Connecticut Credit Risk Soars To Record High As Tax Receipts Tumble

Tyler Durden's picture

Connecticut’s general-obligation bonds are riskier than ever as plummeting income-tax collections and a $2.3 billion budget deficit moved all three credit rating companies to downgrade its debt.

 

As Bloomberg details, tax receipts for the current fiscal year ending in June will be about $451 million short of estimates from January, prompting Governor Dannel Malloy to empty the state’s already small budget stabilization fund. To help close the gap, public employees agreed to accept a 3-year wage freeze and to contribute more for their pension and health-care benefits under a tentative deal that would save more than $1.5 billion over the next two years.

As we previously detailed, The state of Connecticut has been hit hard by the double whammy of a deteriorating local economy, coupled with a plunge in hedge fund profits - as well as hedge fund managers permanently relocating to Florida - leading to a collapse in tax revenues. According to the the latest Connecticut budget released last week, the state is reeling from the consequences of sliding tax revenue from the super-rich, i.e. the state's hedge fund managers. The latest figures showed that tax revenue from the state’s top 100 highest-paying taxpayers declined 45% from 2015 to 2016. The drop adds up to a $200 million revenue loss for Connecticut.

In a dramatic, if of questionable credibility, soundbite Department of Revenue Services Commissioner Kevin Sullivan says these wealthy people are “dramatically less wealthy than they were before.” He was referring to annual income, not actual asset holdings, because judging by the all time high in the S&P, the local financial elite have never had a higher net worth.

“When you look at the top 75, top 50 ... this is a group of wealthy people who are dramatically less wealthy than they were before,” said Kevin Sullivan, commissioner of the Connecticut Department of Revenue Services. “These folks, for a number of reasons, are either not realizing as much income or don’t have as much income.”

Just don't expect tears from the general public. Sullivan also noted how several international hedge funds have recently failed, resulting in “significant retrenchment” from investors. That drop in tolerance for risk brings smaller margins and ultimately less personal income for the state to tax, he added. It's fascinating how the Fed's central planning, superficially meant to restore "confidence" in a rigged, manipulated market is having such proound and adverse 2nd and 3rd order effects on state budgets.

Sullivan also acknowledged part of revenue decline can also be attributed to “a handful” of wealthy individuals who moved to more tax-friendly states — an issue frequently raised by legislative Republicans, who argue Connecticut’s tax policies encourage the state’s super-rich to move out.

None of this should be a surprise... it's no wonder more people than ever are looking to leave the increasing tax burden of this troubled state?

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LetThemEatRand's picture

"In a dramatic, if of questionable credibility, soundbite Department of Revenue Services Commissioner Kevin Sullivan says these wealthy people are 'dramatically less wealthy than they were before.' He was referring to annual income, not actual asset holdings, because judging by the all time high in the S&P, the local financial elite have never had a higher net worth."

See, this is real journalism.  ZH runs the story and includes the quote, but also points out why it is ridiculous.  NYT, WaPo, CNN, FOX, etc could learn something.

WorkingFool's picture

First rule of being a parasite - don't kill the host. DemoRAT is just another word for Marxist. Armerican believe is individual Liberty. The RATs believe in slavery. It's toast time for another American Revolution! Nathan Hale a true patriot from Connecticut said "I regret that I only have only one life to give for my country". From the selflessness of that sacrifice to the entitled Marxist bullsshit we hear every fucking day. Fuck these RAts

Bigly's picture

I will second that emotion

The BigPram's picture

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Vatican_cameo's picture

 

No one is "Feeling the Butthurt" of Hildebeast losing the election more than Resident Shithead Governor Dannel Malloy.  Now he gets to deal with the huge mess he created.  No Cabinet position for you Loser.  Looks like the entire "Sandy Hoax" scam was all for naught, because you're not going anywhere (except maybe Hell).

Tapeworm's picture

Sorry about being late to the party and not seeing your missive before I posted somthing similar,

 I was interested in parasitolgy as a kid, hence my handle.

 The parasites now have their dreams come true. Oh, and be sure to hire a UConn graduate.

Tapeworm's picture

It is bad enough in Wisconsin where the gobmint taxes the living shit out of the few manufacturers are left.

 Connecticut has all of the worst policies of any state. Why would anyone with more than a coulpe of nickles want to live there?

 Oh, yeah, generous welfare scalping of the producers. The parasites have devoured their host. At least tapeworms are smart enough to not kill the host.

 Also, remember the poor bastards that died in Viet Nam, and for what?

 Go DC GO.

silverer's picture

The problem with Connecticut is that they aren't spending enough. Hey CT politicians: Promise more, Spend more! Happy happy joy joy.

