"Something has Gone Wrong with Connecticut"

[EastSideHBG]

I always found CT to be an interesting place and I enjoyed this informative article and sharing, as it touched on the cities as well:


Trouble in America’s Country Club
Companies are fleeing Connecticut. Home values are stagnant. What happened to the nation’s richest state?

Something has gone wrong with Connecticut, the golden boy of New England.

On Wednesday, health insurance giant Aetna announced it will move its headquarters out of the state capital, Hartford, where the company has been since 1853. “We are in negotiations with several states regarding a headquarters relocation, with the goal of broadening our access to innovation and the talent that will fill knowledge economy-type positions,” the company said in a statement.

Translation: The people we need don’t want to live here. In Hartford, as Freddie DeBoer wrote, workers “don’t so much commute as escape.” Still, Connecticut tried. Gov. Dannel Malloy, a Democrat, told reporters that the state had made offers to Aetna CEO Mark Bertolini, including proposals to invest in Hartford, adapt the state’s workforce development programs around the company’s needs, and make the state’s health insurance exchanges more insurer-friendly.

http://www.slate.com/articles/busine...nnecticut.html

[dc_denizen]

What do you know, healthy cities matter, and here CT is lacking. You need more than just country clubs and 3 acre forested lots for someone's 'forever home'.

[JeenyusJane]

"And it looks like companies want one or the other, or sometimes both: a big city to keep the top brass happy, and a low-rent Sun Belt metropolis for the back office. Uber is a San Francisco company, for example, but has hundreds of employees in Phoenix. Globalization has reduced the appeal of an isolated mega-HQ."

Most interesting part to me. Connecticut went all in on the Suburbs and never looked back, the rest is unsurprising.

[pdxtex]

welcome to big tax country!

[llamaorama]

Originally Posted by pdxtex

welcome to big tax country!

The article addresses this and points some important details:

1. Connecticut has lower business taxes than most places

2. Connecticut is losing business to states have higher taxes than it does, like NY and MA.

3. Millionaires and wealthy people aren't very nomadic, and there's no strong national trend of the rich moving to lower tax places.

[the urban politician]

Edit. Ignore

[pdxtex]

Originally Posted by llamaorama

The article addresses this and points some important details:

1. Connecticut has lower business taxes than most places

2. Connecticut is losing business to states have higher taxes than it does, like NY and MA.

3. Millionaires and wealthy people aren't very nomadic, and there's no strong national trend of the rich moving to lower tax places.

clearly you dont know any rich people with RVs!! the west is full of rich people on the go. but interesting about moving to even higher taxed places. well maybe they want to be closer to customers and production??

[Crawford]

Originally Posted by llamaorama

The article addresses this and points some important details:

1. Connecticut has lower business taxes than most places

2. Connecticut is losing business to states have higher taxes than it does, like NY and MA.

3. Millionaires and wealthy people aren't very nomadic, and there's no strong national trend of the rich moving to lower tax places.

Yes to all this.

The reason Connecticut is kinda stagnant is because it's basically nothing but suburbia. Northeastern suburbia hasn't been growing. There's no big city and no rural area. And the Hartford area has particularly had issues.

Fairfield County, the wealthiest county, and most stereotypically Connecticut county (WASP NYC railroad suburbia) is doing well, though. The rest of the state is having issues. Also, the state is heavily reliant on European financial services (RBS, UBS, Lloyds, etc.) and the European banks have been downsizing in North America and/or relocating back from CT to Manhattan. CT also has a huge number of hedge funds, which have also been struggling and/or moving back to the city.

CT will be fine, though. It's still by many measures the wealthiest state, and is, at worst the third wealthiest state. It's also near the top in terms of education, health, safety and other social indicators. And even "troubled" Hartford is one of the wealthiest metros in the U.S. It's a state with really no dumpy rural areas, and the urban slums are tiny.

[mhays]

The trophy companies often go to high-tax places with emphasis on the biggest cities, because they want public services, because they want connections to other firms/airports/etc., and because they want to recruit the best and brightest.

This is very different from trying to hire 1,000 clerks. That can go to the cheaper locales with plentiful workforces.

As for rich people, quite a few have some patriotism and don't mind paying their share, investing in their cities, etc.

