Thursday, July 27, 2017

Some Blue State Are Having Budget Problems Despite Tax Increases

See Blue State Budget Breakdowns: Public union politics hits the wall in New Jersey, Illinois and Connecticut. WSJ editorial. Excerpts:
"Pensions will consume about a quarter of Illinois’s general fund this year. Nearly 40% of state education dollars go toward teacher pensions, and the state paid nearly as much into the State Universities Retirement System last year as it spent on higher education. 

Anemic revenue and economic growth can’t keep up with entitlement spending. The state’s GDP has ticked up by a mere 0.8% annually over the last four years compared to 2% nationwide and 1.4% in the Great Lakes region. Since 2010 more than 520,000 Illinois residents on net have fled to other states.

Democrats held veto-proof super majorities in the legislature during Mr. Rauner’s first two years. But House Speaker Michael Madigan wants to force the Governor to repudiate his campaign promise not to raise taxes and make Republicans share political responsibility for the state’s economic failures. Amid deteriorating public services, Mr. Madigan persuaded 15 House Republicans to back Mr. Rauner’s tax hike a la carte, which spared 11 Democrats in conservative districts from having to take a tough vote. The state Senate followed Monday."

"Connecticut’s former Republican Governor Jodi Rell who in 2009 raised the state’s top rate to 6.5% from 5% while doing little to rationalize spending or fix the state’s bankrupt political culture. See how well that turned out.

Democrats have since raised the Nutmeg State’s top rate to 6.99%. Revenue and economic growth have slumped as high-earning residents have decamped for lower-tax climes. Hedge-fund managers are struggling to sell their palaces in Greenwich. The legislature’s Office of Fiscal Analysis downgraded income-tax revenues this year by $1.1 billion, and sales and corporate taxes are projected to fall by $450 million.

Meanwhile, pension contributions have doubled since 2010 and along with retiree health care—most pay no deductible and a maximum $15 co-pay—make up 20% of the budget."

"The tax bill on a $300,000 home in Hartford is $22,287." 

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