GOLDRICK: Facing up to Connecticut’s “insolvency” zombie lie

Sean B. Goldrick served four years as a Democratic member of the BET. He lives in Riverside.

This article was first submitted to CT News Junkie to whose column by Terry Cowgill it responds (OP-ED Carstensen Study Suggests Legal Weed Worth Trying)

Nobel laureate economist and Times columnist Paul Krugman coined the expression “zombie lies” to refer to “ideas that should have been killed by contrary evidence, but instead keep shambling along, eating people’s brains.” Connecticut has spawned its own “zombie lies,” a number of which CT News Junkie columnist Terry Cowgill rolled out in his latest column.  Start with the zombie lies that the state has suffered “economic distress for at least 20 years.”

In 2011, Governor Malloy inherited Connecticut’s worst economic decline since the Great Depression.  Outgoing Republican governor Jodi Rell emptied what had been a $1.4 billion cash reserve, issued a $900 million “economic recovery note” that had to be repaid in five years, two pension funds were near collapse, having been not just mismanaged by Rell and Rowland, but virtually sabotaged, and a one-year $3.6 billion deficit. 

Yet over the next decade, however, Democratic governors balanced the budget every year, accumulated a cash surplus exceeding 15% of the budget, drove private sector job growth more than double that of the Rowland-Rell years, reaching new all-time highs, while reducing unemployment near all-time lows.

Cowgill roles out the GOP zombie lie that Governor Malloy enacted “punishing tax increases.” In fact, over the past decade, including eight budgets under Malloy and two under Lamont, state spending barely exceeded 1% a year. 

Indeed, as Hearst’s Dan Haar reported, all state departments saw their budgets reduced over the decade.  By contrast, state spending during the preceding 16 years under GOP governors Rowland and Rell rose nearly 4.5% a year, almost four times faster.  So much for the zombie lie of Governor Malloy’s “punishing tax increases.”

Contrary to the zombie lie that Connecticut government is bloated and expensive, Connecticut is a low-tax state.  How’s that?  According to a 2018 study by the North Star Policy Institute, Connecticut’s total government spending at all levels of government as a percentage of GDP ranks us second lowest of the fifty states.  Only New Hampshire’s government spending is lower relative to GDP than Connecticut.  Surprised?  Consider that Connecticut is one of two states without county-level government.  Connecticut’s cities and municipalities are precluded from levying sales tax or income tax, which is common in most states.  We do not levy tolls.  And Connecticut’s total effective business tax rate, according to the Council on State Taxation, is 5th lowest in the nation.  

Cowgill rolls out the zombie lie that Connecticut is either in, or on the brink of, “insolvency.”  In fact, according to Kipplinger, Connecticut ranks second highest in the nation in per capita personal income, fifth highest in median family income, and third highest in percentage of millionaires per population. 

More billionaires live in Greenwich today than there were in the entire state when Rell left office. 

Under Governor Lamont, the state has accumulated a $3.2 billion cash reserve, more than double the amount that Connecticut held before Rell cleaned out in 2010. 

Further, Pew Research points out that Connecticut was one of three states that ended FY20 with a surplus, while the Center for Budget and Policy Priorities ranked Connecticut as one of the states best-positioned to weather the Covid-19 economic downturn. And that is why Connecticut maintains a healthy credit rating from rating agencies, and why last year two agencies announced that they were upgrading our status to positive outlook.  

The “insolvency” zombie lie claims that our unfunded pension liabilities are somehow outrageous and unmanageable.  Yet, according to a report by the Office of Legislative Research, we are one of just five states that fully fund our teacher pensions entirely at the state level, which makes Connecticut’s unfunded pension liabilities for teachers pensions, 40% of total pension liabilities, look larger relative to other states.  Further, Connecticut’s Office of Policy and Management calculates that our state’s total issued debt at all levels of government relative to GDP ranks Connecticut 28th among the fifty states.  So Connecticut is not heavily indebted, contrary to the zombie lie. Cowgill wrings his hands about the need for “savings.”  But he fails to understand that Connecticut’s total government staffing relative to population already ranks as the 10th leanest in the nation, that Governor Malloy cut state staffing back to the level of the mid-1970’s, and that Connecticut’s labor agreements under Malloy are on track to realize more than $24 billion in savings over the next 20 years.  Indeed, the retirements Governor Lamont expects in 2021 come before a raft of scheduled cuts in pension benefits go into effect in 2022.

So second highest per capita GDP, second lowest government spending to GDP, cash reserves exceeding 15% of the budget, total debt roughly in the middle of the pack, both pension funds on path to full funding by 2044.  Those facts are the wooden stake that should put an end to Connecticut’s zombie lies.