The following is intended to provide readers with insight into the fiscal condition of our nation, state and towns. Accordingly, The Federation calls upon all Connecticut Government Officials to
 
FREEZE ALL PUBLIC EMPLOYEE SALARIES!

From the Federation:

There is blood on Main Street as red ink flows through the budgets of states, cities and towns across the nation. 

Connecticut is facing an anticipated budget deficit between $337 million and $550 million.  

Many employed Americans are grateful to have a job.  Therefore, it is very disappointing to read of the reluctance of the 50,000 unionized state employees to discuss further labor concessions as noted within the Journal Inquirer article captioned  Labor talks hit the rough before they even start.   http://ctact.org/default.asp?callcontent=yes&filename=Labor.htm%20%20%20&location=State_-_Budget&buttonname=State%20-%20Budget

California is anticipating a $21 billion shortfall through June 2011.  Higher deficits are anticipated by states in future years as evidenced by the following: http://www.cbpp.org/cms/index.cfm?fa=view&id=711 and

Governor Daniels of Indiana, whose state is witnessing a dramatic drop in tax revenue,  recently wrote in the Wall Street Journal, that states are facing a near-permanent reduction in state tax revenues that will require a reduction in the size and scope of state governments. 

Governor Granholm of Michigan, reduced the state’s budget 10% last year and is suggesting  another 20% cut with a reduction in state departments from 18 to 8.  Rhode Island Governor Carcieri intends to reduce municipal aid by $125 million while eliminating cost of living increases for retired teachers and state workers.   Governor Paterson of New York plans a 10% cut in aid to school districts because the $2.7 billion cut by the legislature to reduce the state’s deficit was not enough.   The $26 billion budget for Illinois is facing a $12 billion shortfall. 

Similar calls for reducing state governments are being made throughout the country. 

Scott Pattison, executive director of the National Association of State Budget Officers recently stated - The little budget tricks that states have tended to rely on in order to keep the electorate happy have mostly run their course. They've done the gimmicky things like moving a pay day across the fiscal-year date. They've drained the reserves from several funds. So if revenue doesn't pick up, the tools in the toolbox are pretty limited.

The PEW Report provides greater insight into financial instability of states throughout the country in the following report : http://www.stateline.org/live/details/story?contentId=436547

Nine of 10 finance officers polled by the National League of Cities in September said it would be difficult to meet their fiscal needs in 2010, the worst outlook in 24 years.

In Connecticut, the State’s bonded debt is the highest in the nation and property owners and businesses pay the second highest property taxes.  Approximately 80% to 90% of local budgets within the 169 towns are dedicated to Town and Board of Ed salaries, pensions and healthcare.  Some pensions are $100,000 or greater.  Healthcare benefits for the public employee and spouse far exceed the benefits of the private sector and are extended throughout retirement. 

On a local level taxpayers pay approximately 80% of healthcare costs for public employees, while many taxpayers have no affordable healthcare.  On a state level, $5 Billion in the State budget is budgeted for healthcare. 
 
It is estimated that nationally, 27 million Americans are unemployed or underemployed.   Connecticut’s unemployment rate is at 8.2%.  Since the onset of the current recession, Connecticut has lost 85,400 jobs which is expected to grow to  more than 100,000.    The 50% rise in Connecticut unemployment has resulted in insolvency of Connecticut’s unemployment insurance fund, requiring the state to borrow nearly $1 billion over the next two years

As such, the Federation is asking all State of Connecticut and Municipal Leaders to Impose a Wage Freeze for all Public Employees for 2010-2011 and 2011-2012.  We encourage all taxpayers and taxpayer groups to bring this message to their local municipal leaders and state representatives, while Promoting reforms to State Binding Arbitration Laws.  We will do the same.  Please contact us with the status of your success or if you need assistance in helping to control the cost of government in your town or state.  You can reach the Federation at FCTOPresident@aol.com.

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Also contained in Tax Talk: 

      Governor Rell Assembles ‘Rapid Review’ Panel to Assess Impact of Federal Health Care Reform
      Governor Rell Vetoes Both Democrat Deficit Bills
      Rell's veto necessary, unfortunate,  Norwich Bulletin 
      U.S. in fiscal peril with $12.1 trillion debt
      Total State Tax Collections
      California Pushes for Federal Help
      Editorial: California should not get a federal bailout
      More California Towns Face Bankruptcy
      California Bonds Fail
      A Message from the Yankee Institute
      N.J. Leads Municipal Bond Downgrades as Aid Shrinks,
      Spending on Lobbying Could Break Record in 2009
      Summary of State Revenues by Fund, Tax  and More
      AIG executives' promises to return bonuses have gone largely unfulfilled 
      2009: The Year Wall Street Bounced Back and Main Street Got Shafted
      After the Bailouts, Washington's the Boss

January 2, 2010 Press Release from the Governor’s Office
Governor Rell Assembles ‘Rapid Review’ Panel
to Assess Impact of Federal Health Care Reform
Panel Will Start Work As Federal Bill Heads to Conference
http://www.ct.gov/governorrell/cwp/view.asp?A=3675&Q=453116
  
