In the two years after the 2011 tax hikes, the state lost an average of 38 people a day to other states, and $5.2 million a day in taxable income.
That adds up to 27,541 people and $3.8 billion lost over 2012 and 2013.
These numbers are from migration data released by the Internal Revenue Service, which has not released data yet for 2014. But Census Bureau data shows that last year the state lost another 13,285 people, or about 36 people a day.
Prior to the 2011 tax hikes, people left the state — but not as many, and the people leaving weren’t as rich. The average person leaving from 1993 to 2010 left with $45,000 a year. In 2012 and 2013, the average was $137,000 per person.
Why are people leaving? The obvious answer is that the 2011 tax hikes pushed people and jobs out of the state.
This year, the state isn’t feeling the pain just because of the latest round of tax hikes — as bad as they were — but also because of a very public national rebuke from one of the largest and most respected companies in the country. When GE executives said Connecticut wasn’t a good place to do business, just ponder for a moment what that did to our national reputation.
So while Gov. Dannel P. Malloy continues to express bewilderment over why the state has never fully recovered from the 2008 recession, the answers are staring him right in the face.
In the midst of a fragile economic recovery, Malloy pushed through huge tax hikes, and other business-unfriendly policies like mandatory paid sick leave. As he did this he gave up Connecticut’s competitive advantages over nearby states like New York and Massachusetts, and he sent a message that Connecticut was not open for business.
The reason it is important to be business friendly is because barriers to business lead to barriers to jobs, and when you put up barriers to jobs, you hurt people.
We have a large and expensive government in Connecticut. Our government employees earn more compared to the private sector than government employees in any other state. We pay more than almost every state for education, and we spend more on social services.
This is not working. Since 2008 we have been perpetually broke. And now we are in a vicious cycle of the cost of government spiraling up, while the number of people — the tax base — goes down.
In light of this, it is encouraging that Gov. Malloy has finally admitted openly that the state has a problem, and it is encouraging that he is inviting leadership from both parties to the negotiating table to talk about how to fix the problem.
What is not encouraging is the amount of snark he’s throwing around. And it isn’t just directed at Republicans, now he’s publicly belittling lawmakers from his own party. This behavior is snuffing out what little optimism people might have had that these talks could actually lead to positive change.
And we could use a little hope and inspiration from our leaders right now. That was what was missing during the 2015 budget cycle, when Malloy seemed only tepidly interested in what the legislature was doing.
Now, it seems, he’s waking up. That’s step one.
Step two: Malloy should at least try to be nice — respectful, even — to the people he’s working with while they try to fix the problem.
Step three: All of the people at the table should commit to lasting, structural changes that will put the state back on the path to sustainable budget growth.
This includes addressing the cost of state employee benefits. By asking state employees to pay more for their health care, and by restructuring the way we provide health care to retirees, the state could save millions. Our elected lawmakers could lead the way by reforming their own benefits first.
The state should also follow the lead of many of Connecticut’s municipalities and switch to a 401(k)-style retirement plan for new hires, instead of the current defined benefit plan, which, as we’ve seen, puts a significant amount of risk on taxpayers.
Malloy could save the state millions by ending prevailing wage regulations, and binding arbitration while he’s at it. He could sell state land, opening up more opportunities for private development.
And Malloy could save money on transportation by doing a better job of prioritizing which projects need funding – for example, he should stop spending money on the New Haven-to-Springfield rail line, which is costing the state dearly for very little payoff, and put more resources into Metro-North, which is falling to pieces and is critical to our economic growth.
And let’s take a second look at some new sacred cows. Connecticut does not need universal pre-kindergarten. Most low-income families already have access to a state or federally funded preschool program, and suburban families do not need this subsidy.
I agree with Gov. Malloy that another payout for early retirements would be foolish. It will only add to the state’s massive pension debt, something we cannot afford.
We should instead look at ways to streamline the current state workforce — many state employees themselves complain about the number of ‘middle managers.’ This is the time to look at what positions are absolutely necessary for providing state services.
Cost cutting is painful. There is always a short-term loss, and it hurts. But right now we have to be focused on the long run if we’re ever going to get out of this mess.
Connecticut could again be a place where people want to live and raise a family. It could again be a place where retirees are happy to stay, and where young people want to put down roots.
Hopefully sometime in the near future we’ll be talking about how many people are moving into Connecticut, instead of how many are moving out. But first, it’s time to make some changes.
• Spreadsheet: State By State Migrations Table 2014
• Spreadsheet: IRS Connecticut Outflow 2013
• Spreadsheet: IRS Connecticut Outflow 2011-2012
Suzanne Bates is the policy director for the Yankee Institute for Public Policy. She lives in South Windsor with her family. Follow her on Twitter @suzebates.
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