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Unless something changes, Connecticut's fiscal obligations will over the long term prove too great and its debt commitments too steep to sustain without massive tax increases and/or cuts in services.
Connecticut's pension fund ratio is only 53.5 percent, meaning it has about half the cash and investments it needs to meet its obligations to current and future state retirees, according to the U.S. Census Bureau Annual Survey of Public Pension. Only two states have pension funds in worst shape. The state's debt sits at $8,500 per person, according to the Tax Foundation, the fourthest high per capita debt obligation in the country.
Add in the obligations to provide services to the needy, maintain roads, staff prisons, fund the court system, provide for education, and it becomes apparent something has to give.
Raise taxes too high (many would argue Connecticut is already there) and business will decline, and so too tax revenues, creating a downward spiral. As it is, Connecticut's income tax system is particularly vulnerable to economic booms and busts.
Meanwhile, spending to meet pension obligations and pay off debt threatens to increasingly crowd out investments in education, transportation, municipal aid and other services.
Dealing effectively with this situation, while avoiding periodic budget crises, is arguably the biggest policy challenge Connecticut faces in the coming decade.
This is why a Friday workshop, presented by the Eastern Connecticut Chamber of Commerce and other sponsors, should prove so interesting. The topic is, "Fiscal Sustainability: Critical to Connecticut's Growth."
Participants will include the governor's top fiscal adviser Benjamin Barnes, secretary of the Office of Policy and Management, and reporter Keith Phaneuf, who reports on budget matters for The Connecticut Mirror.
It runs from 7:30 a.m. to 10 a.m. at Groton Inn & Suites. For information on attending, visit the chamber website at chamberect.com or call 860-701-9113.