The Tax Foundation released its annual ranking of states based on their overall business tax climate and placed Connecticut 47th in the country, besting both New York and New Jersey but falling short of other Northeastern neighbors. The rankings were based on personal income, sales, corporate, property and unemployment insurance ...
As Connecticut residents flee fiscal mess, some take their jobs with them
When Scott Blanchette, 55, and his wife move from New Britain, Connecticut, to Charleston, South Carolina, they won’t have to find new jobs, instead both of them will be able to work their old jobs from their new home.
Blanchette works for one of the major Hartford insurance companies and says those key Connecticut industries already employ thousands of people who work from home, so moving out of state does not necessarily mean finding a new job in a new place and starting all over.
Blanchette says his boss was encouraging. “He said if you have a chance to get out of Connecticut, then just go.”
They will be moving into a larger, brand new house on John’s Island. While his property taxes in New Britain approach $8,000 per year, the taxes on the new house will be approximately $1,400 per year.
Those savings will come in handy, as Blanchette says he won’t get “anything close to what we paid” for his house in New Britain. “We just have to cut our losses and go,” he said.
Blanchette notes that the weather is nicer but that alone wasn’t enough to make them decide to move. “It isn’t one thing that says we gotta get out of here, but when the stars align correctly, you look at how much money you can save and its a no-brainer.”
But Connecticut’s constant fiscal problems, rising taxes and diminishing population played a big role in their choice to leave. “You see no end in sight,” Blanchette said about Connecticut’s financial problems. “I call it the downward spiral until we turn into Detroit.”
Similarly, Edward “Jack” Dinse, also 55, and his wife finalized their move from Guilford to San Antonio, Texas, in August of 2016. Dinse also didn’t have to look for work near his new home. A licensed journeyman tool and die maker, he was recruited directly by a Texas company looking for his skill set.
Dinse says his former employer in Connecticut was struggling. He hadn’t received a raise in six years and his wife was laid off from Anthem. They struggled paying the mortgage and health insurance but he says the final straw was when they finally paid off their mortgage and found things still weren’t getting better.
“Even with one less bill, money still was going out faster than it was coming in.”
Since moving, they used the proceeds from the sale of their home to buy a new house, new truck and put money away for retirement. Edward’s wife found a full-time job with benefits as a paraprofessional in the school system.
“With our current cash flow we will be able to retire in 10 years rather than being forced to work until the day I die just to pay property taxes,” Dinse wrote in an email. “My property taxes are lower here, yet my house is over twice the square footage of what I had in Connecticut. And once I hit the age of 60, I will not have to pay the school portion of my property tax.”
Connecticut currently faces an outmigration crisis as young people, families, businesses and retirees are seeking life in other states, particularly states with lower tax burdens.
Unfortunately, that outflow may be contributing to ongoing budget deficits by shrinking income tax receipts. Last week income tax revenues came in $413 million lower than projections, driving the two year budget deficit to $4.9 billion and leading Gov. Dannel Malloy to implement a state hiring freeze.
While Connecticut has faced a net loss of population according to federal IRS and Census data, the loss has been further compounded by the fact that those leaving the state generally have higher income than those moving into the state.
Connecticut’s job growth remains woefully lower than most of the nation, and the lowest in New England. As job numbers and businesses swell in places like Texas, Connecticut may continue to have difficulty retaining human capital.
Blanchette and Dinse, both 55 years old, are part of the third largest population segment leaving Connecticut, according to a study by McKinsey & Company. Retirees and recent college graduates comprise to the two segments of Connecticut’s population that most often leave.
But residents in their age group generally have jobs and have established themselves with homes and families, making their departure more impactful for the state when they relocate.
As high-growth states more actively pursue educated, skilled employees and internet technology makes jobs more portable to other states, employees in this age range may find relocating to low-tax states easier.
The population growth in low tax states like Texas and South Carolina have also led to changes in the cultural life of their cities, adding to their appeal. Blanchette says that the cultural atmosphere in Charleston was one of the big draws for him and his wife. “You go out and you see people,” he said. “It’s not a ghost town like Hartford.”
Dinse also says that the lower cost of living in San Antonio allows him and his wife the ability to explore the area. “There are many things to do and explore here, and with gas prices at $2.17 a gallon, we can afford to explore.”
Connecticut’s cities, on the other hand, are experiencing some of the same problems facing the state. Hartford faces a major budget deficit and some of Connecticut’s major cities like Waterbury, New Haven and Bridgeport are all considered “distressed municipalities” with high taxes, high rates of poverty, state subsidies and ongoing fiscal difficulties.
But people like Blanchette and Dinse are not fleeing Connecticut’s cities, instead they are leaving places like New Britain and Guilford, not willing to bear the brunt of the state’s continuing fiscal crisis and the constant threat of more taxation.
In response to the budget crisis, some lawmakers and state employee unions are calling for another round of tax increases.
The idea has been roundly rejected by state Republicans and thus far Gov. Dannel Malloy has said there will not be further tax increases. Instead, the governor is asking for $1.5 billion in state employee concessions and warned that state employees could face up to 4,200 layoffs if a deal can’t be reached.
Previous budget deficits in 2011 and 2015 led to the largest two tax increases in state history, but those increases were not enough to make up for the rapidly growing cost of debt service payments, pension contributions and retiree healthcare costs.
But insistence by state Republicans and the governor that further tax increases won’t solve the budget problems may be too little, too late for residents who already face some of the highest costs of living in the country and have grown weary of paying more, while getting less.
“Connecticut is not making the tough choices,” Blanchette said. “You can’t keep doing things the old way.”
“What can anyone tell lawmakers in Connecticut?” Dinse asked. “They do what they think is going to keep them in office, not what is best for its citizens.”
A coalition of public sector unions in Connecticut are running advertisements on television and social media calling for increasing taxes on the wealthy and list off the names of Connecticut’s billionaires they feel should be targeted. The ads come just two months after state employees received a second 3.5 percent ...