[Pedestrian]

Originally Posted by JeenyusJane

"And it looks like companies want one or the other, or sometimes both: a big city to keep the top brass happy, and a low-rent Sun Belt metropolis for the back office. Uber is a San Francisco company, for example, but has hundreds of employees in Phoenix. Globalization has reduced the appeal of an isolated mega-HQ."

Most interesting part to me. Connecticut went all in on the Suburbs and never looked back, the rest is unsurprising.

Very few SF-headquartered companies put a majority of even headquarters employees in the downtown. Techs are an exception because so many of their employees are young geeks who want to live in the city and they have to keep them there to retain them. But the banks (Wells Fargo), brokers (Schwab), and the rest (Chevron), if they don't put the back office out of state, put it in a distant East Bay office park. Uber, Lyft and AirBnB just pretend to be techs of course--like Amazon, they are really about more prosaic businesses but do have to have some tech staff to make the app work.

But I think Connecticut's problems are more about taxes than anything else. It has some of the highest taxes in the country. Even the mega-wealthy who maintain Greenwich (and other shoreline) addresses probably find ways to be legal residents of somewhere else that's more taxpayer-friendly. That's what second (and third and fourth) homes are good for. The Wall Street Journal's Friday edition is always packed with mansions in Jackson, WY and John's Island, FL for sale.

[eschaton]

Originally Posted by pdxtex

clearly you dont know any rich people with RVs!! the west is full of rich people on the go. but interesting about moving to even higher taxed places. well maybe they want to be closer to customers and production??

I highly doubt too many members of the global financial elite are hiking around the west in RVs. They're not talking about general contractors who retired at age 50 here with a few mil in the bank, they're talking about hedge fund managers.

[Crawford]

Originally Posted by Pedestrian

But I think Connecticut's problems are more about taxes than anything else. It has some of the highest taxes in the country.

CT taxes are far lower than those of adjacent states. This has basically always been the case. I'm not sure that adequately explains why CT has, very recently, stagnated.

It could be, partially, not taxes per se, but political climate. CT was always a middle-of-road state, and has transitioned to one of the most progressive states in the country. It's spending big on transit, putting tolls on highways, raising taxes on the super-wealthy and the like. Its only boomtown is Stamford, a very urban city. It's not really different than NY, CA, MA and the like, when before it was full of Rockefeller Republicans. Maybe this has alienated some of the Stepford Wives set, and they've left.

Also, CT had only grown in past decades because of NYC outmigration. It isn't like many people move from Ohio to Darien or New Canaan. Since the upper middle class and wealthy are increasingly staying in the city, obviously the traditional commuter suburbs suffer.

[eschaton]

I grew up in Connecticut, just north of Bridgeport. I was thankful to leave the state behind when I went to college, and except for a year in my early 20s when I had a job in New Haven (the only part of the state I found tolerable) I never looked back.

Obviously all states went through a period where they trashed their cities during the urban renewal period, but Connecticut really took the cake. Hartford has to be one of the most extreme examples in the country, where the historic city center was bulldozed for mid-century office towers, the CBD was nearly ringed with highways, and a large "moat" of parking, institutional structures, and otherwise poor urban fabric separated downtown from the nearest urban neighborhoods - none of which show even a whiff of gentrification. Everything north of downtown is poor and black, everything south of Downtown is poor and Latino. The only semi-nice portion of the city is the West End, but it's an outer ring urban neighborhood which is very suburban across much of its area. It's not really gentrifying either - just stagnant.

Bridgeport is an incredibly sad city which I technically lived in for awhile (my mother bought a house in the North End after I finished high school, though I only spent summers there). On one hand, it's safer than it was 20 years ago, and the population has begun to grow again. On the other hand, the city has no job base at all, downtown has been dead for decades (although it at least has more historic buildings than Hartford), and there isn't even a whiff of gentrification (although there's a few older stable neighborhoods like Black Rock, where people won't even put Bridgeport on their postal address). The only thing Bridgeport has going for it is that since the surrounding towns were so expensive (not to mention zoning protected), low-wage service workers for Fairfield County had to live somewhere, which meant it's actually seen some residential reinvestment.

