Businesses Close, Jobs Disappear, More Citizens Flee CT as Dems Hike Taxes, Spending

During the Great Depression of the 1930’s, impoverished citizens from the plains states, the south and the southwest pulled up stakes and moved to states like California in search of jobs and a better life. Now, with the Great Recession of the late 2000’s well into its second year, Nutmeggers are fleeing Connecticut in search of jobs and a better life in the low-tax states of the south and southwest.
The depopulation of Connecticut began to build after the state income tax was imposed in 1991. The exodus gained momentum during recessions in the late 1990’s and early 2000’s. It is likely to peak if the recession drags on for another year or two – a scenario that lately seems more and more likely.

Given the fact that Connecticut’s hostility to businesses large, small and in-between is being replicated on the national level by the Democrat-dominated Congress and the Obama Administration, it probably will take more than two years before our state’s economy even remotely resembles pre-recession levels.

If I sound pessimistic about Connecticut’s economic future, it is because the state legislature’s super-majority Democrats currently have the votes to do pretty much what they please – and that usually means ramming massive new spending programs through the General Assembly, imposing crippling new tax hikes to pay for their excesses, and overriding Governor Rell’s vetoes of measures that are unaffordable during normal economic times and totally unsustainable during a major recession.

On July 20th, Democrat legislators overrode several of her vetoes, locking in even more spending.

Currently, the state legislature’s non-partisan Office of Fiscal Analysis estimates the deficit at about $8.5 billion over two years, most of which relates directly to the majority Democrats’ addiction to lavish government spending programs.

The additional spending included in most of the bills Governor Rell vetoed that became law after the override votes will mean even higher deficits in the near future and almost certainly lead to another round of tax hikes.

It is a vicious cycle that will mean prolonged economic stagnation and joblessness in Connecticut long after low-tax states in the south and southwest have recovered from the recession and are creating jobs.

While my Republican colleagues and I have drafted another ‘No Tax Increase’ budget that keeps funding for municipalities and local school districts at current levels and does not cut funding provided to cities and towns from Indian casino revenues, the majority Democrats’ most recent budget plan would increase taxes by $1.8 billion, including a 15 percent increase in the surcharge on corporate profits.

Their budget plan would underscore Connecticut’s reputation as one of the least business-friendly states in the country (Expansion Management Magazine has rated the Connecticut General Assembly as the nation’s ‘Least Business-Friendly Legislature’).

Over the past two years, 26,000 Connecticut businesses have shut down, and, since January 2009, a record 7,000 Connecticut businesses have closed their doors, according to the Secretary of the State’s Office.

Over the same two years, Connecticut sustained a net loss of 53,000 jobs. The state’s unemployment rate currently stands at 8 percent and is likely to go higher in the months ahead. By the time the recession ends, Connecticut is projected to lose between 78,000 and 110,000 jobs, according to the University of Connecticut Quarterly Review.

Connecticut has been dead last in job creation since 1991; and since 1990, taxes and spending have grown at triple the rate of inflation, according to the Tax Foundation.

As businesses in Connecticut have closed over the years, jobs have dried up and the state’s population has declined precipitously. A greater percentage of young people have left Connecticut than any other state, and from 2006 to 2007, we lost almost 43,000 taxpayers to other states, taking with them over $3.2 billion in income.

After the last census, Connecticut’s population had eroded to the point that we were one of only a few states to lose a Congressional seat.

Will we lose another one after the 2010 census?

If the majority Democrats’ budget plan or something like it is adopted in the days or weeks ahead, and job-killing tax increases take effect, no one should be surprised to see the unemployment rate hit double digits and thousands more abandoning Connecticut for good.

At that point, losing another Congressional seat may be among the least of our worries.