Eight residents of a Connecticut nursing home have died during a COVID-19 outbreak that has lasted nearly six weeks.
A total of 89 employees and residents have tested positive since the outbreak began at the Geer Nursing and Rehabilitation Center, located in Litchfield County, in the Town of Canaan, on Thursday, Sept. 30.
“Despite seeing significant numbers of residents recovering from Covid,” the facility’s chief executive Kevin O’Connell and nursing director Cady Bloodgood said in a statement. “testing has resulted in one additional positive case among fully vaccinated residents and staff members. Sadly, we have lost eight residents with serious underlying health issues to Covid.”
We call it the “Zombie Index” based on the work of Edward Kane, a prolific and respected finance professor at Boston College. Back in 1985 and 1989, Ed wrote two books warning about taxpayer exposure to losses from bank deposit insurance schemes, before we knew what hit us in the savings and loan crisis. Ed coined the term “zombie bank” to identify effectively-insolvent banks that were allowed to remain open by regulators and others. Deceptive accounting principles greased the wheels for regulatory forbearance, making “zombies” appear to be solvent.
Zombies had incentives, in Ed’s terms, to “gamble for resurrection.” Insiders could capture the upside of riskier investments, while prospective losses could be socialized through the government’s sponsorship (and ultimately, bailout) of deposit insurance systems. These incentives ended up magnifying taxpayer losses during the 1980s deposit insurance crisis. Those losses ran in the hundreds of billions of dollars and helped set the stage for the massive financial crisis of 2008-2009.
According to statistics from The Associated Press, the five states with the highest percentage of a fully vaccinated population are all in New England, with Vermont leading, followed by Connecticut, Maine, Rhode Island and Massachusetts. New Hampshire is 10th.
Case counts in Vermont, which has continually boasted about high vaccination and low hospitalization and death rates, are the highest during the pandemic. Hospitalizations are approaching the pandemic peak from last winter and September was Vermont’s second-deadliest month during the pandemic.
Even though the state’s coffers, for now, are awash in money, a huge fiscal cliff looms two years from now, when billions of dollars in federal stimulus grants expire.
Despite a record-setting rainy day fund and a new biennial state budget free of major tax hikes, unprecedented unemployment and deep pockets of urban poverty could easily shift Connecticut’s tax fairness debate — which accelerated this past spring — into high gear in 2024.
“We came out of a year from hell, and I think it was really important we came together in terms of our budget,” Gov. Ned Lamont said last Thursday, one day after lawmakers had adjourned a session that adopted a $46.4 billion, two-year state budget that makes big investments in municipal aid, education, health care, social services and economic development — all without major tax hikes.
But about 4% of that plan, nearly $1.8 billion, was propped up by one-time federal coronavirus relief, most of which will have expired after the coming biennium, which starts July 1.
Question: When was the last time a Connecticut legislature was poised to adopt a state budget with a $2.3 billion surplus built into it?
Answer: Never, until now.
Democrats and Republicans alike were expected to vote for the $46.4 billion, two-year package when it goes before the House of Representatives on Tuesday. But even though about 5% of the funds appears to be left unspent, the anticipated surplus would become a payment into the state’s pension accounts.
That’s because the budget, which boosts spending 2.6% in the fiscal year beginning July 1 and by 3.9% in 2022-23, really is the first of its kind under a new system designed to bring stability to state finances.
Connecticut is four years into a savings program that limits spending of income tax receipts tied to capital gains and other investment earnings, but this is the first time since 2017 that analysts are projecting big revenues from Wall Street before legislators actually approve a budget.
The Centers for Disease Control and Prevention’s “social vulnerability index” has formed the basis for the state’s prioritization system and has been a reliable indicator of low vaccine uptake. Generally speaking, the higher a community’s SVI score, the lower its vaccination rate, a CT Mirror analysis found.
An estimated 32% of the state’s eligible population lives in the state’s priority ZIP codes, and the state aims to administer the same percentage of vaccines within those communities. While the state inches closer to that goal each week, the statewide slowdown in the number of shots administered means that it has a lot of ground to make up. Of all the vaccines administered so far, just 25% of all vaccines distributed as of last week have gone to residents of those ZIP codes.
“Progress is slower now,” said Josh Geballe, the state’s chief operating officer, at a recent press conference.
Connecticut has opened the door for a statewide property tax that has no upper limit. It offers a “new” tax revenue source for states such as New Jersey that have failed to address their structural deficits and continue to live beyond their means. Many New Jersey homeowners refer to their local property tax bills as a second mortgage, since the burden often rivals or exceeds the monthly payments on their home purchase.
A review of New Jersey’s modern history of taxes shows citizens should rightly be concerned.
Our state enacted a personal income tax in 1976 to support public schools and provide property tax relief. The tax began with a simple two-rate structure consisting of a 2.0% rate on income below $20,000 and a 2.5% rate on income above $20,000. In 45 years, 8 brackets have been introduced without any substantive update to account for inflation, making this more burdensome over time. The only meaningful change has been to establish a new top rate of 10.75%, the 3rd highest in the nation.
