Monday, February 28, 2011

ANIMAL KINGDOM BEHAVIOR OF ELECTED OFFICIALS ... EVERYTHING IS ON THE MENU!


Proposed tax raises ire of coupon fans

Published 11:00 p.m., Sunday, February 27, 2011
HARTFORD (AP) -- Devotees of coupons and discounts are angry at Gov. Dannel P. Malloy's proposal to slap a new sales tax on the original price of a good or service rather than the discounted price.
Ending the sales tax exemptions for coupons, discounts and automobile trade-ins are among tax exemptions Malloy has proposed ending to help close the state's projected $3.5 billion deficit. For example, the tax would be imposed on the $30 price of a blouse, not the $15 sale price.
Gina Juliano learned firsthand after she lost her job in 2009 as a vice principal in the Hartford Public Schools that coupons and sales can help a family make ends meet. She cut her budget for food, toiletries, pet supplies and paper goods from between $200 and $300 a week to $50.
"Under his proposal, I would have to pay tax on that, which is not right because I didn't pay for the item," said Juliano, who runs classes on couponing. "Everybody who does this, it's not like they're rich. They're doing this to survive."
Benjamin Barnes, Malloy's budget chief, isn't a particular fan of the proposal. But because of the state's deficit woes, the administration is forced to examine the numerous tax exemptions currently on the books.
"It's true, it's a new tax. It sucks," he said.
"Every single one of those, however many, 20-odd taxes is a new tax and it sucks. I don't know how to hide it. These are new taxes."
"I turned to coupons because I would have had to lose my house and everything. I wouldn't have been able to survive," said Juliano, who now writes a blog in Connecticut called Gina's Kokopelli that tracks coupons, sales and bargains for other shoppers.
Like many avid couponers, Juliano pays little or nothing for items after matching coupons with sales. For example, she recently used a $3 coupon to buy a bottle of Gain fabric softener that was on sale for $2.99 at Rite Aid.
Food items under Malloy's budget would continue to be exempt from the sales tax and therefore not affected by the proposed coupon and discount exemption rollback which is projected to bring in $92 million in revenue over the two-year, nearly $40 billion budget. The coupon exemption is among many sales tax exemptions the new governor has proposed ending.
Malloy has also proposed raising the sales tax rate from 6 percent to 6.35 percent for retail purchases and ending the $50 exemption for clothing and footwear.
Kristen Ellis, a Connecticut blogger who writes "Funbeingfrugal.com" about ways to live inexpensively, said she and her husband are on unemployment compensation and have to count pennies and carefully plan their shopping.
"How can you tax me on what I did not spend? The short answer is, you can't," she said.
Ellis cites legal definitions of a "sales tax" and how they indicate a sales tax is to be levied on the sale price paid by consumers. She also cites a state law that says "all coupons and scan cards reduce taxable price."
"If Mr. Malloy follows through with this proposal, he is opening himself and the state up to legal action," Ellis wrote on her blog.
Barnes said the administration will need to change state law to collect taxes on the pre-discounted amount. "We can't do it by administrative fiat," he said.
Timothy Phelan, president of the Connecticut Retail Merchants Association, said he's concerned that many of the exemptions Malloy has proposed repealing -- proposals to raise the sales tax and luxury tax -- will affect retailers. Shoppers may instead buy on the internet where sales taxes are not charged on many items, he said.
"It's a loss for the state because they won't get that sales tax revenue and it's certainly a loss for the retail community," Phelan said.
Car dealers also are concerned about Malloy's plans to end the sales tax exemption for auto trade-ins, a proposal that would raise $81.8 million over two years. Currently, consumers pay tax on a new car minus the value of a car they are trading in to the dealer. Under this proposal, that trade-in -- essentially a coupon against the price of the new car -- would no longer count.
James Fleming, president of the Connecticut Automotive Retailers Association, said he believes such a move will make it more difficult for consumers to qualify for a car loan because they often use the value of the trade-in toward a down payment. Under Malloy's plan, the trade-in value would be reduced by the sales tax.
"My dealers will say people will walk out of a showroom over a $20 a month increase in a car payment," he said.
Connecticut residents will ultimately have to pay the tax if they buy the car from an out-of-state dealership, but Fleming said it's been shown in other states that those consumers will go to that out-of-state dealership for repairs and oil changes. He estimates Malloy's proposal could lead to possibly 500 layoffs across the state.
"The experience in other states is it's a loser. It's a big, big loser," he said.


Read more: http://www.newstimes.com/default/article/Proposed-tax-raises-ire-of-coupon-fans-1033691.php#ixzz1FJUpI1Bp

Sunday, February 27, 2011

EITHER THE PEOPLE HAVE SPOKEN OR HAVEN'T ... APPARENTLY DECIDED IS NOT PART OF THE ANALYSIS OF A VOTE!

