Odd how high taxes can lead to a financial crisis…
From Fox News: While Illinois Opens a New Window. Connecticut has been under the microscope for its $15 billion backlog of unpaid bills, multi-billion dollar pension crisis and paralyzing political polarization, it is not the only state facing pressure to pass a spending deal by June 30.
The nation’s wealthiest state, Connecticut, is also facing a series of challenges as it remains unable to strike a budget deal with the new fiscal year approaching on Saturday. It is likely the state will enter the new month without an approved two-year budget, but a so-called provisional “mini budget” is still on the table. This last-ditch option includes $300 million to balance out spending cuts the state would be prompted to make in order to keep up with the deepening deficit.
Revenue shortfalls in the state register around $450 million for the current fiscal year alone, while estimated deficit totals are projected to clock in near $5 billion for the 2018 and 2019 fiscal years combined, according to The Connecticut Business & Industry Association. Debt outstanding levels and unfunded pension liabilities relative to revenues are among the highest of any state in the country, Moody’s Investors Service said in May.
As previously reported by FOX Business, income-tax collections are projected to fall Opens a New Window. in fiscal year 2017 for the first time since the recession.
Connecticut’s financial despair comes despite the state government’s approval of one of its largest tax rate increases ever in 2015.
The three major rating firms have downgraded the state’s credit rating in response to the ongoing budget crisis. In its most recent downgrade, which landed Connecticut with the third-lowest rating out of every state behind only New Jersey and Illinois, Moody’s said “the downgrades reflect continuing erosion of Connecticut’s finances, evidenced by the pending elimination of its rainy day fund, growing budget gaps and rising debt levels.”
However, the situation could get worse still.
On Thursday, health insurance giant Aetna announced it would move its Hartford, Connecticut-based headquarters — after more than 150 years in the state — to New York City in late 2018. The company cited a lack of access to talent as one reason it was leaving its Connecticut base, and said Thursday its long-term commitment there will depend on the state’s “economic health.”
Earlier this year, General Electric (GE) announced a similar move, shipping its headquarters from Fairfield, Connecticut to Boston, Massachusetts.
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