Malloy kicks the can so far down the road that it land’s right on our children’s heads

The voters of Connecticut need to pay special attention to Governor Dannel Malloy’s irresponsible proposal to change the way that Connecticut funds its pension program for state employees.

Governor Malloy’s plan is nothing more than an outrageous maneuver to balance his failed state budgets on the backs of our children and their future.  As the title of yesterday’s Wait, What? blog stated – Connecticut: BEWARE of Governor Malloy’s most fiscally irresponsible budget proposal yet.

The CT Mirror’s Keith Phaneuf provides more information about Malloy’s proposals in his latest article, explaining that the new initiative violates one of the most fundamental promises Dannel Malloy made when he was running for governor in 2010.

Keith Phaneuf writes,

“One year after taking office, Gov. Dannel P. Malloy vowed to accelerate payments into the state’s cash-starved pension fund, much as a family might make extra mortgage payments now to lessen balloon payments looming in future years.”

But not surprisingly, although Malloy pushed through significant tax increases in 2011 and 2015, he used the additional funds to pay for other things and never followed through on his commitment to make those extra pension payments.

Now, in the face of new state budget problems, Malloy is completely reversing his stand on properly funding Connecticut’s State pension fund and proposing “kicking the can” down the road by pushing off $8 billion in necessary pension payments onto the next generation of Connecticut taxpayers.

Phaneuf notes,

“Under the governor’s plan, Connecticut still would catch up on its pension contributions — after 2032.”

But as the CT Mirror reports, the Governor who seems unable to tell the truth denied reality, once again, claiming,

“We are not kicking anything down the road,” Malloy said, citing a phrase he and other gubernatorial candidates used in 2010 to describe the fiscal gimmicks that had weakened the pension system and created a record-setting state budget deficit at that time.

“It is simply irresponsible to leave more and more debt for future generations.”  Malloy wrote in his 2010 campaign platform on “Taxes & The Budget.”

The governor insisted this week that it would be irresponsible to pretend state finances, and taxpayers, could afford a $6 billion-plus pension expense down the road.

Postponing some pension payments until later to avoid that fiscal iceberg is the best option, Malloy said, adding that his new plan would “smooth out” the late-term costs.”

However, the truth is that the real spike in the amount of money needed to meet the required pension payments – the real “iceberg” Malloy is referencing – does not occur this year, or next year or even the year after that.

The harsh reality is that Governor Malloy isn’t offering up this new pension funding plan because he is worried about whether the state can make its required pension payments in 2025, he is doing it NOW because he wants to use the money that we should be paying into the pension fund over the next few years to balance the state budgets during his remaining time in office.

This is not an issue of Democrats versus Republicans or Liberals versus Conservatives.  Nor is it a debate about whether there should be addition changes to Connecticut’s state employee pension program.

This debate is about whether Connecticut will fulfill its financial obligations to the state pension fund or allow Dannel Malloy to divert that money to balance his state budgets and reduce the need for additional tax increases or budget cuts.

There will always be politicians like Dan Malloy who would rather dump problems on someone else rather than actually tackling the job of developing fair and honest balanced budgets.

That said, what is not be acceptable is allowing Malloy to resolve the mess he created by dumping the problem on our children.

  • buygoldandprosper

    Budget issues…what budget issues?!
    Look over there at that my $100B transportation vision!!!
    All roads lead OUT of Connecticut and Danny wants to be driven out without hitting any potholes.
    What a clown.

  • jhs

    I’m shocked that anyone is surprised. The can has been kicked down the road for decades. Democrat controlled legislatures have done nothing about it for years. Malloy said one month last year we were having a $55 rebate and the next month we were in the red.The unions don’t seem to be bothered by it because they know the state, the taxpayers, will be on the hook. The unions still contribute to the Democrats to get what they want. I knew last year we were in trouble when Malloy borrowed to fill potholes.When you don’t budget basic maintenance properly government is being mismanaged. Malloy has no answers, and his reduction of 500 jobs is too little too late. We need a top down review of every job for duplication, waste, and necessity. Agencies and committee need to go and administration needs to be cut. Look at salaries and pensions on for an eyeopener.

  • perturbed

    Jeez, Jon, I’m a bit surprised by your extreme reaction. While I do not place much trust in any of the parties that would be carrying out this proposal, at face value I can’t see much not to like. It looks like a win-win scenario, both for us state employees and for (us again) CT taxpayers.

    Have you seen the graph showing the projected state contributions under the various assumptions?

    Do you really think a contribution steadily rising to somewhere between $3B and $6.5B by 2032 and dropping to practically nothing a couple of years later makes more sense than a uniform $2B/year?

    Also, if you again refer to the graph, you’ll see that there is no projected savings to the budget until 2018, contradicting what you wrote.

    What lends credibility to this plan is the fact that it was developed with the assistance of Alicia Munnell and the folks at the Center for Retirement Research at Boston College, . That’s a very well respected group.

    Might your judgement be a bit too hasty?


    • perturbed

      Actually, the first year with projected budget savings in 2019. Doesn’t exactly fit the description of a quick-fix gimmick.

