Op-ed: Mismanaged finances holding state’s economy back
In a recent article published by Barron’s Financial Magazine, states were ranked based on their ability to properly manage their finances. The article combined debt and unfunded pension liabilities relative to Gross Domestic Product (GDP) to measure all 50 states, and unfortunately, Connecticut was ranked dead last.
While most other states have prevented a financial crisis by addressing their debt and other budget issues, Connecticut has remained one of the few states to have sunk deeper. The highest-ranked state on the list, South Dakota, has unfunded pensions and debt that added up to just 1 percent of their GDP. Connecticut’s, on the other hand, added up to a staggering 17.1 percent.
Many years of failed budget policies has made our state’s deficit grow wildly out of control, and the majority leadership in the legislature have yet to establish how we can fund the pensions we are obligated to payout to our state’s retired employees.
At one time, Connecticut was able to compete with our neighboring states because of our lower tax rates, pro-business policies and secure finances. Now, according to the Tax Foundation, Connecticut has the third highest state and local tax burden in the country at 12 percent of per capita income, behind New York and New Jersey.
Our state’s over-borrowing and inability to fund our pension obligations came back to haunt us earlier this year when Moody’s Investment Services downgraded our bond rating citing our state’s “high combined fixed costs for debt service and post-employment benefits relative to the state budget” and pension funding ratios that are “among the lowest in the country” at around 50 percent.
In order for Connecticut to maintain the notion that we are in fact “open for business,” we must first create an environment that is actually inviting. Connecticut’s current financial situation makes our state seem too unpredictable and too unstable in the eyes of investors. If we want to wheel-in outside investment we must first prove to investors we’re getting on the right track financially, but instead of lowering our taxes and easing the expensive mandates we force upon businesses, we’ve had to persuade outside companies with millions of taxpayer dollars and huge tax breaks to settle in our state based on the promise that they will stay and create a few hundred jobs. While I am all for job creation, I am against the way that we’re going about it. It’s simply not sustainable. Is this the only way we can attract businesses here? Is this the best Connecticut can do?
If we made Connecticut a reasonable place to do business, there would be no need to bribe these companies to stay or move to our state. We can attract more business if we just rolled back our taxes and cut the unnecessary costs we implement on businesses — its common sense.
We also shouldn’t forget how our state’s recklessness has hurt our local businesses. I have met with many small business owners in our community who have wanted to expand their business and hire more employees but decided not to while our state’s finances remain in the red and taxes remain too high. For any small business owner, taking on an additional worker is simply too risky.
It’s time for the majority in the General Assembly to understand what must be done to bring economic growth back to Connecticut. Its common sense policies that will help grow our economy, but if legislature keeps ignoring the dire financial problems we face, we may have to wait for recovery.
Len Greene is a Republican state representative who represents the 105th House District towns of Ansonia, Beacon Falls, and Seymour.