Connecticut's State Pension Crisis

Hidden in the economic debacle created by the Connecticut Democrat Party is the ongoing state pension crisis.  According to a new report released by the American Legislative Exchange Council Connecticut is dead last in total ratio pension funding in the country coming in at 20.28% of the money needed to fund the pensions, thus being underfunded by 80%. The unfunded pension liability amounts to $32,805 per person in the state and 45.13% of Connecticut’s gross state product according to this report.
Connecticut assigns a very high rate of return of 6.9% to its State Employee Retirement System and an even higher 8% rate of return for its Teachers Retirement System.  Both funds do not achieve this rate of return as far as I can research.  With limited information to review I see that the Teachers Retirement System is seriously underfunded and their rate of return is also seriously understated.  Therefore both funds are underfunded by $70 billion dollars.  This debt will only grow in the future and is a massive part of the states yearly budget in costs.  I estimate in the near future that due to the borrowing for these pensions along with the actual annual contributions the state makes to them and the pension payouts themselves, 20% or more of the state budget will account for employee pension costs.
Governor Lamont's solution like former Governor Malloy's solution is to push payments down the roads years from now and continue to estimate the same rates of return on the pension funds. Thus future generations will be bankrupted trying to pay for these pensions for a small minority of the workers of the state.
This current pension crisis should have been addressed in this legislative session.  Obviously it was not.  Where is the money going to come from in the future?  How is this sustainable?  What is coming next a new tax to pay for the state teacher and employee pensions? 
Pushing payments years from now to pay for the funds just exaggerates the issue.  Realistic rates of return along with self funding pensions should be immediately enacted.  Negotiations need to be implemented to restructure pensions to stop these massive costs from bankrupting Connecticut.  I think many legal citizens and legal taxpayers of the state are fed up with these ridiculous salaries, pensions and benefits that paid out yearly to suffice a ruling political elite of the state.
It is time to address Connecticut's state pension crisis today.

Connecticut's New Tax and Spend Budget

Governor Ned Lamont's first budget was an extension of former Governor Malloy's budgets.
The budget increases spending and increases taxes.
There was not much new in his speech this week other than if includes his proposed toll plan taxes will increase over $2.4 billion dollars, $1 billion dollars in new and increased taxes along with at least $1.4 billion dollars in tolls.  This is on top of the $4 billion dollars plus in new and higher taxes that were enacted during the Malloy regime. 
In the Lamont budget the sales tax will be expanded to virtually anything and everything that one uses including vehicle trade ins (even though you paid sales tax already when you bought it new or used you will also pay when you trade it in), college textbooks, soda, plastic bags that you pack groceries in, and parking just to name a few.
Lamont is also is forcing some towns and cities to pay for a portion of teachers pensions costs.  For example in Wallingford the town loses over $1.8 million dollars in this category.  One will assume that for the towns that will lose money their property taxes will increase to offset this loss of funding.  These same towns and cities have no say in how teachers pensions are either negotiated and or structured. 
Tolls are an impending nightmare for Connecticut Taxpayers.  Now 50 tolling places will be installed throughout the state with congestion pricing impact rush hour traffic.  The costs of living in Connecticut will increase dramatically as the costs of tolls will be passed on to all consumer and business goods and services.  I wonder how our Governor with all of his supposed years of business experience would not think the cost of living would not go up from these tolls?  Also how do any of the studies come up with the actual revenue figures from these tolls?  How much per mile?  There are an excessive amount of questions with regards to tolls that are not being answered by our Governor.
However, Governor Lamont stated he was open to suggestions on the budget.
Here is a partial list of mine:
Cut state spending in the following areas. All newly appointed Commissioners would take a 10% cut in pay from the last Commissioner when appointed.  They would not have pensions.  Cut the non union workforce in these agencies by 5%.  (Most new Commissioners got massive raises from the old ones.)
Eliminate all longevity bonuses for state employees. 
Eliminate all non essential bonding for two years.  This would lower interest costs and improve the state bond ratings.
Privatize several state agencies including the Department of Motor Vehicles.
Connecticut with its new budget remains non business friendly and non taxpayer friendly.  It continues the irrational economic policies of Dan Malloy and enacts new burdens on both businesses and taxpayers  that will result in more economic stagnation for the state and more moves out of the state.  There is little economic logic in what we have been presented in this new yet old Lamont tax and spend budget.
By cutting spending and cutting taxes it would help stimulate Connecticut's dormant economy.  But instead the opposite occurs.  It is what we have come to expect from the Omnipotent Party Rule of the Connecticut Democrat Party.  Tax and spend.  Forever until Connecticut is bankrupt. 

