Connecticut’s Budget Issues

I am not much of an economist, but when I found out that General imgres-1Electric (GE) was moving to Boston, I knew that this would affect the economy in Connecticut, the employees of GE, and even some of the students at St. Luke’s whose parents work there. As I did more research, I realized that losing GE is the least of CT’s economic woes.

It was in June that GE first announced the proposed move on the basis of the future tax proposals. This caused growing concerns from legislators and concerned citizens. When interviewed by the Fairfield Citizen, state Rep. Laura Devlin said, “GE means so much to our community and is a direct hit to our state’s economy” Devlin was not exaggerating. According to the Connecticut Department of Labor, GE is in the top 100 employers of people in Connecticut. The same article stated that there are approximately eight hundred employees that work at the Fairfield location. It is difficult to determine exactly how many of those employees will relocate– nevertheless, losing its highest taxpayer will certainly take a toll on Fairfield. Many residents are cautiously optimistic about the future.

Now we move on to the why of the situation. What caused GE to move its headquarters from Connecticut? When announcing the move, GE Chairman and CEO Jeff Immelt said “GE aspires to be the most competitive company in the world…Today, GE is a $130 billion high-tech global industrial company, one that is leading the digital transformation of industry. We want to be at the center of an ecosystem that shares our aspirations.” The First Selectman of Fairfield pointed to the demand for a different pool of employees– perhaps the company wanted to look for a location that better suites the company’s key employees (millennials) especially considering the profitability of the digital tech industry. The only observation that contradicts this opinion is that GE seems to be taking many of its employees with them. Other people blame both local and state officials. Some also blame the high taxes in CT. However, legislators argue that Massachusetts has higher overall taxes. On the other hand, Massachusetts does have lower corporate income tax rates.

GE’s relocation announcement would not be as worrisome if Connecticut’s budget deficit had not been announced around the same time. Economically, CT is a difficult state to live in. According to USA today, Connecticut has the third highest tax burden in the nation. “Connecticut residents paid just under $7,000 per person in 2010, the highest amount in the country… The cost of living in Connecticut was higher than in all but five states and property taxes were the second- highest in the country per persons” (USA Today). With such high taxes, it would be expected that we wouldn’t be in such rampant debt, however recently it was announced that the budget deficits from the next two years will total about $500 million.

A budget deficit is a gap between the amount of money in the budget and the amount of money spent by the government. That money is added to the debt which in Connecticut’s case is about $44 billion. To put it in simpler terms, this means that there is about $12,000 of debt per citizen. Governor Dannel Malloy will present his proposed budget adjustments to the General Assembly on February 3rd.

These statistics are incredibly alarming. Clearly if Connecticut continues to spend more than it make we will have a crisis situation. Our current path is unsustainable, but the solution is by no means clear to any party. The loss of General Electric will be severely felt by Connecticut as a whole and specifically, Fairfield Country.
–Claire Wilson, Staff Writer

Posted by on January 25, 2016. Filed under School News. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry