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Findings, Solutions For Connecticut’s ‘Broken Cities’

January 20th, 2017 · 13 Comments · News and Events

Connecticut’s cities are languishing in poverty, crime and fiscal stress, according to a report by the Connecticut-based think tank Yankee Institute, which diagnoses the problems and offers solutions. Hartford, in particular, is in a state of crisis, according to the report. Bridgeport and some other cities as well struggle with retirement-related debt that’s stretching budgets. Stephen D. Eide, a senior fellow at the Manhattan Institute, delves into the matter.

Findings Include:

– Connecticut’s four major poor cities owe about $4.8 billion in retirement-benefit related debt, according to official estimates. Costs associated with servicing this debt are rising more rapidly than revenues, creating a “crowd out” effect in budgets. Had Hartford and New Haven’s pension costs risen at the same rate as property tax revenues over the decade prior, they would have had about $36.8 million in additional revenues to devote to basic municipal services in FY15.

– All four spend heavily on health insurance for retired workers, a benefit that has been almost completely phased out in private industry. The four cities’ annual expense on retiree medical is $120 million and the unfunded liability is $2.7 billion

– Along with retirement benefit costs, these cities’ fiscal flexibility is currently restricted for four additional reasons. First, all four now employ fewer workers than before the last recession. Declining headcounts raise questions about service quality levels and the practicality of further spending reductions. It is much easier to eliminate positions than to reduce salaries and/or benefits.

– Second, their mil rates rank among the highest in the state, and have been rising in recent years.

– Third, all four have reduced their reserves and/or increased their bonded debt burden over the last decade.

– Fourth, poverty is highly concentrated in these cities. Since 1970, their populations have declined and the number of people living in poverty has risen. The impoverished, weak character of their local economies means both that they have limited ability to absorb tax increases and are unlikely to grow their way out of their debt struggles.

– Though all four cities are fiscally weak, Hartford stands out for its high mil and poverty rates, and its escalating deficits.

Full report here.

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13 Comments so far ↓

  • Jimfox

    Let each city establish its own toll stations, with a 50/50 split with the DOT.
    Bridgeport has a daily traffic flow on I-95 of over 165,000 cars and trucks per day. Merritt Parkway has somewhere around 110,000 cars per day, at $2 a toll that’s $550,000 per day, what the fluck are we waiting for, Trump?!
    Put the toll stations on the west end of the city and knock down those old factories.

    • Jimfox

      A $2 toll can generate over $90 Million per year just for Bridgeport.

    • John Marshall Lee

      Highways do not require toll booths anymore. Cashless systems process EZPass accounts and bill people based on plate ID. Big Brother has many ways to use cameras as parts of systems.
      But more money going into systems with little or no operation of checks and balance is not the sole answer, either. What combination of addressing our agreed-upon priorities, managing effective programs for efficiency as well, and setting out balanced budgets that operate that way in practice will we stumble upon and embrace? Time will tell.

    • barry soitera

      No tolls!!! Just another tax.

  • Ron Mackey

    The Manhattan Institute for Policy Research is an American conservative think tank.

    • Ron Mackey

      The Yankee Institute is a conservative think tank.

      • Jennifer Buchanan

        Yes Ron, they are both conservative, and when it comes to fiscal policy and our tax dollars, I for one prefer the course of conserving, not wasting and destroying an asset.

        • Jimfox

          Jen, come home! Black Rock needs you!

        • Ron Mackey

          Jennifer Buchanan, good morning, I hope everything is well with you. You said, “I for one prefer the course of conserving, not wasting and destroying an asset.” I also agree with that concept but that’s not what the Republican Congress gave us. People don’t have to like former President Obama but he was left a financial disaster. The 2008 financial crisis is considered by many economists to have been the worst financial crisis since the Great Depression of the 1930s.

          Jennifer, I found a few things in The Loans were doled out to “subprime” borrowers with poor credit histories who struggled to repay them. These risky mortgages were passed on to financial engineers at the big banks, who turned them into supposedly low-risk securities by putting large numbers of them together in pools. Pooling works when the risks of each loan are uncorrelated.

