Connecticut's Towns Are Crying For Help: But Will Hartford Listen?

As we've pointed out time and time again, the government of the state of Connecticut is sinking into debt at a time when rising interest rates and a shrinking tax base are threatening to crush the state's economy. The primary culprit? By most accounts, it's public-sector unions, who have leveraged their enormous political influence in the state to preserve generous retirement benefits, who are  contributing the most to the present economic crisis.



Connecticut Gov. Dannel Malloy

Generous benefits have forced Democratic and Republican governors to defer payments, leaving the system dangerously underfunded.



As the Wall Street Journal editorial board explained earlier this week, Connecticut's labor laws convey many advantages on public employee unions. Local mayors say their only hope for reining in retirement costs would be for the state to change these laws. At the very least, the Connecticut Conference of Municipalities, a lobbying group for Connecticut's towns and cities, is asking that some collective bargaining rights be curtailed.

While that request - made in a solidly Democratic state - will likely trigger unfair comparisons to Wisconsin, the fact that it's even being made tells you something.

Even the Democrats know they can't tax their way out of this mess.

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Connecticut mayors grappling with rising retirement costs and sinking economies this week issued a distress signal to lawmakers in Hartford: Save us from our public unions.

The state would be in a “stronger position if we don’t negotiate for benefits,” Joe DeLong, the executive director of the Connecticut Conference of Municipalities, told a committee convened by the legislature to restore fiscal stability and economic growth. The conference of municipalities implored the state to end collective-bargaining for pensions and health-care benefits as well as limit binding arbitration when unions and local politicians deadlock during contract negotiations. This usually results in a sweet deal for the unions.

“We’re suggesting it’s very difficult in the state of Connecticut under the current labor agreements and under binding arbitration,” said Waterbury mayor Neil O’Leary, a Democrat. His town’s health care and pension costs make up 30% of its budget.

Gov. Dannel Malloy, after multiple tax increases, last year tried to close the state’s $3.5 billion deficit by shifting teacher pension costs to municipalities. Mayors warned that this would lead to property tax hikes. The legislature punted some pension payments to the future, but mayors are worried that they will eventually be required to pick up more of the bill.

That’s because state lawmakers have little flexibility to cut spending since Mr. Malloy extended collective-bargaining agreements through 2027 despite receiving few concessions from government unions. Meanwhile, tax revenues have been declining amid a sluggish economy and retirement costs are soaring. About 35% of state revenues go to debt service and retirement obligations. Connecticut’s annual teacher pension contribution is projected to quadruple by 2032.

While mayors say they’re willing to pay more for pensions, many want the ability to shift their employees to defined-contribution plans that give them control over the costs.

But will Democrats in Hartford defy their labor friends and rescue Connecticut’s underwater cities? Connecticut voters are only beginning to understand the damage from two terms of Mr. Malloy.


Bigly Cognitive Dissonance Wed, 01/31/2018 - 21:14 Permalink

I have not yet.

But regardless, they need to break this collective bargaining agreement as CT will not exist as a remotely viable state 10 years from now.

Malloy is a toxic moron. Look at that stupid expression in that pic. His face always looks that blank.

Have him declared insane and go back and undo then redo what he signed.


Edit: their disregard of our 2nd amendment makes the state motto the biggest joke: the Constitution State.  And do we even grow nutmeg, btw?  Ppty Taxes: in CT a 250k house is 6-9k a yr :-(


In reply to by Cognitive Dissonance

AGuy Bigly Wed, 01/31/2018 - 21:29 Permalink

"I have not yet. But regardless, they need to break this collective bargaining agreement as CT will not exist as a remotely viable state 10 years from now.

I suggest you leave as soon as you can. Don't go down with the ship!

In reply to by Bigly

Bigly AGuy Wed, 01/31/2018 - 21:33 Permalink

Well, there is something that literally chains me here another year or two.

That said, since I don't live in a mcmansion and my town was never bubbly, if my house goes down 10% we are not talking a fortune as a loss. 

I do have a problem if waves of any upstanding citizens of hartford want to riot in surrounding towns though.

In reply to by AGuy

what happened Bigly Thu, 02/01/2018 - 11:14 Permalink


CT has nurtured their Democratic base and has more union employees than most states.  They can be ruthless and it is even encouraged.  The more the union resists change, the greater the population decline.  The good news is they will meet the UN standards for depopulation, the bad news is young people are also leaving.

In reply to by Bigly

LaugherNYC Wed, 01/31/2018 - 21:00 Permalink

How the hell is it possible that their stated value could be higher than their market value??

Even if its all fixed income, unless they bought 100% of their bonds in the last a8 months, they couldn’t possibly all be that far off their mark-to-market. Literally EVERY ASSET is at a value peak or near it. Stocks, all record highs, everywhere. Fixed income - the 10 year at 2.70 is well below its 20-year average. Real estate - at or near highs. Tech - at highs. What is going on here???

There will be a civil war in America, but it wont be between the Trumpsters and Never Trumpets. It will be between the public sector union pension piglets and the public. Their payola pensions and benefits will crowd out 100% of public services in many states in the next decade. New York is in there too, don’t kid yourself.

It could become a hot war, too. All those gym teachers with $80k pensions fighting people who want their garbage picked up and the cops on the corner. Gonna be funnnnnnn

FoggyWorld AGuy Wed, 01/31/2018 - 22:05 Permalink

Same thing happening in New Jersey.  Friends and families of politicians are the only ones who are guaranteed heaven at the expense of others.

And when they retire young at say 55, they leave here and run to states down south where those huge pensions (plural in many cases) will take care of them forever.

In reply to by AGuy

LetThemEatRand Wed, 01/31/2018 - 21:04 Permalink

I can only say that it is extremely appropriate that the home state of so many bankers and insurance executives who live in lavish luxury there, is on the edge of bankruptcy.  Canary in the coal mine.