In the face of mounting deficits after years of unsustainable policy, Democratic Party leaders appear to have made a shift, albeit one that has turned their most ardent supporters into some of their harshest critics. “Hopefully the governor won’t do any more layoffs,” one member said. “Stop building so much stuff,” he added. “They’re spending money. They’re renovating things. They have to stop spending money that way - foolishly.”
When people think of a major city declaring bankruptcy the city of Detroit often comes to mind with its sky-high crime rates and areas of urban wasteland. But as more and more cities like Hartford find themselves in impossible financial situations, sometimes filing for Chapter 9 can actually be the best alternative. If the city could prove it was insolvent, what would a Hartford bankruptcy look like?
At the Department of Transportation’s training facility in Newington massive sheets of paper are taped to the walls and lined with blue painter’s tape and dotted with multi-colored post-it notes and cut-out paper stars. In the room are perhaps ten employees with the Office of Early Childhood Development. There is a table with snacks of Goldfish crackers and bottled water. This is a Kaizen training session. Part of Connecticut’s LeanCT program aimed at making government more efficient.
This year we’ve tried to shine a light on Connecticut’s bonded debt, as well as our pension and retiree healthcare liabilities. When all of this debt is combined, Connecticut is one of the most indebted states in the nation. A new report by J.P. Morgan’s Michael Cembalest provides additional clarity.
The General Assembly passed a budget last week that stops driving Connecticut backward. The question is: will we take the next step and start driving forward? Last year, lawmakers passed the second-largest tax increase in state history, just five years after the largest tax increase. This year’s budget, while not good, was at least a temporary rejection of last year’s approach. It remains to be seen whether it was really a change of direction or merely a case of election-year stagefright.
Twenty-five years ago Connecticut Gov. Lowell Weicker gave a speech explaining how the income tax would fix Connecticut’s problems. He said earlier tax increases had failed because the revenue was “gobbled up in orgies of spending.” Weicker intended the new income tax as the tax increase that would break the mold and actually solve Connecticut’s fiscal challenges. Reading his speech from May 15, 1991, and comparing it to today’s budget woes suggests how far the income tax fell short.