As the page turns on fiscal year 2009, anyone involved in Jewish life in Connecticut knows that this has been another difficult year for Jewish organizations to achieve their modest budgetary goals.

It seems like all recent years have been tough ones. Of course, an occasional campaign here or there across the state may shine after prodigious efforts are involved, but the fact is that it is difficult to raise funds in Connecticut because Connecticut itself is not doing well. It’s a place where the economic environment continues to deteriorate every year. In fact, it is nothing short of miraculous that Jewish institutions have done as well as they’ve done over the last couple of decades.

A Wall Street Journal editorial last week, entitled ‘Jodi Corzine’, focused on Connecticut’s fiscal predicament and projects that the future holds little hope for the state if current trends are perpetuated. With a staggering tax burden already in place – one that makes Connecticut one of the top three most taxed states in the country, along with only New York and New Jersey – Connecticut is planning to raise the tax burden on its citizens again. A high tax burden affects a lot of things, not the least of which is the degree to which people contribute to support the institutions that depend on them.

How did this all happen? After all, Connecticut is still one of the richest states in the country.

Sadly, Connecticut’s situation proves that where there is great wealth there is also a commensurate growth in the taxing power of governments to dissipate that wealth. As the Journal article points out, Connecticut was able to balance its budget very nicely without an income tax until 1991 when the 4.5% tax was levied against income. Since then expenditures have increased, as public employees pension and other benefits have been dramatically expanded.

The long-term beneficiaries of this largesse have been Connecticut’s public employees. Their pension and pay at one point was very much like most other states, but as Connecticut’s ability to tax increased, so too did the public employees remuneration. They are now near the top of the list of all states in terms of per capita pay and benefits. As a result, the 4.5% income tax levy that became 5% is now not enough, and 6% is what the legislature and Governor feel they need, as one group after another takes its turn at the public trough.

How does this apply to the Jewish community? It’s simple. Higher rates of taxation create less economic opportunity in the private sector and a poor economic environment is quickly reflected in the business climate: growth decreases, opportunities shrink and productive/creative people begin to leave the state for opportunities elsewhere. The population of Connecticut has been shrinking, with about 113,000 people leaving the state in the last decade. When Connecticut stops growing its Jewish community doesn’t grow either.

According to a stunning statistic from the Wall Street Journal article, Connecticut has not added one job to its employment rolls since 1991 – while the rest of the country has added 22 million new jobs to its work force. This means that the sons and daughters of Jewish families have to look elsewhere for their career opportunities. At the same time, seniors become more aware of an increasingly burdensome inheritance levy and weigh the benefits of staying in Connecticut. A warmer climate might be on the top of their list of reasons to move, but somewhere on that list is also the serious burden of posthumous taxation. Florida, a state with no estate taxes, is full of former Connecticut residents.
Not a large community to begin with, the Jews of Connecticut increasingly find their children, as a matter of course, gravitating to opportunities elsewhere, while their older relatives actively consider more tax friendly venues for their current income and future estates. It’s hard to sustain communal institutions in a shrinking population.

It is difficult to meet even the most modest budget targets. To the Jewish communities’ credit, many of its undertakings continue to thrive and grow. But it is not an easy thing to do, and it doesn’t look as if the economic environment in which they have to function is going to make things any easier going forward.

– nrg

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