New Haven is different, largely because of the influence of Yale. It not only kept a couple of nice suburbanish-fringe neighborhoods, but a relatively intact walkable downtown and two urban gentrified residential neighborhoods which you can walk into downtown from (East Rock and Wooster Square). IMHO the city's main issue is it hasn't really attracted any serious job anchors besides Yale and the hospitals.

What else? Stamford has been growing like gangbusters - it seems like a new building is going up every week. Much of this appears to be driven by residential construction, not commerce however. Stamford is close enough to NYC that it can function as a railroad suburb for Manhattan, meaning people live there and take the train into the city. Others locate there because it's the closest thing to a healthy urban environment in Fairfield County. Norwalk has this to a limited extent as well, but it's much smaller.

Waterbury is doing...okay. Mostly because Hasids from NYC are colonizing the city now. All of the smaller cities are in various forms of struggling, with the exception perhaps of Middletown, which at least has Wesleyan. I try to think about the suburbs as little as possible, as they're mind-numbingly boring and 90% interchangeable.

[montréaliste]

Originally Posted by eschaton

I grew up in Connecticut, just north of Bridgeport. I was thankful to leave the state behind when I went to college, and except for a year in my early 20s when I had a job in New Haven (the only part of the state I found tolerable) I never looked back.

Obviously all states went through a period where they trashed their cities during the urban renewal period, but Connecticut really took the cake. Hartford has to be one of the most extreme examples in the country, where the historic city center was bulldozed for mid-century office towers, the CBD was nearly ringed with highways, and a large "moat" of parking, institutional structures, and otherwise poor urban fabric separated downtown from the nearest urban neighborhoods - none of which show even a whiff of gentrification. Everything north of downtown is poor and black, everything south of Downtown is poor and Latino. The only semi-nice portion of the city is the West End, but it's an outer ring urban neighborhood which is very suburban across much of its area. It's not really gentrifying either - just stagnant.

Bridgeport is an incredibly sad city which I technically lived in for awhile (my mother bought a house in the North End after I finished high school, though I only spent summers there). On one hand, it's safer than it was 20 years ago, and the population has begun to grow again. On the other hand, the city has no job base at all, downtown has been dead for decades (although it at least has more historic buildings than Hartford), and there isn't even a whiff of gentrification (although there's a few older stable neighborhoods like Black Rock, where people won't even put Bridgeport on their postal address). The only thing Bridgeport has going for it is that since the surrounding towns were so expensive (not to mention zoning protected), low-wage service workers for Fairfield County had to live somewhere, which meant it's actually seen some residential reinvestment.

New Haven is different, largely because of the influence of Yale. It not only kept a couple of nice suburbanish-fringe neighborhoods, but a relatively intact walkable downtown and two urban gentrified residential neighborhoods which you can walk into downtown from (East Rock and Wooster Square). IMHO the city's main issue is it hasn't really attracted any serious job anchors besides Yale and the hospitals.

What else? Stamford has been growing like gangbusters - it seems like a new building is going up every week. Much of this appears to be driven by residential construction, not commerce however. Stamford is close enough to NYC that it can function as a railroad suburb for Manhattan, meaning people live there and take the train into the city. Others locate there because it's the closest thing to a healthy urban environment in Fairfield County. Norwalk has this to a limited extent as well, but it's much smaller.

Waterbury is doing...okay. Mostly because Hasids from NYC are colonizing the city now. All of the smaller cities are in various forms of struggling, with the exception perhaps of Middletown, which at least has Wesleyan. I try to think about the suburbs as little as possible, as they're mind-numbingly boring and 90% interchangeable.

Than you for the breakdown on Ct cities.

How do CT cities compare to major towns in Rhode Island or Massachusetts for gentrification and or consolidation of architectural heritage?

[Crawford]

Originally Posted by eschaton

smaller cities are in various forms of struggling, with the exception perhaps of Middletown, which at least has Wesleyan. I try to think about the suburbs as little as possible, as they're mind-numbingly boring and 90% interchangeable.

I think CT has some of the best suburbs in the U.S. Pretty much every town along the coast from NY to RI, has either an urban downtown, or a quaint, upscale downtown.