No Connecticut Budget on October 21

My usual blog on a Saturday is to remind Connecticut Taxpayers that there is still no budget and there is still massive short and long term unfunded liabilities and debt.  Along with above market salaries, benefits and pensions for both state management and union workers.  Thus today, Saturday October 21, I will state the same there is still no budget and there is still massive short and long term unfunded liabilities and debt.  Along with above market salaries, benefits and pensions for both state management and union workers.
There was a budget proposal that was worked on and is being ready for a vote this coming week.  Governor Malloy has been shut out of these negotiations as both sides are tired of his fits of rage when dealing with his economically illogical proposals on his four ridiculous budgets that he has presented.  The new budget raises the cigarette tax and eliminates the local property tax on motor vehicles which will shift this tax burden to cities and towns.  It increases the amount that state teachers contribute to their pensions from 6% to 7%.  Currently according to the Office of Fiscal Analysis Connecticut has one of the highest average teacher pensions in the country at $59,000 per year for those who retired in 2016.  In 2017 it will increase more.  State teachers do not pay into Social Security but pay 6% of their incomes into their pension fund.  The pension fund unfunded liability is expected to increase dramatically over the next ten years.  The amount the state contributes to this fund will grow from $1 billion dollars a year to $6 billion dollars a year in the near future.  Connecticut also offers a state income tax break on those state teachers pensions of 50% beginning in 2017 up from the current 25% if these teachers continue to live in Connecticut.   Connecticut Taxpayers who have private sector pensions receive no state income tax exemption for their pensions.  For those individuals who work in the private sector and who pay into Social Security their tax is 6.2% on their incomes.  As an example, an individual who works in the private sector and averages $80,000 a year in income will when retiring at age 67 will only receive an average social security payment of $22,000 to $27,000 a year depending on gross life time earnings.  This figure is much less than Connecticut teachers retirement benefits.  The fiscal imbalance is enormous for Connecticut Taxpayers who work in the private sector.  If we look at other state pensions for both management and union workers the amount they receive in their pensions are well above average as compared to other states.  Some state workers do not even contribute to their pensions.  Some state pensions will add overtime and mileage reimbursements to their pensions.
This budget proposal also address binding arbitration cases for towns and cities by allowing more than just the last offers from both sides to have to be accepted in these cases.  This leaves more room for negotiations and less costly proposals to be available for cities and towns.  The budget naturally will bail out the city of Hartford to help avoid their inevitable bankruptcy.
There is a lot to like and dislike about this budget proposal.  Connecticut Taxpayers can see the incredible power the state employee unions have over how the state is allowed to spend their monies.  Connecticut Taxpayers can also see how above market salaries, benefits and pensions for both state management and union workers will eventually be the only area that the state will be spending its money on and will probably lead to our own states bankruptcy. 
How did Connecticut end up in this fiscal mess?  In my economic opinion it has been pay to play, give unions and all of the other special interest groups what they want paid for by Connecticut Taxpayers.  Make sure votes both legally and illegally are then delivered to the Connecticut Democrat Party to keep them in power.  Push any economic solutions to resolve the impending economic crisis to future unborn generations.
What a mess.
It is time to take back Connecticut.