With Illinois facing a Friday night deadline by which it has to come up with its first fiscal budget in three years or face a downgrade to junk resulting in what a policymaker called a “death spiral“, another mini drama is taking place in Connecticut, which is also facing big budget problems as wealthy residents, hedge funds and major corporations flee the state’s high taxes and its fiscal future gets murkier by the day.
Just today, we reported that Aetna, the insurance giant founded in Hartford where it has been for the past 164 years, announced it would move its headquarters to New York City despite intensive lobbying efforts by Connecticut officials. The move, which followed a departure by GE of its Fairfield HQ of 40 years, is a blow to the company’s hometown, which is facing severe financial problems. Hartford’s problems are a representation of the troubles facing the entire state: while Illinois’ story is familiar, Connecticut has the distinction of the third-worst ratings in the country, only behind Illinois and New Jersey after S&P, Moody’s and Fitch all downgraded the state last month in what officials described as a “call to action” for state leaders.
‘We’ve been downgraded by everybody in the last six months, and in the last year two or three times,’ Senate Republican President Len Fasano said cited by Fox news. ‘If we don’t pass a budget, I think we will see a further downward spiral.’
And, just like Illinois (and 14 other states), Connecticut faces a Friday day of reckoning: the state has yet to pass a fiscal 2018 budget by the June 30 deadline.
‘We must immediately take the necessary steps to mitigate the current year deficit and then balance the … budget with recurring measures to reduce spending and structural solutions to our long-term problems,’ a spokesperson for the Connecticut Office of Policy and Management said in response to Moody’s downgrade.
This post was published at Zero Hedge on Jun 30, 2017.