Is there a U.S. suburb with better urbanity than South Norwalk? Or a wealthy town with a nicer core than Greenwich? There are few cookie cutter suburbs. McMansions are rare. Places like Westport, New Canaan, Ridgefield, Fairfield.

And then there are the small village centers, within CT towns. Greenwich has like five downtowns (Old Greenwich, Cos Cob, Riverside, Byram and Greenwich Center). Most of the towns are amalgamations of colonial-era villages.

Even Hartford has nice suburbs. West Hartford is almost entirely walkable and has a great core.

[Omaharocks]

^ South Norwalk is an older small New England town, not a suburb in it's core. But like all of Connecticut as you mentioned, it's a village center linked by cookie cutter suburbia.

The newer suburbia itself is certainly no better than anywhere else, even if wealthier. Despite the supposed shift to more progressive politics, Connecticut remains the most culturally conservative place I've ever lived.

[Pedestrian]

Originally Posted by Crawford

CT taxes are far lower than those of adjacent states. This has basically always been the case. I'm not sure that adequately explains why CT has, very recently, stagnated.

Connecticut’s Tax Comeuppance
June 2, 2017 6:52 p.m. ET

The Aetna insurance company has been based in Hartford, Conn., since 1853, but this week it said it is looking to move to another state. Governor Dannel Malloy has pledged to match other states’ financial incentives, but taxpayer money can’t buy fiscal certainty and a less destructive business climate. That’s the real problem in Connecticut, which saw GE vamoose to Boston last year and which even Mr. Malloy now seems to recognize . . . .

Gov. Malloy has spent two terms treating business as a bottomless well of cash to redistribute to public unions. Now that his state is losing millionaires and businesses, he has seen the light. But the price of his dereliction will be steep.

Last month the state Office of Fiscal Analysis reduced its two-year revenue forecast by $1.46 billion. Since January the agency has downgraded income-tax revenue for 2017 and 2018 by $1.1 billion (6%). Sales- and corporate-tax revenue are projected to fall by $385 million (9%) and $67 million (7%), respectively, this year. Pension contributions, which have doubled since 2010, will increase by a third over the next two years. The result: a $5.1 billion deficit and three recent credit downgrades.

According to the fiscal analyst, income-tax collections declined this year for the first time since the recession due to lower earnings at the top. Many wealthy residents decamped for lower-tax states after Mr. Malloy and his Republican predecessor Jodi Rell raised the top individual rate on more than $500,000 of income to 6.99% from 5%. In the past five years 27,400 Connecticut residents . . . have moved to no-income-tax Florida, and seven of the state’s eight counties have lost population since 2010. Population flight has depressed economic growth—Connecticut’s real GDP has shrunk by 0.1% since 2010—as well as home values and sales-tax revenues . . . .

The Governor—a slow learner—seems finally to have accepted that raising taxes on the wealthy is a dead fiscal end. Democrats are now proposing higher taxes on tobacco, expanding casinos and eliminating some tax breaks, though they don’t want to touch an exemption for teacher pensions. The state teachers union warns that axing the exemption would impel retired teachers to relocate. A quarter of pension checks are currently sent out of state.

Mr. Malloy is also seeking $1.6 billion in concessions from unions, which would be easier to achieve if collective bargaining weren’t mandated by law. He’s suggested increasing municipal pension contributions and cutting state-revenue sharing, both of which could drive up property taxes and imperil insolvent cities like Hartford. Mr. Malloy’s budget includes a $50 million bailout for Hartford to prevent bankruptcy, which might occur in any case if Aetna—its fourth largest taxpayer—leaves.

The state treasurer has advocated “credit bonds” securitized by income-tax revenues to reduce the state’s borrowing costs. Investors beware: Puerto Rico tried something similar with its sales tax, and bondholders might not get back a penny . . . .

https://www.wsj.com/articles/connect...nce-1496443958

[Pedestrian]

^^

Connecticut, Nation’s Wealthiest State, May be Tapped Out on Taxing the Rich
By Joseph De Avila
Updated May 19, 2017 7:19 p.m. ET

. . . Connecticut forecasts it will come in $400 million short in income-tax collections this fiscal year, worsening a budget crisis that has prompted all three major ratings firms recently to downgrade the state’s credit rating.

Connecticut’s budget office estimates that income-tax collections will fall in fiscal 2017 for the first time since the recession.

About $200 million of the drop in receipts came from the state’s closely watched top 100 earners, who are the source of an outsize proportion of the state’s revenue. Many of the state’s richest residents work for hedge funds, which have been hurt by a downturn in the industry . . . .

The tax question in Connecticut, where several thousand tax filers with adjusted gross incomes of more than $1 million a year account for about a third of all income tax receipts, comes amid a shift in tax policy nationally. President Donald Trump, who campaigned on promises to lower taxes, has proposed lowering business and individual rates. But he is also seeking to repeal a deduction on state taxes that will especially hit high-income earners, making it tougher for states to raise taxes among the richest . . . .

The state projects a $5.1 billion budget deficit over the next two fiscal years, fueled by increases in fixed costs over that period including pension obligations, health-care expenses and debt servicing.

In its recent downgrade, which landed Connecticut with the third-lowest (bond) rating for a state, Moody’s Investors Service flagged the state’s shrinking population since 2013—the current population is 3.58 million—as contributing to an underperforming housing market and weak labor-force growth . . . .

Connecticut pitched leafy suburban neighborhoods and good schools for decades as a way to lure residents away from New York. But urban revival has gained steam, drawing away recent college graduates who aren’t interested in such bedroom communities. The shift motivated General Electric Co. last year to move its top executives from Fairfield, Conn., to a new base in Boston . . . .

Connecticut introduced its income tax in the early 1990s, and income-tax growth averaged 9% a year from 1993 through 2008. Since then, the average has been 2% a year. Mr. Malloy put through two tax income increases, in 2011 and 2015, raising the top rate to 6.99%.

Opponents of the past tax hikes have said yet another one would scare away the very people the state relies on. The number of tax filers leaving Connecticut have exceeded the number of filers moving into the Nutmeg state since at least 2010, according to the Internal Revenue Service.

Yet data from the state revenue department shows the number of full-time Connecticut tax filers with an adjusted-gross income of $1 million or more grew to 11,223 in 2015, a 21% increase over 2011. The state says fewer than five of its top 100 taxpayers have fallen out of the ranking since 2014.

Mr. Sullivan of the state’s revenue department said after each of the past two income-tax increases, the average tax liability for the state’s 100 wealthiest residents would increase in one year and then fall. He said that suggests those wealthy residents either adjusted their tax strategies or earned less money in the down years.

The current decline in income taxes also could be the result of wealthy people deferring 2016 income in anticipation of national tax reform, he said . . . .

To address the revenue shortfall, Mr. Malloy is seeking $700 million in concessions from public-sector unions and has threatened pink slips if unions won’t come to the table. He also wants to cut $700 million in state funds to cities and towns.

Public-sector unions, however, maintain that the state’s wealthy should help solve the state’s fiscal problems . . .

https://www.wsj.com/articles/connect...ich-1495186203

[Pedestrian]

Originally Posted by Crawford

I think CT has some of the best suburbs in the U.S. Pretty much every town along the coast from NY to RI, has either an urban downtown, or a quaint, upscale downtown.

It is very possible to own a home in a pretty Connecticut suburb and not be a legal (and therefore taxible) resident of the state. State laws on residency vary but generally if somebody with a gorgeous Greenwich estate also has a gorgeous waterfront spread in Palm Beach or Islamorada or John's Island and registers his/her cars in Florida, votes there, has any professional licenses there and especially if they take advantage of a Florida law allowing the filing of a "Declaration of Domicile" with the county clerk, they can largely avoid paying taxes to Connecticut in site of enjoying its leafy suburbs a decent part of the year (like summer when Florida is insufferable).

[emathias]

To the extent I ever thought of CT in the past, I always imagined Yale and Rich commuter suburbs of Manhattan. I also knew about UConn from basketball, and that the Bushes were partly from there, and I remember reading about Yale making a direct attempt to help be good stewards of the neighborhoods near it.

In 2013 when I lived in Cambridge, MA for a semester, I took the train to New York one weekend to see an exhibit at the Met and was pretty shocked by how ramshackle much of the areas near the Amtrak route were.