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State’s financial situation is beyond precarious

State’s financial situation is beyond precarious

By Len Suzio

On March 5, the Human Services Committee held a hearing on a number of bills. One of those bills, SB 274, proposes providing potentially millions of dollars of funding for Planned Parenthood of Southern New England to replace federal money that Planned Parenthood had voluntarily rejected because new federal regulations under Title X forbid both performing of abortions or referring for abortions.

What made this legislation unusual was not only the state potentially supplanting federal money that Planned Parenthood had voluntarily rejected, but that all year we’ve been told that the state doesn’t have enough revenues to keep our highways and bridges in good repair. Do we really have extra money to give to an organization that has refused federal money? Or are the state’s finances truly in desperate shape and if so, why the extra millions of dollars for Planned Parenthood?

Anyone who can read a financial statement knows the state’s financial condition is beyond precarious. If anything, the year long debate about tolls featured the governor and toll proponents claiming over and over again that the state lacks the revenues to adequately fund necessary infrastructure spending. Indeed, a close examination of spending under the Special Transportation Fund 2021 budget reveals some shocking information about the costs driving STF spending upwards.

One of the large components of STF spending that is not for highways and bridges is an item called “fringe benefits” which tops out for FY 2021 at more than a quarter of a billion dollars, $253.8 million to be exact. In fact, the amount spent on fringe benefits exceeds the amount paid to compensate the combined state employees who work at the Department of Transportation and the Department of Motor Vehicles (which is also included in the STF budget) which total $250.6 million in the STF budget. We spend more money on fringe benefits for employees in the DOT and the DMV than we pay for their salaries.

Even more shocking is that “normal” retirement costs are only $19.1 million while the amount of unfunded accrued retirement costs is $156.8 million. Translated, this means the costs to pay toward retirement benefits that should have been paid for years ago, is about 8 times the cost of the “normal” retirement contributions in today’s annual budget.  The STF is burdened with hundreds of millions of dollars to pay for unfunded benefits promised to employees these past 40 years.

The relationship between “normal” retirement contributions and the contributions caused by decades of underfunding is a good example of an enormous burden placed on our current and future budgets for decades to come. And it is not isolated to the STF.

The General Fund is burdened with similar disproportionate costs. For the budget year 2021 the General Fund shows $149.0 million for “normal” cost of retirement contributions and $1.247 billion for contributions to make up for unfunded benefits. In other words, the costs associated with unfunded retirement benefits are more than 8 times the normal costs.

A graph presented in a report to Connecticut municipalities in 2019 shows the growing costs of benefit payments for state employees during the period from 2008 through 2018. The graph reveals that the cost of benefits has more than doubled in only 10 years and forecasts are for those costs to continue to increase for years to come.

Clearly, the state has a serious and growing problem. Connecticut is “hanging by the fingernails” financially, and one of the primary causes is the growing burden of funding costs that should have been paid a long time ago. With the country in a record-breaking economic expansion we haven’t been able to balance our budgets without accounting gimmicks and record-breaking tax increases during the last 10 years. The next recession spells financial doom for the state and it’s time to start preparing for it now.

Other indicators of Connecticut’s weak financial condition can be found in the state’s short-funding hospitals and nursing homes which provide important medical services for the indigent.

With the state inadequately funding other key medical services providers how can the state justify adding millions of dollars of funding for Planned Parenthood? Is there a threat Planned Parenthood would close some of their healthcare facilities and deprive women of necessary medical services? Available information indicates that Planned Parenthood operates 12 facilities in the state. But federal information shows there are 231 federally qualified health-care centers in Connecticut. So, it’s not likely that closing any Planned Parenthood clinics would have any measurable effect on women’s healthcare in Connecticut.

What else could motivate Hartford politicians? Maybe the answer can be found in the political contributions of Planned Parenthood. SEEC filings show well more than $100,000 expended by Planned Parenthood Votes went to Democratic candidates in the 2018 legislative races. Apparently, “one hand washes the other.”

Len Suzio is a former state senator.

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