As I’ve written here before, the small state of Connecticut is about to go belly-up after years of Democrat golden-goose misrule. And now, it looks like the state’s malevolent stewards have run out of geese to kill:
Gov. Malloy has spent two terms treating business as a bottomless well of cash to redistribute to public unions. Now that his state is losing millionaires and businesses, he has seen the light. But the price of his dereliction will be steep.
Last month the state Office of Fiscal Analysis reduced its two-year revenue forecast by $1.46 billion. Since January the agency has downgraded income-tax revenue for 2017 and 2018 by $1.1 billion (6%). Sales- and corporate-tax revenue are projected to fall by $385 million (9%) and $67 million (7%), respectively, this year. Pension contributions, which have doubled since 2010, will increase by a third over the next two years. The result: a $5.1 billion deficit and three recent credit downgrades.
According to the fiscal analyst, income-tax collections declined this year for the first time since the recession due to lower earnings at the top. Many wealthy residents decamped for lower-tax states after Mr. Malloy and his Republican predecessor Jodi Rell raised the top individual rate on more than $500,000 of income to 6.99% from 5%. In the past five years 27,400 Connecticut residents, including Ms. Rell, have moved to no-income-tax Florida, and seven of the state’s eight counties have lost population since 2010. Population flight has depressed economic growth—Connecticut’s real GDP has shrunk by 0.1% since 2010—as well as home values and sales-tax revenues.
Include me in on the “home value” list, so I do in fact have a dog in this fight. Malloy, whose election was very likely stolen by the Democrat machines in the bankrupt sewers of Hartford and Bridgeport (where ballots miraculously fall off trucks), has picked up where the RINO (when not actually convicted and imprisoned) Republicans left off. They ought to be indicted for the willful murder of one of the few nice places to live in the northeast United States.
Mr. Malloy is also seeking $1.6 billion in concessions from unions, which would be easier to achieve if collective bargaining weren’t mandated by law. He’s suggested increasing municipal pension contributions and cutting state-revenue sharing, both of which could drive up property taxes and imperil insolvent cities like Hartford. Mr. Malloy’s budget includes a $50 million bailout for Hartford to prevent bankruptcy, which might occur in any case if Aetna—its fourth largest taxpayer—leaves.
The state treasurer has advocated “credit bonds” securitized by income-tax revenues to reduce the state’s borrowing costs. Investors beware: Puerto Rico tried something similar with its sales tax, and bondholders might not get back a penny. Maybe Democrats should follow Jerry Seinfeld’s advice to George Costanza and do the opposite of the instinct that has brought the state so low: Cut taxes.
The answer to the state’s woes is obvious: break the public unions, repeal the state personal income tax, stop nickel-and-diming the residents to death, cut “services,” thus encouraging the export of freeloaders and illegal immigrants, and close up as many sinecure departments in Hartford (pop. 125,000 — yes, you read that right) and create a far more business-friendly climate.
Speaking of climates, the Nutmeg State’s can’t rival California’s, where prosperous folks essentially pay for the weather as compensation for being fleeced and tortured. What made Connecticut boom in the 1970s and ’80s was its status as a strategically located no-income-tax state whose southwesternmost seaside towns lie just a few miles from Manhattan, whose New England villages near the Berkshires beckoned refugees from New York and Massachusetts, and whose northeastern towns are within an easy drive of Fenway Park and Foxborough.
A “moderate” Republican, Lowell Weicker, fired the first shot with a “temporary” income tax, but it’s been left to the Democrats –many of whom were those tax refugees from several decades ago — to throttle not only the geese but the goslings as well. Maybe the voters should think about throttling the Democrats next time.