CT’s UNFUNDED PENSIONS – PART III

“CT Public Sector Wage Increases: What About the Taxpayer?”

Unfortunately, most of us have been the man in the cartoon.  Sometimes we get a raise; sometimes we don’t.  Sometimes we even get laid off and our salary disappears completely, at least for a time.  Private sector wages don’t generally go up every single year, year after year.

That’s why the state of Connecticut can’t afford to continue increasing wages every single year for state employees.  I wish we could, but the Legislature is raising public sector wages faster than the taxpayers’ (like the guy above) ability to pay for it.  

It’s financially unsustainable.

And yet, that is what is happening. In the past 6 years, CT state employee wages have risen every year compounding to 33% growth.  And this year, the union agreements proposed continue increases through 2029 - for a compound increase of almost 60% over 10 years.   CT state employees are already the #2 highest paid in the country.  With the raises proposed, CT will be #1.

What’s more, state employee wages set pensions. Every time there is a pay raise, state employees’ pensions are higher in perpetuity.  Finally, add to this that CT state health benefits are also the #2 most generous in the country for current workers and #1 for retirees.

Continuing public sector wages increases for four more years is especially problematic because CT isn’t properly funded to pay the wages and pensions we ‘ve already promised.  Our state has the highest debt burden per taxpayer of any state in the country (tied for #1 with NJ), and our pension plan funding ranked #46 out of 50 states. 

So, how can we get our financial house in better balance? CT should stick the Fiscal Guardrails and continue paying down pension debt (the majority voted to violate them by approx. $2 billion last year).  Let’s create a more business-friendly regulatory framework to attract business and increase corporate tax revenue.  Finally, let’s freeze CT state employee wages for 2 years. Reports suggest that while public sector wages grew 33% in CT, private sector wages grew 23% over the same time frame. A temporary freeze could give the private sector taxpayer (above) time for his/her wage increases to catch up to the state’s wages for which he/she is responsible.

CT public sector wages and benefits are the largest component of our entire budget. I believe that state employee wages should continue to increase – but only if we can answer the question: can the state – i.e., the taxpayer - afford it?