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originally posted by: hopenotfeariswhatweneed
a reply to: ketsuko
So if this does happen, what happens to all those peoples retirement funds, do they just say bad luck moneys gone suck it up ?
Connecticut faces an outmigration trend in which higher-earning individuals are leaving the state, with Florida being one of the primary beneficiaries. According to IRS data, from 2011 to 2012 4,560 Connecticut residents moved to Florida, taking with them $1.3 billion in income, an average of $285,000 per person. Florida, with no income tax, has been attracting wealthier individuals as Connecticut passed two of its largest tax increases in history in 2011 and 2015. Notably, Florida has siphoned off some of Connecticut’s wealthiest people. In 2015, hedge fund manager Paul Tudor Jones moved from Greenwich to Florida, taking with him nearly $30 million in income tax revenue
originally posted by: ketsuko
This is just part and parcel with the threads about paying public officials in Illinois.
But despite all its wealth, Connecticut is almost in worse fiscal shape than Puerto Rico. Let that one sink in for a minute.
A state that ranks as one of the wealthiest in the nation ... is in worse fiscal shape than Puerto Rico. Why? It is nearly $75B in debt. For a state the size of Connecticut, that's a lot!
That's just the overall state. Look internally. It gets worse.
They can't pass a budget.
Lawmakers, who have been bickering with Gov. Dannel Malloy for months over how to clean this mess up, missed a July 1 deadline to pass the state’s $40 billion budget. There are currently four different proposals circulating, and Malloy predicted there won’t be an agreement until September or October.
At that point, the state will likely be operating with a deficit that could climb to $5 billion over the next two years.
Not one that won't run up way more in new debt anyhow.
Hartford is contemplating bankruptcy, and the four major cities, including Hartford, owe a combined total of $4.8B in retirement benefits payouts.
But with no budget in sight, Hartford, a microcosm of the state’s troubles, is contemplating bankruptcy. The state’s four major cities, Hartford, Waterbury, New Haven, and Bridgeport, have accumulated a combined $4.8 billion in retirement benefit obligations and may need future intervention from the state to handle its debts.
And how is the state going to handle bailing them out when the state itself may need bailing out?
And why is this? It's the same old story. Politicians can't be wise with the money.
“A lot of what is going on now could have been predicted 30 years ago,” said state Comptroller Kevin Lembo. “Revenue was flowing into state coffers but politicians never did the hard work to make sure the retirement system was funded. They did the opposite and had them underfunded.”
For 80 years the state failed to properly save for the cost of pensions promised to its public employees and teachers. Its spendthrift decisions led then-Gov. Lowell Weicker to enact a state income tax in 1991.
Soon buckets of revenues from the new tax and from the state’s passage of legalized casino gambling began to flow into state coffers. State’s leaders went on a spending spree.
And the results, while predictable, were inevitable because you can't bilk math. Numbers do what they'll do, and when you don't pay attention and kick the can down the road betting someone else will have to deal with your mess, the mess eventually comes home in a big way. Now as rich as Connecticut is, they can't handle the mess.
The Daily Beast article somewhat plays it down, but the chief driving factor for this unfolding disaster is the public employees’ guaranteed pension and benefits funds. The same as we’ve seen in Chicago and other major cities, promises were made during times of high employment and revenue with no foresight as to what the long term costs would be when all of those public servants aged out of the workforce and continued to live on for decades, being augmented by ever larger armies of workers. As is the case with government at every level, the unions negotiated sweet deals with nobody putting any thought into arguing on behalf of the taxpayer from the other side of the table. Now the bill has come due and even in a state as prosperous as Connecticut has been, the revenue stream is never enough to feed the beast.
So let's see how many dominoes are getting ready to fall ... Illinois, Connecticut, California ... and what about the cities? How many of them are just about ready to call it quits on their debt too? We've already watched it happen in Michigan with the Detroit area.
originally posted by: DontTreadOnMe
Granted these are states and not cities, but Washington refused to bail out Detroit.
originally posted by: andrew778
A huge part of it is city contracts. They pay ridiculous prices. Somewhere in southern ontario there's a park that the citizens wanted stairs built in and the city said it will cost up to 150000$ for a damn staircase! Some guy built them for 500$ and the city took them down. They're stupid with money