I know Rep Candelora is the same way. We have to do no harm to our state and we have to stop the bleeding of our runaway spending.
Joe Savage: I’m thinking about the late Senator Paul Saunges, who beautifully stated at one juncture, he said “You know you can’t be pro-jobs and anti-business.” I would take that a little further. You can’t be pro-jobs, you can’t be pro-tax revenues, and not be incredibly supportive of the incredible wealth that this state has, and making sure that its a place where people feel like they’re a part- like businesses. You know I watch it all the time. I see businesses essentially apologize for their success, and yet I was the chairman of the United Way of Central Connecticut and it was amazing to see employees- United Technologies, $25 billion of revenues came into this state and United Technologies employees put up $7 million of that; these are individuals. So this notion of Us vs. Them, is really a bad thing.
Savage: I was in Missouri not too long ago for a conference and I overheard them talking about states and the expression “C.I.C.” came up, and, you know, I said “Wait, what’s C.I.C. stand for?” “Oh, that’s easy: that’s California, Illinois, and Connecticut.” That is not the company we want to be in.
Savage: I got to tell you: at Webster Bank, if a commercial banking customer was borrowing money to pay his bill to us, as opposed to generating it from his operating cash flow… I don’t want him at our bank. That can’t be and that’s the track that Connecticut’s going down.
Savage: Representative Hampton said we have a spending problem. That is true. We also are going to have a revenue problem because people are leaving our state, and we got to think about that.
Dave Walker: I’m tired of hearing people in government, in Connecticut, say but we’re a rich state. The bottom line is this: Connecticut ranks number 47 out of 50 in relevant financial position and it also ranks in the bottom quintile regarding competitiveness. There’s a variety of factors that you consider on competitiveness but the bottom line is you’re not gonna grow this- your way out of this problem. You’re gonna have to make some tough decisions. In my view, the reason that we are where we are is three primary reasons: number one, we’ve had extremely poor leadership at the top, no matter which political party was in power; number two, we’ve had gross mismanagement; and number three, uh, the leaders in this state have caved to the public employees year after year after year, and this state has gone from a leading state twenty-five to thirty years ago, to at or near last place in virtually every financial and competitiveness category.
Walker: And we obviously have to set priorities. Safety and security comes before self-actualization the last time I checked Maslow’s hierarchy of needs. Uh, look, you know, the bottom line is this is a great state but its got serious, serious problems, and until we get a governor, whoever that is, and whatever party they’re affiliated with, who will lead, who will tell the truth, talk about the tough choices, and go directly to the people so that the people will put pressure on the legislature to make these tough choices, we’re going nowhere, because time is working against us, uh, and, and the clock is ticking.
Eileen Norcross : In other words, Connecticut has taken on a lot of debt, but the real worry are the underlying fiscal practices that seek to evade or conceal the full cost of public spending. Issuing debt to cover operating expenses is one of many similar tactics some governments, in addition to Connecticut, have used to avoid structural reforms. Other practices some states have used include pension deferrals, questionable accounting assumptions, or weakly designed and poorly enforced budget rules and fiscal rules. This is a behavior I call fiscal evasion. Once such habits become institutionalized into state practice, they harm the state’s long-term prospects by convincing lawmakers of a policy’s sustainability and concealing the costs of policy choices to taxpayers.
Norcross: Another major concern and my area of focus in much of my research on Connecticut are it’s large pension and oped benefits. The total unfed- unfunded liability for Connecticut’s defined benefit plans is 25 billion, according to the state’s own accounting. But on a market valuation basis- that is the way economists measure pension debts, is they value them like guaranteed to be paid debt, they lower the discount rate used to, uh, evaluate these pension liabilities- if we value that pension liability like a debt that must be paid, the unfunded liability is actually 76 billion. The new GASB 67/68 standards, which some of you may have heard of, are doing little to reveal the real size of Connecticut’s debt. I took a quick look at the report before coming over here and they are continuing to assume these high discount rates going forward of eight and eight and a half percent; that is they are assuming the pension system will earn eight and a half- eight and eight and a half percent on their assets, when in reality they have been earning five and a half percent. And that goes on to inform how they fund the system. This kind of accounting technique is another form of fiscal evasion and as long as accounting standards permit the suppression of the full bill, the danger remains of sustained fiscal weakness.
Pete Gioia: Right now, you know, we’re bleeding taxpayers, we’re chasing business people, particularly family business people, people who pass their entities out of the state, which is hurting the tax revenue. We’re- we’re bleeding to death our nonprofit entities. We’re clobbering our hospitals. This is not healthy stuff to do. And part of it is, if you take a look at the state budget, about 45% of it is government employee spending. And a lot of it is on things that are not for actual uh, pay and benefits for existing, but its all these huge retirement obligations, which allows, which forces us, especially since there’s unfunded liabilities with it, to spend a billion dollars more to take care of problems that we’ve already had that we’re actually still building on. So we’ve- we’ve got to do these things differently, and you know, I do think there is hope for that, you know, as long as you’ve got an executive who wants to hang tough. I think that’s there. I think there are more and more legislators who are starting to get religion on this, but there still are a lot who don’t get it. I mean, when you can have a hearing on marijuana simply because you need the revenue, when you can threaten to tax Yale University, simply because you need the revenue, those people haven’t- don’t get it. They haven’t gotten the message from the governor that there is a new economic reality, that things are different in this state, and we better change our fiscal habits.
Walker: Secondly, when you compare what we pay state employees to major private sector employers on a total comp. basis- which means current comp., deferred comp.- Connecticut is the most overpaid state in the union. The premium is anywhere from- from 21-41% over the private sector, and its all directly attributable to retirement obligations. The health- retiree health care obligations are particularly outrageous. I bought the home of, my home from Chris Shays. He’s still on the health care plan because it is so lucrative as compared to the Congress, as compared to Fortune 50, or whatever else, and he’s not alone; there are plenty up there in that category.
Walker: What’s been happening is people are trying to put a band-aid, they’re trying to treat a wound- a minor wound- when we have cancer. And we’ve got to start treating the cancer.
Representative Candelora: I think one of the things in the legislature we need to do right now is a 5 year plan. Doing the budget right now, we’re in deficit mitigation mode constantly, so we raise taxes in your off-years and then we’re mitigating, mitigating, mitigating. There’s no long-term planning. We need to force the legislature to start mapping out what five years is gonna look like, and how do we readjust Connecticut and put it on the right track, so businesses start having faith in us again.
Candelora: The numbers are so bad that we cannot tax our way out of it.
Norcross: Again, this sort of opacity in bargaining, and it sounds like a great deal- it sounds, you know, very, a very generous set of benefits. But if they are not evaluated properly, if they are not measured properly, if they are not funded properly, you are promising someone- you are not promising something that you can deliver, and I think that’s a case of even injustice against the workers and, of course, the taxpayers. So transparency would be- would be great and I think those kind of union contracts and collective bargaining should be made public.
Home Care Daily highlights a report from the Yankee Institute on union deductions.
The Connecticut Parents Union filed a lawsuit in federal court on February 20 against the state of Connecticut alleging racial quotas meant to keep the state’s magnet schools diverse are actually preventing minority students from gaining access to those schools. The lawsuit is the second of its kind making its way through ...