As if we needed more evidence, yet another sobering nonpartisan report came out last week projecting a bleak economic future for the Nutmeg State.

At the Capitol, Gov. Dannel P. Malloy’s chief budget flak Ben Barnes has, since his boss took office, consistently underestimated the size of the budget deficit and painted a rosier picture of the state’s economic future than analysts who don’t report to the governor. And partisan leaders in the General Assembly obviously have their own political agendas. They either want to make the governor look good, or in the case of Sen. John McKinney and Rep. Larry Cafero, they’re considering a run for the Republican nomination for governor next year.

Fortunately, for those interested in objectivity, there is the Connecticut Center for Economic Analysis at UConn. Economics professor Fred Carstensen heads the center and has never been shy about giving his take on where the state is headed economically (click here and here for recent examples).
Last week, CT News Junkie reported that Carstensen and former U.S. Comptroller David Walker, who heads the Comeback America Initiative, found that Connecticut has “some of the highest — if not the highest — total liabilities and unfunded obligations per taxpayer of any state in the nation.”

Those liabilities mostly take the form of state employee pensions, retiree health care coverage, and bonded debt: “Beginning in the 1990s, state employee retirement programs were expanded considerably,” the report said. “For several years now, elected officials have not made the necessary contributions to fund the promised benefits.”

Why? The answer is really quite simple. As state controller Kevin Lembo told WNPR’s John Dankosky on Wednesday’s Where We Live, the years of inadequate employee retirement funding correspond roughly with economic downturns: the early 90s recession; the dotcom bust of the late 90s; the great recession of 2008-09.

“Do we cut a vital service or underfund the pensions?” the independently elected Lembo asked.

We all know the answer to Lembo’s rhetorical question. Rather than make the tough choices about spending, elected officials kicked the proverbial can down the road.

The problem is especially acute in states like Illinois and Connecticut, where lawmakers are closely aligned with public employee unions. While Connecticut had assets to cover only 53 percent of its pension obligations in 2010, North Carolina, South Dakota, Washington, and Wisconsin were able to cover 95 percent of their obligations. The deadbeat state of Illinois clocked in at 40.4 percent, the worst in the nation.

State employee salary increases, on the other hand, have remained reasonable. The governor’s office, which in Connecticut is charged with negotiating state labor contracts, realizes that large raises would make for big headlines. So they sweeten the pot with generous pension benefits that go largely unnoticed and which do not have to be funded until decades after the ink is dry on the labor agreement.

Most state employees can retire with full pension benefits after only 25 years. Employees who work in what the state classifies as “hazardous duty” (mainly correction officers and police) can retire after only 20 years. Compounding the problem is that many hourly employees pile on the overtime in their last three highest earning years in order to artificially boost retirement benefits. Sadly, the Connecticut Mirror’s Keith Phaneuf told Dankosky he has seen no indication that lawmakers are considering ending such abuses.

I don’t begrudge the right of any employee to enjoy a decent retirement. I’m not too far away from calling it a career myself. But paying retirees not to work for 40 years is the embodiment of fiscal insanity.

One can only hope that Gov. Malloy realizes this and ultimately provides the necessary leadership. After Moody’s downgraded Connecticut’s bond rating early this year, based in part on the state’s appalling pension liabilities, Malloy proposed to achieve 80 percent funding by 2025 and 100 percent by 2032.

But it will take more than funnelling additional taxpayer money into those retirement funds. When the current John Rowland-negotiated labor agreement expires in 2017, the state’s elected officials should rein in the pension abuses, enact reforms, and hammer out a sustainable deal. Otherwise, we’ll be little better than Chicago writ small.

Terry Cowgill blogs at ctdevilsadvocate.com and was an editor and senior writer for The Lakeville Journal Company. He can be found on Twitter @terrycowgill.


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