Hartford Business Journal

28 Hartford Business Journal • June 6, 2016 www.HartfordBusiness.com OPINION & COMMENTARY EDITORIAL Pension fix ignored, but must not be forgotten A t the end of 2015 and start of this year several state leaders, including Gov. Dannel P. Malloy and Comptroller Kevin Lembo, offered up plans to tackle the state's bil- lions of dollars in unfunded pension liabilities, but the issue was largely ignored during the legislative session. Ongoing budget deficits sidetracked legislative leaders' attention, but this issue can't wait to be acted on much longer. The most recent data to raise alarm bells: Connecti- cut's pension debt rose to 11.3 percent of the state's overall personal income in 2013, up from 6.2 percent in 2003, according to a new analysis by The Pew Charitable Trusts. Add in retiree health care and bonded obligations, and Connecticut's indebtedness rose to $67.5 billion in 2013, giving the state one of the worst debt burdens in the nation. Meantime, another new report from George Mason University ranked Connecticut dead last among the 50 states when it comes to overall fiscal health. The numbers aren't all that surprising, but they help refocus the spotlight on the looming threat of rising pension costs on the state budget. A study published at the end of last year by Boston College's Center for Retirement Research found that if the state remains on its current path to fund- ing pensions for state workers and teach- ers, the annual budget expenditure would explode from around $1.8 billion today (out of an approximately $20 billion spending plan) to $6 billion by 2032, a scenario that would wreak havoc on the state's finances. The threat is so acute that both Malloy and Lembo within a few months of each other starting in November issued plans that aimed to ward off the coming fiscal tsunami. Malloy's plan included splitting off the 31,600 most expensive retirement system members and paying their benefits over a longer period of time through an annual appropriation in the state budget. Lembo's plan included changing the amortization method so pension payments become more predictable, similar to a fixed-rate mortgage with equal payments throughout the term. Both also proposed lowering the assumed rate of return on pension investments from 8 percent to 7 percent. We didn't and still haven't backed either plan, but we do support Malloy's and Lem- bo's desires to address the issue now, rather than continue to kick the can down the road. If you think next year's projected billion-dollar deficit negatively impacts business confidence, imagine what the threat of annual pension payments going from $1.8 billion to $6 billion will do to job growth and investment in the state. The state's long-term fiscal health was one of the concerns raised by General Electric in its decision to relocate its headquarters to Boston from Fairfield. This should be a key issue raised during the 2016 election, in which all 187 seats in the state legislature will be up for grabs. While it may not be a sexy issue, it's incredibly important and must be tackled by legislators in conjunction with dealing with projected short-term deficits. Now more than ever, lawmakers must prove they can walk and chew gum at the same time, by developing long-term solutions to problems that pose both short- and long-term threats. The state's fiscal health is at stake. n OTHER VOICES Rescue cities by letting suburbanites vote there By Chris Powell W ith state tax revenue declining, those who consider themselves big thinkers have been advocating more regional- ism, as if having towns share a dog warden will save them much as long as their municipal employee union con- tracts remain subject to binding arbitration and thus exempt from serious economies. In fact, advocacy of regionalism long has been just a cow- ardly evasion of Con- necticut's most expen- sive policy failures. In any case, try to find someone who will argue for more regionalism in the context of recent developments in Hartford. The city is beyond insolvent, with the new mayor, Luke Bronin, having to slash its budget and seek concessions from the city employee unions. Meanwhile the minor-league baseball stadium the city last year decided to build is now not only 20 percent over budget but also months late in completion. The entire home season of the baseball team seems likely to be lost. Of course few observers are sur- prised by this, com- petence not being expected from city government. Asked last week about the troubles of the Hart- ford stadium, even Gov. Malloy remarked that he had not been enthusiastic about it. But the governor could have killed it with a word before it got started. He could have declared that if Hartford, while its school system and police protection were collapsing, really thought it could afford $50 million to build a minor-league baseball sta- dium, the state administration, which covers half the city's budget, would reduce financial assistance to the city by whatever amount the city appropriated for the stadium. Instead the governor, a Democrat, was silent, reluctant to alienate the city's Democratic orga- nization, and now Hartford is out at least $60 mil- lion, and instead of a stadium and minor-league baseball the city more likely can look forward to years of expensive litigation with the developer. Meanwhile, the Hartford Courant dis- closed last week that even as the city's school administration was closing schools and eliminating services to economize, it was also paying $61,000 for having sent 33 school employees to a conference in Miami, where the school system got an award, which might as well have been for obliviousness. Such scandals are typical of Connecticut's cities and they happen because the cities long ago lost their independent, self-sufficient, polit- ically engaged middle class employed in the private sector, becoming dominated instead by the government and welfare classes. As a result, people who are self-sufficient or aspire to self-sufficiency and aspire to get their children away from the pathology of government-created poverty relocate to the suburbs, where people who pay more in taxes than they receive in income drawn from taxes want nothing to do with regional- ism, insofar as regionalism means fluff like overpriced stadiums and Florida junkets. Though this situation offers suburbanites an escape, it is hideous all the same, since it lets Hartford, Bridgeport, New Haven, and Connecticut's smaller cities remain cor- rupt and exploited dependencies, free of political pressure or incentive to change. So the regional- ism Connecticut needs should recog- nize that the state pays too much for its cities for them to function mainly as generators of pov- erty and patronage. The regionalism Connecticut needs should enfranchise suburban residents to vote in city government elections and refer- endums, since suburban residents are already paying half of city government expenses. Connecticut's cities do not have a big enough private sector to bring city government under control, to make it pursue the public interest. But if city elections were actually regional elections, city officials might behave more responsibly — and might not even think of spending money on stadiums and trips to Florida. n Chris Powell is managing editor of the Journal Inquirer in Manchester. HARTFORDBUSINESS.COM POLL Does CT have adequate affordable housing? ● Yes ● No To vote, go online to HartfordBusiness.com. Last week's poll results: Should billion-dollar hedge funds get state aid to grow jobs or invest in infrastructure? 30% Yes 70% No Chris Powell ▶ ▶ Now more than ever, lawmakers must prove they can walk and chew gum at the same time, by developing long-term solutions to problems that pose both short- and long- term threats. ▶ ▶ The city is beyond insolvent, with the new mayor, Luke Bronin, having to slash its budget and seek concessions from the city employee unions. Send Us Your Letters The Hartford Business Journal welcomes letters to the editor and guest commentaries for our opinion pages. Electronic submissions are preferred and welcome at: editor@HartfordBusiness.com.

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