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December 18, 2009 Press Release from the Governor’s Office
Governor Rell Vetoes Both Democrat Deficit Bills
Calls $12 Million in Cuts ‘Feeble’ Attempt to Reduce Spending,
Submits Legislation to Expand Governor’s Rescission Authority
http://www.ct.gov/governorrell/cwp/view.asp?A=3675&Q=452902

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Rell's veto necessary, unfortunate Norwich Bulletin  ……..We agree with House Speaker Christopher Donovan, D-Meriden, that Connecticut is on a dangerous fiscal footing, but strongly disagree with his contention the governor’s veto is the cause. It is the budget crafted by Democrats that the governor allowed to become law without her signature that is irresponsible and putting the state in financial jeopardy. http://www.norwichbulletin.com/Opinion/x370505407/Rell-s-veto-necessary-unfortunate

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U.S. in fiscal peril with $12.1 trillion debt By Richard Wolf, USA TODAY, Dec 30, 2009  WASHINGTON — After $787 billion in stimulus spending and $700 billion in bank bailouts, 2010 is fast shaping up to be the year of the federal budget diet.  Bipartisan support is growing in Congress for action to stabilize the nation's bulging debt, which is now $12.1 trillion. Influential experts from former Federal Reserve Board chairman Alan Greenspan to former comptroller general David Walker have joined the cause.  The public debt is the amount owed to individual investors, including foreign countries, but excluding money the government owes to its own trust funds. It has soared from $5.8 trillion to $7.6 trillion this year alone — and is more than half the size of the nation's economy for the first time since 1956.  Continued at …. http://www.usatoday.com/news/washington/2009-12-30-debt_N.htm

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Total State Tax Collections, December 30, 2009, Wall Street Journal State  revenues fell 11% in the third quarter of 2009 versus the same period a year ago with big drops in sales and income taxes, according to a report released by the Census Tuesday. The report shows state and local governments are only now catching the full brunt of the recession. See total state tax collections for the third quarter of 2008 and the third quarter of 2009.  http://s.wsj.net/public/resources/documents/st_TAXES1229_20091230.html

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As California cries Bail Me, state taxpayers are paying some of the highest public employee pensions in the nation. http://www.pensiontsunami.com/

California Pushes for Federal Help By Stu Woo  Wall Street Journal Dec 31, 2009  Facing a $21 billion shortfall through June 2011, California leaders want billions of dollars in budget relief from Washington that could head off deep cuts expected to state programs.  Gov. Arnold Schwarzenegger will ask the White House to waive rules that require the state to spend its own money on certain programs to receive federal funds, according to California officials briefed on the Republican's coming budget proposal.  http://online.wsj.com/article/SB126222107949110937.html

More on California:  http://thehill.com/blogs/blog-briefing-room/news/73471-report-schwarzenegger-to-seek-a-federal-bailout

Editorial: California should not get a federal bailout MediaNews editorial ,  01/03/2010 ………..Earlier this year, the Obama administration made it clear that it was not about to bail out states with huge budget deficits. We hope the president continues that policy, especially for states whose budget woes are largely of their own making. It would set a dangerous precedent tempting other states to follow suit and more than likely undermine efforts to reform California's fiscal policies. Continued at …. http://www.contracostatimes.com/opinion/ci_14101589

More California Towns Face Bankruptcy By BOBBY WHITE, Wall Street Journal, Dec 28, 2009 RIO VISTA, Calif. — California may soon have more bankrupt towns on its hands. The city of Vallejo, Calif., gained national attention earlier this year by filing for Chapter 9 bankruptcy protection. Now, two neighbors are fighting to avoid the same fate, as the state's economic crisis spreads. Isleton and Rio Vista, small towns roughly 50 miles northeast of San Francisco, say they have begun consulting with bankruptcy lawyers as they draw up plans to deal with their mounting budget crises. Continued at …. http://online.wsj.com/article/SB122954346309915189.html

California Bonds Fail ……. Dec. 17 (Bloomberg) — For California Treasurer Bill Lockyer, the offer from Goldman Sachs Group Inc., JPMorgan Chase & Co. and Citigroup Inc. was too good to refuse.   If California was willing to forgo competitive bidding for a $4.5 billion bond offering, the banks promised more orders from individuals and a lower bill to the taxpayers. ……… The California sale helped send the municipal-bond market to its worst month in a year. It ended a rally that had pushed borrowing costs for cities and states to a 42-year low, as measured by the Bond Buyer’s index of 20-year general obligation bonds.  Continued at … http://www.bloomberg.com/apps/news?pid=20601109&sid=aWuY7slLZtoI&pos=10

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A MESSAGE FROM THE YANKEE INSTITUTE

We're putting the finishing touches on a new website that will bring sunlight and disclosure to how the state spends every dollar.

