Report: Connecticut is in a Fiscal 'Hole'

This post was reported and written by Associate Regional Editor Eileen McNamara.

A new report on Connecticut's economy paints a bleak picture of the state's financial health. 

“Connecticut at Risk: Will the State Navigate to Prosperity?” says the state has dug itself into a financial hole and needs to get out by putting its fiscal house in order, restructuring its pension and healthcare plans for state employees and undertaking comprehensive tax and revenue reform. 

The report, released earlier this week, was conducted jointly by the Comeback America Initiative and the Connecticut Center for Economic Analysis at the University of Connecticut. The researchers argue that  Connecticut wound up in its present poor financial and economic situation because of "critical missteps" that include:  

• The state's failure to adapt to changes in the global economy 
  
• It's adoption of tax and other policies that led to perceptions that Connecticut is unfriendly to business
  
• Allowing a huge growth in debt and unfunded liabilities, especially underfunded government pensions and retiree healthcare obligations. 

Other evidence of Connecticut's fiscal mismanagement is spelled out in the report, including: 

• The cost per taxpayer of Connecticut’s pensions and retiree healthcare is among the nation’s highest
  
• The state has the worst job creation of all 50 states sine 1990
  
• Connecticut has the highest achievement gap in education in the country
  
• Connecticut is tied (with Illinois) for worst roads in America. 
  

“Connecticut has a proud history dating to the Revolutionary War,” said David M. Walker, CEO of the Comeback America Initiative and one of the report's authors. “But the state faces serious financial and competitiveness challenges that need to be addressed.” 

The report offers several suggestions for improving Connecticut's fiscal situation: 

1. Connecticut must put its finances in order, especially with regard to restructuring pension and healthcare plans to make them fair, affordable, and sustainable. Putting our finances on a sound track will also require comprehensive tax and revenue reform. 
   
2. The state must take steps to attract businesses in the sectors that can grow Connecticut’s economy in the future — such as digital technology, biomedical innovation and pharmaceuticals. 
   
3. Lastly, the state needs to create a culture of transparency, accountability and transformation at all levels of government, in order to address economic inefficiencies and disparities that arise, in part, from the fact that Connecticut is one of only two states without county government.