SoDamnMad's picture

Al-a-Luya, Al-a-Luya, Alaluya, Alaluya. Praise be the spenders.

max2205's picture

Chicago with trees 

Delving Eye's picture

Far from it, and I've lived in Connecticut my entire life. I remember when Chicago was a city I would have been happy to live in. No longer. I don't think CT is heading in that direction.

RovingGrokster's picture

Chicago's a city. Have you walked around your cities at night?

GotAFriendInBen's picture

Puerto Ricans move to CT?

AllStarInvestor's picture

Increasingly ridiculous state regulations and tax games have driven dozens of asset management businesses out of the state - Malloy and Co. caused this.

Delving Eye's picture

I have lived in CT all of my 63 years and you are absolutely right. Doesn't help that as a Trump supporter, I am in the minority, which means Democrats' waste will continue in Hartford. To make up for the tax shortfall there, our Fairfield County town has been informed that instead of getting its annual state funding for schools, roads, etc., the town must now pay $4Million to the state. Just because. Sad.

Juggernaut x2's picture

If the Republicans in CT are like the ones here in IL then they are barely discernible from the Ds and love to hand out money to the cops, firefighters, civil servants, etc

Bigly's picture

There are a couple who are not as whipped but almost all are RINOs, but dems have had a lock on everything for way too many years 

Arnold's picture

Following the Massoftwoshits model is not healthy.

nightshiftsucks's picture

Soon the Govenor will admit to the Sandy Hook lie to get a bailout from Trump.

Catahoula's picture

Maybe the Connecticans have had enough of high taxes. Burn it down!

Born2Bwired's picture

was a great place forty years ago, like much of America.... so Sad!

Delving Eye's picture

It still is. Just not Hartford, Bridgeport and New Haven -- but that's nothing new.

All the Nutmegger naysayers should spend some time here. The vast majority of the state is still lovely. I wouldn't live anywhere else.

Bigly's picture

+1

I certainly do not live here for the commie statists who surround me.

It has so much going for it. And everything that is wrong with it is 100% made by the bad politics over the last 2 decades.

Bad politics does not negate the natural beauty of the state

IridiumRebel's picture

Lived there for four years. It's gorgeous. I'd have gladly stayed, but getting the shit taxed outta you can only go on so long. I hope folks wise up and run the liberal scum out. The post Sandy Hook gun grab was the final straw.

It's a beauty. It wises up and ousts the lefties killing it and I'd return.

Buckaroo Banzai's picture

Thank you, Lowell Weicker, you fucking faggot.

RovingGrokster's picture

Why is it that the turncoat, half-assed, Republicans in name only, do so much more damage than most Democrats?

gswifty's picture

Yup. Still waiting for the repeal of the 'temporary' income tax. Fuck Connectishit,...the constipation state.

Bigly's picture

Right. And i want to bolt. But then i look at my ppty. It is like living in a PARK, not some prefab home no land kinds of places. I have 5 golf courses, 2 are spectacular within a 5 mile radius.  Stare parks. Good medical, restaurants, farms, great schools, music venues... You can go on.

But yes taxes here are horrendous. And i detest the cucked beta males and sjws. These 2 things are the depressing pieces to life in CT  (and being sick of winter by February)

RovingGrokster's picture

Hmmm - just wait a while.
Consider the sustained exodus from NJ caused by crime and taxes. Yeah, beautiful in parts, but nobody can afford to live in the nice parts, and nobody wants to live in the cities.

Bigly's picture

If the shtf only true major geographical isolation MAY help.

And if this comes to pass, instead of relocation to another state, i am thinking another hemisphere after i go dredging 

RICKYBIRD's picture

I live in the "Quiet Corner", the North East part of CT. Still wonderful here. When I moved here in '86 it was like going back to the America of the 1950's. I bought a house here then for $50,000! I can tolerate taxes if it will keep the riff raff out. This area voted Republican in the last election.

Bigly's picture

Ricky, Iridium and Delving....

Option besides bolting: find likeminded, dig in and fight back.

40% of the state did vote trump, people have not handed in their guns post sandy hook.

I think there is just more weeding to do than in some states 

Delving Eye's picture

Yup, I have no intention of leaving. Pluses still outweigh the minuses. My house is modest so my property tax is "affordable" -- and it pays for a lot. For instance, over the past 22 years, I've had 6 different (new to town) neighbors (we have an acre apiece) who've had barking dogs that barked all day long. I called the animal control guy in town and he politely took care of the matter. These newcomers had to be schooled in how to behave. He taught them. Where else are you going to find that? Well worth the tax bite for peace and quiet.

roddy6667's picture

I lived in Ashford, Eastford, and Woodstock for 15 years. Later in north central CT. At age 65 bolted from the whole country. The big cities are dragging the whole state down.

