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For decades Connecticut’s elected officials have not been very good at solving the state’s major problems, which remain much the same as they long have been. But as shown by the latest report from the Yankee Institute, written by Ken Girardin, assisted by the Reason Institute’s Marc Joffe — “Warning Signs: 2021 Update” — the state’s elected officials have been expert at concealing problems. For a while they were even good at making Connecticut’s looming financial disaster seem to disappear even as it was worsening.
State government’s unfunded pension and medical care liabilities for its employees and retirees, lately estimated as nearly $100 billion, are now acknowledged even by Democrats, the party of the government employee unions. But the Yankee Institute’s report calculates that the similar unfunded pension and retirement liabilities of municipal governments are another $15.5 billion, with more than 40% of that burden resting where it least can be afforded, on the state’s three largest cities, Bridgeport, Stamford, and New Haven.
Cities aren’t the only municipalities with badly funded pension and retiree medical plans. The Yankee Institute report calculates a “fiscal health score” for all of the state’s 169 municipalities, and many suburbs also do poorly, including East Haven, West Hartford, Manchester, Rocky Hill, Fairfield, Guilford, Wethersfield, and Hamden, the latter having the largest per-capita municipal debt in the state.
State government is ultimately on the hook for the municipal liabilities, unless it wants to allow municipalities to file for bankruptcy — as state government should have had Hartford city government do in 2018. Instead the administration of Gov. Dannel P. Malloy induced a willfully blind General Assembly to pass legislation by which state government assumed most of the city’s debt, more than $500 million. This even had the state paying for the minor-league baseball stadium the city had just built despite its insolvency.
For elected officials the wonderful thing about pension and medical benefits for government employees is that they can be promised in the present to win votes from those employees and their unions while actual payment for the benefits can be pushed into the future, made the responsibility of officials not yet elected and residents not yet able to vote or even not yet born.
In the last several years state government has begun to catch up on its pension fund contributions, but the unfunded liabilities remain huge and at the current rate of catching up they will not be whittled down to a responsible level for many years. Meanwhile state law imposes no controls on the pension liabilities incurred by municipalities — nothing that could prevent the need for another Hartford-style bailout, a bailout to which, as a matter of fairness, every other municipality already can claim to be entitled because Hartford got one.
As a practical matter state government and the governments of the larger municipalities already have become mainly pension and benefit societies, and these expenses are crowding out services to the public. As the Yankee Institute notes, today’s taxpayers are paying for ordinary services that were delivered long ago, if then.
There are ways of stopping the cannibalization of government by pension expenses.
The state could outlaw defined-benefit pensions and state-paid retirement medical insurance for future government employees, leaving them with the individual retirement accounts, Social Security, and Medicare coverage on which most people depend. A few towns have already ended defined-benefit pensions for new employees.
State law could require government employees to contribute more to their retirement plans. State law could remove government retirement benefits from labor negotiation and set them by statute. It could require municipal pension systems to comply with conservative state formulas for forecasting pension fund growth and obligations.
But there can be no solutions until elected officials liberate themselves from the government employee unions — especially Democrats, whose party the unions own, but also Republicans, who are almost as afraid of them.
Such liberation can happen only when braver candidates agitate publicly about the unaffordability and unfairness of a system that puts the contentment of government employees ahead of all other objectives in government.
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Chris Powell is a columnist for the Journal Inquirer in Manchester, Connecticut.