In the meantime, you can visit Yankee Institute at   http://www.yankeeinstitute.org/  

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N.J. Leads Municipal Bond Downgrades as Aid Shrinks, Bloomberg, By Terrence Dopp  Dec. 22 (Bloomberg) — Bond ratings of New Jersey towns and cities are being reduced faster than in any other state as property values slide 11 percent and Governor Jon Corzine lowers municipal aid to cope with a $1 billion budget deficit. Moody’s Investors  Service cut ratings on $592 million in general obligation debt issued by 14 municipalities since October, about four times the rate for neighboring New York, the second-most indebted state, according to data compiled by Bloomberg. New Jersey’s per-capita personal income of $51,358 last year was exceeded only by Connecticut, according to the U.S. Commerce Department’s Bureau of Economic Analysis.  With the U.S. jobless rate hovering around 10 percent and tax revenue dwindling, the downgrades in New Jersey, the most- densely populated state, may be the start of a national trend, according to Richard Ciccarone, chief research officer at McDonnell Investment Management in Oak Brook, Illinois. Nine of 10 finance officers polled by the National League of Cities in September said it would be difficult to meet their fiscal needs in 2010, the worst outlook in 24 years. Continued at … http://www.bloomberg.com/apps/news?pid=20601109&sid=aq.K4roDA_wg&pos=11

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Spending on Lobbying Could Break Record in 2009 CBSNews.com, Last year, $3.30 billion was spent on federal lobbying, according to the Center for Responsive Politics. That was the highest figure ever calculated. This year it could go even higher.  CFR has calculated that in the first three quarters of 2009, $2.50 billion was spent to lobby Congress and federal agencies. If the average throughout the year holds, $3.33 billion will be spent this year. And there are indications that it could go higher.  "We would expect…an above-average fourth quarter just because of all the legislation that was in play," CFR spokesman Dave Levinthal told Hotsheet. He said he would be "not at all surprised if it was a very, very big fourth quarter." Continued at …. http://www.cbsnews.com/blogs/2009/12/22/politics/politicalhotsheet/entry6011207.shtml

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SUMMARY OF STATE REVENUES BY FUND, TAX TYPE AND ACCOUNT WITH VARIANCES FOR FISCAL YEARS 2005-2006 THROUGH 2008-2009
Prepared by Robert Young of FCTO
http://cthallofshame.com/attachments/115_State%20Income%20statement.pdf

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AIG executives' promises to return bonuses have gone largely unfulfilled  By Brady Dennis  Washington Post Staff Writer
Wednesday, December 23, 2009When word spread earlier this year that American International Group had paid more than $165 million in retention bonuses at the division that had precipitated the company's downfall, outrage erupted, with employees getting death threats and President Obama urging that every legal avenue be pursued to block the payments.  New York Attorney General Andrew M. Cuomo threatened to publicize the recipients' names, prompting executives at AIG Financial Products to hastily agree to return about $45 million in bonuses by the end of the year.  But as the final days of 2009 tick away, a majority of that money remains unpaid. Only about $19 million has been given back, according to a report by the special inspector general for the government's bailout program.
Some of the employees who had offered to return their bonuses have instead left the company, taking their cash with them.  Continued at … http://www.washingtonpost.com/wp-dyn/content/article/2009/12/22/AR2009122203788.html

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2009: The Year Wall Street Bounced Back and Main Street Got Shafted Robert Reich, Robert Reich's Blog: "The five largest remaining banks are today larger, their executives and traders richer, their strategies of placing large bets with other people's money no less bold than before the meltdown. The possibility of new regulations emanating from Congress has barely inhibited the Street's exuberance. But if Wall Street is back on top, the everyday lives of large numbers of Americans continue to be subject to overwhelming trauma, chaos and disruption." http://robertreich.blogspot.com/2009/12/2009-year-wall-street-bounced-back-and.html

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After the Bailouts, Washington’s the Boss, By BOB DAVIS, DEBORAH SOLOMON and JON HILSENRATH , Wall Street Journal, Dec 29, 2009
In 2008 and 2009, Washington strove to save the economy. In 2010, Americans will get a clearer picture of how Washington has changed the economy.
Only as the recession recedes will it become fully evident how permanently the state's role has expanded and whether, as a consequence, a new, hybrid strain of American capitalism is emerging.
One thing is clear: The government is a much bigger force in today's U.S. economy than it was before the financial crisis. "The frontier between the state and market has shifted," says Daniel Yergin, whose 1998 book "Commanding Heights" chronicled the ascent of free-market forces starting in the 1980s. "The realm of the state has been enlarged."
 
Continued at http://online.wsj.com/article/SB126195515647306765.html
Write to Bob Davis at bob.davis@wsj.com, Deborah Solomon at deborah.solomon@wsj.com and Jon Hilsenrath at jon.hilsenrath@wsj.com

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From The Federation of Connecticut
Taxpayer Organizations (FCTO)
Contact:  Susan Kniep, President
Website: http://ctact.org/
Email: fctopresident@aol.com
Telephone: 860-841-8032