Report: Connecticut ranks dead last in taxpayer burden
(The Center Square) – Taxpayers in the Constitution State have the highest tax burden in the country, according to a new report on the state’s financial health.
Truth in Accounting (TIA), a nonprofit organization that has been collecting data on the financial health of states for more than a decade, released its annual State of the States report Tuesday showing that taxpayers in Connecticut have a taxpayer burden of $62,500 each, ranking dead last in the country.
The organization compiled the report by evaluating state governments on their state’s debt versus state revenue.
Connecticut, which ranked 48th last year, has a total debt of $79.6 billion, according to TIA’s calculations, as the debt burden increased by more than $10 billion. According to TIA, the state’s financial standing worsened by 18% during the pandemic.
TIA reports the state’s financial situation is dictated by unfunded retirement obligations combined with growing promised pension benefits.
According to TIA, Connecticut sets aside 43 cents per every dollar on promised pension benefits and just 5 cents for every dollar on promised retiree health care benefits.
“The state was assuming they were going to earn 8% on that one dollar to pay that benefit,” Truth In Accounting CEO Shelly Weinberg told The Center Square. “They used that 8% in 2018 and then they reduced the rate to 6.9%. When you reduce the rate you earn less money over time, and that accumulates over time. Since you are not earning as much interest, or anticipating as much interest, the state is liable to make up the difference to pay future benefits.”
While the state did receive CARES and COVID-19 funding from the federal government, the state’s finances eroded as it could not pay its debt.
It took the state 234 days, according to TIA, after the end of the fiscal year to issue its report. TIA recommends states issue fiscal year financial reports within 100 days of the end of the fiscal year.
For fiscal year 2020, which ran from June 1, 2019, to June 30, 2020, the total debt for all 50 states was recorded at $1.5 trillion, according to the report, with pension debt being recorded at $923.6 billion and retiree health care accounting for $638.7 billion.
According to the report, 39 states did not have enough funding to pay their bills, even as a balanced budget is law in every state except Vermont. Meanwhile, just 11 states had enough money to cover their bills.
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