SantaClaws's picture

Adjacent Rhode Island is going down next.  Its utterly clueless Governor, Gina Raimundo -- a local version of Hillary Clinton -- similarly assumes there is no limit to the taxes government can impose and bad ideas on which to waste the proceeds.

 

RovingGrokster's picture

I thought she'd persuaded the state employee unions to contribute more to their benefits - time to read up on what happened after she became governor - thanks

RICKYBIRD's picture

I just read in my local CT paper that the RI electronic benefits computer system doesn't function. This is after they spent almost $500 million on it. Shades of Obamacare, for which Michelle's college BFF was tech developer!  RI is a basket case. BTW RI's economic development director is Stefan Pryor, who left CT in disgrace after screwing up the CT Department of Ed, of which he was head. Failure is a lib resume enhancer.

SantaClaws's picture

The feds told RI not to put the new computer system online before doing a beta test.  RI put it online anyway and it crashed.  Still not operating properly.  Many people dependent on government checks, many of the poorest among them, haven't received them for months.  But those people don't matter to Raimundo because they don't make political contributions.

Pryor's not doing any better in RI.

SantaClaws's picture

Raimundo sent much of the employee pension fund assets to expensive NYC and other hedge funds, apparently in exchange for some campaign contributions.  According to Forbes' Edward Siedle, who has done a great deal of excellent investigative work on this, Raimundo's bizarre actions have cost the pension funds some $500 million to date, and counting.  http://www.providencejournal.com/news/20170429/pension-allegations-again..., https://www.forbes.com/sites/edwardsiedle/2015/12/16/will-sec-fbi-and-do...

Before she was Treasurer, Raimundo's own hedge fund put some state pension assets into losing bets from which Raimundo is still being paid personally.  She sees no conflict there.

Her latest ideas -- toll the roads for trucks, at great expense, to generate more money to fix the roads and bridges (of course, the appropriated road and bridge repair money was diverted).  And now she wants to provide free college for all and to spend millions of state dollars on a private minor league baseball stadium owned by millionaires who don't need the state cash.

She'll probably next direct everyone to start planting as many trees as possible, because in her mind that's where money comes from.

directaction's picture

The entire country is crumbling, converting into a Third World garbage pile.

Seasmoke's picture

ESPN is in Connecticut too. HA HA. 

RightLineBacker's picture

May both Liberal sinkholes RIP.

 

scoutshonor's picture

"In a dramatic, if of questionable credibility, soundbite Department of Revenue Services Commissioner Kevin Sullivan says these wealthy people are 'dramatically less wealthy than they were before.' ~~~

 

Maybe we should hold a telethon for the poor unfortunates.  Oh, I know--a go fund me page.  Get Sally Struthers to make some commercials--could have the poor billionaires out on the deck with simulated flies on their faces.

 

Hey Kevin--get out more.  Spend some time with real people.  Help out at the soup kitchen.  Get back to us when you realize how completly absurd you sound.

GestaltNine's picture

I wonder if it has anything to do with the swarms of undocumented workers they let nest there over the past couple decades 

Buckaroo Banzai's picture

Bridgeport, New Haven, and Hartford are chock full of niggers. Prolly has something to do with it.

Kprime's picture

don't tell me rich folk are behaving like lower middle class and dropping out of the workforce, joining the off the grid unemployed and working for cash only?  The tax roll virus is spreading everywhere, folks just getting sick and dropping off the tax rolls.  Guess politicians should have come up with a better health care plan.

RightLineBacker's picture

Connecticut is the richest state in the U.S., as measured by per capita income (maybe was).

So the logical Progressive Liberal solution is to tax the "rich".

Obvious result, the rich move elsewhere. Surprise. Surprise.

And now the State is going broke. Surprise. Surprise.

If you need more proof that Progressive Liberals are totally insane, just look at Cali's proposed State Universal Healthcare Project - Hint: Recently discovered that it will cost much more than the State's total income.

Dream on Liberal dreamers. Or maybe just move to Chicago or Baltimore.

Always remember that Liberalism is an incurable and always fatal mental disorder.

Hence, observe that the Democratic Party is on its deathbed.

RIP Democrats & Socialists!

 

Last of the Middle Class's picture

Don't get a lot of "tax" activity with 3 generations living in each house just to pay Obamacare premiums. Just sayin.

venturen's picture

ever read about the UCONN professor retirring on $300k pension? Cops $100k pensions. Just a matter time before it fails