However, the SALT cap didn’t so much go after “Democrats” as “affluent Democrats.” It only applied to people who itemize their taxes, which meant the 90% of Americans who take the standard deduction were unaffected. The deduction raised over $70 billion in just the first year, and roughly 56% of that money came just from the top 1% of taxpayers, living in a few states in particular.
The tax nastygram seemed directed at Trump’s hometown delegation. Congresswoman Carolyn Maloney in April of 2017 complained about the cost of protecting “Trump and his family here in NYC”; the SALT cap affected 19% of Maloney’s constituents in Brooklyn and on the Upper East Side, and taxpayers in that 19% each lost an average of $100,405 in breaks. Chuck Schumer, one of Trump’s fiercest critics, personally took over $58,000 in SALT deductions just in 2016.
Overall, 39 of the 40 districts most affected by the SALT cap were represented by Democrats. Of those, 28 came from New York, New Jersey, and Connecticut. Also affected: Nancy Pelosi’s San Francisco district, where residents lost an average of $53,471 of write-offs. Trump’s campaign promises to take on “elites” proved phony, except when he was able to effect this targeted partisan strike at the people he knew and hated the most: rich, socially liberal Democrats, especially ones from the tri-state area.
Because Connecticut employees contributed so little to their own pensions, the cost to the state was actually higher than the average cost of pension benefits in the 50 states, Here are the numbers from the center’s study (page 17). In 2014, Connecticut contributed 8.0% to SERS, while the 50-state average contribution was 7.0%. These percentages are pension cost as a percent of payroll cost.
The higher level in Connecticut was necessary because state employees contributed only 2.2% to their own pensions, while the 50-state average employee contribution was triple that amount, or 6.6%.
The differential between Connecticut’s 8% and the national average of 7% amounted to a 14.3% higher level in Connecticut. Either way you look at the extra 14.3% – as a higher state cost or as a larger employee benefit – it was overly generous. So how did the center make its mistake? Instead of recognizing the impact of the level of employee contributions, the center glossed over them and only looked at the gross unallocated cost of pension benefits, namely 10.2% in Connecticut versus an average of 13.6% in the 50 states. This creates an illusion opposite to reality. The fair and accurate measure is net cost for the state and net benefit for employees, which, in Connecticut, was 8%. The gross cost of the benefit of 10.2% was offset by the employee contributions of 2.2%, leaving both the state’s net cost and the employee’s net benefit at 8%. Nationally, a gross cost of 13.6% was offset by employee contributions of 6.6%, leaving a lower net cost/benefit of 7%.
Connecticut’s neighbors have also prioritized age in their rollouts after prioritizing health care workers and nursing homes, though they have also made teachers, essential workers and people with underlying conditions eligible in tandem at different points in the pandemic. New York announced that teachers and some essential workers were eligible in January along with individuals 75+; Massachusetts included people with co-morbidities in its 65+ rollout in late February. Rhode Island deviated from an age-based strategy around mid-March when it opened up eligibility to teachers, and later to individuals with co-morbidities.
Week 1 Monday, May 10: (General) Actuarial Transformation: Trends & Insights across Data, Processes, Models, and People
Tuesday, May 11: (Life) Consolidated Appropriations Act, 2021: Changes to IRS code Section 7702 Wednesday, May 12: (General/Professionalism) Emerging Professionalism Issues in 2021 Thursday, May 13: (Investments) Macro Economic & Market Update
Thursday, May 13, 4pm EDT: (General) Networking Session Friday, May 14: (Health) The Role of Behavioral Health‐Now and in the Future
Week 2 Monday, May 17, 9am EDT: (General) Actuaries Working in International Landscape Tuesday, May 18: (Health) Health Technology, Consumerism and the Explosion of Telehealth Wednesday, May 19: (Pension) New Pension Relief under ARPA: Its Implications for Pension Plans Thursday, May 20: (Life/Annuities) Mortality Differential by Socioeconomic Categories in the US Friday, May 21: (Life/Annuities) Life Reinsurance 101 Panel Discussion
A study of Connecticut’s state government in advance of an expected wave of retirements next year has identified as much as $900 million in potential savings in executive agencies with total budgets of $14 billion, while acknowledging the significant obstacles to making changes in one of the most heavily unionized public-sector workforces in the United States.
The report released Wednesday by the administration of Gov. Ned Lamont says 8,000 of the 30,000 executive-branch employees are eligible to retire by July 1, 2022, when retirement benefits will be reduced under the terms of a 2017 concession deal. A survey found about 70% of the eligible workers were leaning toward retiring.
The highest percentage of expected retirements is among employees responsible for public safety and caring for at-risk children and people with intellectual disabilities and mental illnesses. As such, the exodus poses daunting challenges to maintaining essential services and perhaps offers once-in-a-generation opportunities for fundamental change.