          Low interest rates created an incentive for banks, hedge funds and other investors to hunt for riskier assets that offered higher returns. They also made it profitable for such outfits to borrow and use the extra cash to amplify their investments, on the assumption the returns would exceed the cost of borrowing. The Fed made no attempt to stem the housing bubble, regulators asleep at the wheel. The collapse of Lehman Brothers, a sprawling global bank, in September 2008 almost brought down the world’s financial system. It took huge taxpayer-financed bail-outs to shore up the industry.

          Jennifer, now add that to the Bush tax cuts plus two wars that were not paid for so that cost was pass on to future taxes. Obama had to deal with over 800,000 a month in jobs lost in America. These were the conservative ways the Republicans gave America.

          • Jennifer Buchanan

            Hello Ron, and good morning to you! There are a few details missing from your narrative. True fiscal conservatives are on record for getting the cost of the war on the books, they were ignored. I was a mortgage loan officer during the meltdown, there were many responsible and ethical banking officials both sounding the alarm to federal government officials, and putting their lending rules and regulations in place to protect their shareholders. True conservatives set out to save, protect and keep assets. In the cases you cite, true conservatives were ignored for both personal profits and security based on faulty information and reasoning. More than anything I wish for policy and practices to be in place so you and your fellow public employees have the guarantee what was promised to you is attainable.

  • Jeff Kohut

    The solution is real (dramatic) tax-base growth in the context of massive, local job creation, the same prescription for the restoration of the economic health of our national, house-of-cards economy (which currently rests on a foundation of debt and money manipulation that is perpetrated/sustained via the exploitation of global capital/resources and labor exploitation by the US and other “developed” nations).

    In regard to Bridgeport; we also need to think about pushing for statutory authority to tax certain non-profit-owned property in Bridgeport, especially SHU property and other institutions that massively exploit and stress our services and infrastructure while not having their legal location credited to Bridgeport. (The Police OT budget and ability to effectively police high-crime Bridgeport neighborhoods are negatively impacted, to a very significant degree, by the uncompensated demands of SHU dormitories/facilities in Bridgeport.) This situation of uncompensated non-profit exploitation of our services and infrastructure contributes in no small way to Bridgeport’s financial problems. Beyond taxing certain non-profits, the state must pass legislation for full PILOT compensation for social service operations, et al., in Bridgeport and other cities.

    We cannot bean-count our way out of our massive financial dilemma, nor can we make our compensation packages any less competitive for public-service employees, especially in regard to first responders and highly-trained/educated professionals.

    We have to grow our way out of our fiscal dilemma while at the same time not allowing non-profits and even other municipalities to get a free ride from our services and infrastructure (while, in the latter case, actually facilitating theft and diversion of our tax base by way of access to our infrastructure in the absence of tax-base sharing).

    Basically; we have to stop being passive and stupid in our municipal development and business policy. Ditto for the State of Connecticut and its urban centers, and even for the US. (While Trump might present an unattractive, scary picture for our country in some ways, at least he’s not talking in terms of the stupid economic policies that got the US and so many of its urban centers in the untenable fiscal/socioeconomic bind we’re in now.)

  • Tom White

    Lennie, thank you for sharing this with us. It is a sobering report and reflects a trend of many years in Connecticut. We have a State and Municipalities that are run by government employee unions that feel they have given back all they will. To them, the only solution is to generate more revenue. To the Democrat Connecticut legislature that means tax and spend.
    Malloy’s ‘deal’ with state employee unions to extend the timing of state (taxpayers) contributions to pensions simply ‘kicks the can down the road’ and perpetuates a system that cannot be sustained.
    As for the Obama administration, he had the option to simply print more money rather than seriously tackle the root cause of problems, in doing so, increasing the national debt to record levels.

    • Frank Gyure

      Ronald Reagan left office with a greater national debt than when he assumed office. George W. Bush left office with a greater national debt than when he assumed office. Indeed, Republicans have a great record when it comes to reducing the national debt.

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