      The presentation is here:

      ►Reduce the investment return assumptions for both State Employee and Teachers’ systems.
      ►Implement actuarial improvements recommended by Boston College study, including use of “level dollar” amortization and a 15-year rolling amortization period.
      ►Control future benefit costs through collective bargaining, and especially by avoiding retirement incentives, contribution holidays, or other similar damaging practices.
      ►Split the SERS system into two funds, one a closed pay-as-you-go plan for Tier 1 retirees for whom most of the unfunded liability applies, and one open plan for Tiers 2 and 3.This fund will be 95% funded, and will be sustainable.

      • jonpelto

        Couldn’t disagree with you more. What does the Boston college study say about the cost of shifting 8 billion to after 2033, not to mention the existing 10 million in the fund belongs to tier I people as much as tier II and iia . Will Malloy release the Boston. College study or keep it secret?

        Sent via cell phone meaning more typos than usual

    • jonpelto

      I’ll respond in a blog post

      Sent via cell phone meaning more typos than usual

      • perturbed

        I’m interested in any honest, rational arguments against the proposal you might have. So far, I haven’t read any.

        On one hand, you seem to be saying it’s a good thing that the “iceberg” is a can that was already kicked far enough down the road that we shouldn’t correct course. The huge payments in the late 2020s are far enough off for you? But on the other hand, kicking the can out just a tiny bit further — and that’s what 10 years is in the grand scheme of a pension fund — to smooth out those huge required payments in the late 2020s with more than minimal payments in the 2030s is “irresponsible.” That defies logic.

        The other specious claim you make is that the proposal is intended to help with balancing the budget over the next few years, at the expense of future generations. But your claim appears to be false. The proposal actually shows the state would have to pay *more* in pension funding over the next few years, especially in 2018, *not less*. It’s not until 2019 that there would be any reduction in the anticipated pension payments. How do you support your assertion?

        Many people over the years have attempted to exaggerate the pension funding obligations — or at least cast them in the worst possible light — in order to convince people of their “unsustainability.” The intent is ultimately to break the pension obligations. Are you one of those people? A plan comes along that provides a clear, sustainable path forward without breaking pension obligations, and it’s somehow worse than the unsustainable path? Do you think defaulting on the obligations is a better, more reasonable course of action?

        I don’t get it. But as I said, I’m open to rational arguments…

        — perturbed

        • perturbed

          CORRECTION: a higher pension payment is shown in 2017, not 2018.

  • perturbed


    I remember when I first found your site, back in 2011, amid the crisis for us state employees caused by our unions teaming up with the state to concoct SEBAC 2011, blindsiding us with unprecedented concessions. You ran a fair, open and honest site. It was the only shelter from the storm of misinformation and hostility we ever really found.

    And as I post comments on a news site here or there, and am occasionally tempted to omit inconvenient facts, I often think back to what you wrote here (honestly!). To paraphrase, you wrote that the truth is our only hope of working though the issues that confront us, collectively. Your words then still help keep me on the straight and narrow path of honesty.

    Please don’t abandon that philosophy now.

    — perturbed

  • perturbed

    From the Center for Retirement Research at Boston College: State and Local Pension Costs: Pre-Crisis, Post-Crisis, and Post-Reform ( )

    Connecticut fact sheet, dated February, 2013:

    • jonpelto

      Remember to calculate in the loss of federal dollars, the loss of compounding, the fact that the funds were not paid in “exclusively” for Tier II, Tier IIA and Tier III employees so that Tier I employees have a legal right to those funds. Although hopefully it would not be needed, a severe recession/depression could require that money in the pension fund be used – as it is NOW – to pay benefits for Tier I employees.

      I will certainly review all of the information you’ve sent and respond or modify my position appropriately but I remained convinced that this is the most fiscally irresponsible move Malloy has made. Additional revenue should not be come by diverting pension payments but by requiring the wealthiest to start paying their fair share. As we know, we could raise our income tax by 2% for the wealthy and they’d still be paying less in CT than in New York, New Jersey, NYC, etc. Alternatively we could tier our capital gains tax to achieve that same goal.

      Malloy is proposing to move $8 billion in public expenditures until after 2032…. That cost and the associated interest lost shifts the burden in a way that is not fair or appropriate at this time.

      As for the cost savings, we know the Malloy administration is already adept at pushing costs from one year to the next and redefining revenue to apply it to a different fiscal year. If his plan is approved we will see budget deficits rolled forward until the “new” money is available and my guess is that even more likely we’ll see a system of “anticipation” notes to “ borrow” off “new” money that would become available in fy20-fy23

      By forcing state employees to go without raises for the next few years, reducing the state payroll by 500 state employees (which is not possible without major reductions in services) cutting vital program and kicking the can down the road on pensions, Malloy would be COME CLOSE to balancing the FY18 and FY19 budget and not leave a smaller whole for the next governor – while one can see why he’d want to do that – the actual cost to the people of CT both today and in the future is far worse than dealing with the immediate problems in a more fiscally sound manner.

      • perturbed

        ► We still don’t know if there are any impacts to federal dollars. That was a preliminary question raised — but unanswered — by Lembo.
        ► On the concern for Tier I, and loss of compounding: according to Lembo’s office, 82% of the payments from the general fund go primarily to ongoing payments to current Tier I retirees anyway. So the effect would be marginal, right?

        See Slide 8:

        On the CT tax structure, and its lack of progressiveness, I couldn’t agree more!

        — perturbed