CT DEBT AND DEFICITS
Many of us have heard that CT has the "highest per capita taxation". This erroneously leads our residents to believe that this translates into the idea that we also pay the highest taxes in the nation and other states to believe that we must all be rich. Both are incorrect assumptions. Many people do not fully understand what is debt and what are deficits. Imagine you have a home with a mortgage and a car with an auto loan. These are your long-term debts. The state also carries these long-term debts as well, but are not absolute indicators of solvency or insolvency.
It asks the question, "can our incoming revenues can carry that debt load?" Like individuals, the amount of debt we can carry is dependent on our states economic capacity and incoming revenues. In money terms, it is called "debt to Gross Domestic Product (GDP)". The wealthier states can carry a higher debt load as much as an individual with a higher income can carry a higher debt load. The deficits are the monthly or yearly budget shortfalls in meeting our spending capacity. Can we pay for the grocery and heating bills without charging (deficits)? If we cannot, how long will it be before we can catch up?
CT State Retirement Burdens
There have been many concerns expressed over CT's state retirement funding and their impact on budgetary obligations. Lawmakers have taken several critical steps to improve our funding status as well as have mandatory stress tests to ensure both the solvency of the funds and maintain a workable budget. Pew performed our first stress test in December 2018. " The analysis found that although reforms to SERS had improved the system’s fiscal health, additional changes to the teachers’ system were still needed to avoid substantial cost increases that could limit the money available for other state spending in the event of a downturn." See the full report here.
The State Pension Funding Gap: 2018
"At $1.24 trillion, the 50-state pension funding gap—the difference between a state retirement system’s assets and its liabilities—improved slightly in 2018 primarily due to strong investment performance. However, after a decade of economic recovery, the aggregate pension funding gap remains historically high and could increase by up to $500 billion based on market returns through March 2020, including recent losses related to the COVID-19 pandemic. In addition, the disparity between well-funded and underfunded state retirement systems is greater than it has ever been." See how CT compares to other states.
TRENDS IN CT DEBT AS A PERCENTAGE OF GDP
CT TAXES
"At the state level, Connecticut ranks 18th in the nation in state taxes collected as a percent of
personal income (6.48 percent)
43. However, of the ten comparator states, only New York has a
higher state tax burden than Connecticut. Factoring in local government taxes moves Connecticut
higher, to 13th in the nation (11.3 percent), below three comparators, New York, New Jersey and
Rhode Island. Based on this analysis, Connecticut’s tax level is relatively high, but not as high as
some comparators"
Federal Tax Dollar Returns
We always want to know what we get for what we give. This is a graph from WalletHub 2017 data for The Atlantic.
For the full story from The Atlantic help yourself.
CT Population Growth
There are many conversations about the CT population growth. Here is the CT history of our population and other demographics. We are one of the oldest states in the nation, with an aging population with low birth rates.