Hodge `disappointed but not surprised' New Fairfield rejects library proposal
John Pirro, Staff Writer ... A JOHN HODGE WATERBOY!
Updated 03:53 p.m., Sunday, February 27, 2011



NEW FAIRFIELD -- Taxpayers on Saturday apparently decided that building a new library was "a bridge too far" and rejected the project by fewer than 80 votes in a townwide referendum. [SPEAKING OF BRIDGES ... WHAT ABOUT THE BRIDGE TO THE OLD HOUSES, CAFE ON THE BEACH, CELL TOWER ... WE NEED MORE SPENDING SO WE CAN BOND MORE AND HAVE HIGHER TAXES!] 
In a low turnout, residents turned down the $2.5 million proposal, 585-506, meaning that library users will have to continue to make do with a facility that project proponents have said is too small, lacks adequate parking and doesn't comply with federal access requirements for the physically disabled. 
The tally is not yet finalFirst Selectman John Hodge said Sunday, noting that eight absentee ballots remain to be counted. But whichever way they were cast, the result won't be changed.
"Although I'm disappointed, I'm not surprised," commented Hodge, who supported the project.
"I think it's just a reflection of what people are feeling in the current economic climate," he observed. "They just don't want to spend any more money."
Hodge said the turnout of fewer than 1,100 people --- out of about 9,000 registered voters --- despite a full day of balloting was "lower than other" referenda and considerably fewer than the number of people who typically go to the polls for votes on the town and school budget. [A SIGNAL FROM HODGE THAT THIS VOTE WILL NOT STAND ... NOT ENOUGH PEOPLE VOTED TO REALLY MAKE A DIFFERENCE, SO LET'S PLAN ANOTHER.] 
"There didn't appear to be any organized opposition to it," Hodge said, "but we wondered if this would be a bridge too far. It's just a reflection of what people are feeling."  [SO WHEN IS THE NEXT REFERENDA ... GUESS IT WILL BE THIS SUMMER ... WILL KEEP VOTING UNTIL WE GET IT!]
Proponents had hoped for a favorable result that would have allowed the town to build a new 14,000-square-foot facility on municipally owned land near the high school.
They had said the current library, located in a converted church on Brush Hill Road, has long suffered from inadequate parking and lack of space and is not in compliance with accessibility standards mandated by the federal Americans With Disabilities Act.  [THESE ARE THE SAME ARGUMENTS ENUMERATED FOR THE TOWN HALL WHICH HAS BEEN USED TO FLOG THE VOTING PUBLIC TIME AND AGAIN!]
Building a new library would have been cheaper than renovating and expanding the existing building, which has been estimated at in excess of $4 million.
"That really saddens me," said New Fairfield resident Jefferson Wiggins, who supported building a new library. "It's not a loss for New Fairfield alone. It's a loss for all people who believe that the library is where you go to seek first-hand information."
Hodge said the library board will be able to take the drawings and other plans for the defeated project and use them to apply for a state grant.
"But that's probably a few years away at this point," he said.
Contact John Pirro
or 203-731-3342.

I WOULD GLADLY PAY YOU TUESDAY FOR A HAMBURGER TODAY

Municipal bonds: A Balancing act

By Nicole Bullock and Aline van Duyn in New York
Published: February 27 2011 20:18 | Last updated: February 27 2011 20:18

Our New Fairfield taxes are going up but the municipal budget is once again at a zero or near zero increase ... soooooo, why are the taxes going up?  The Popeye cartoon featuring Wimpy and his famous line is reminiscent of how the present administration uses taxes.  The sham of using a 'pearl in an oyster' is how the various town funds are used and spent down.  Now for the rest of the story. 
It was October 1975 and New York City was about to run out of money. The city had to meet its payroll obligations for police, firefighters and other employees. Payments on the city’s bonds were due on the same day. There was not enough cash for both.
Harrison “Jay” Goldin, who as the city’s comptroller was in charge of its finances, was summoned to a meeting with mayor Abraham Beame and a group of leading New York bankers and chief executives of companies including insurers and retailers.
“I was told the group had decided that I should meet the payroll the next day and not make the payments on the debt,” Mr Goldin recalls, sitting in the offices of his financial advisory firm in Manhattan’s Empire State Building.
But the next day, he made the debt service payments. “The priority under the New York state constitution was to make payment on the debt first and the obligation to do so was my duty as comptroller,” he says.
A commitment to repay debt, even in the face of severe financial problems, is the bedrock of the modern US municipal bond market, a $3,000bn part of the credit markets where states, cities and other public bodies borrow for roads, bridges, schools, hospitals and utilities that their regular tax revenues cannot fund.
The depth of the latest US recession and the ripple effects of the financial crisis have shaken that foundation. Since 2008, states have managed to close budget gaps of more than $400bn, according to the National Conference of State Legislatures, a bipartisan research group, by steep cuts in spending or rises in taxes and fees.
As lawmakers struggle to plug the latest deficits – most states are constitutionally required to balance budgets annually – investors have started to worry. Some states are still spending more than their revenues, which come mostly from taxes: receipts remain below pre-crisis levels. Their expenses could also rise in the coming years as they pay out pension and other benefits promised to public sector employees in better times. A public backlash has already begun to emerge as lawmakers push for deep cuts and concessions, particularly from trade unions.
Will states and cities slash spending and increase taxes, and continue to prioritise payments on debt? Or will some US states and cities try to restructure their debts, forcing bondholders to swallow losses alongside concessions from citizens and unions? Will the federal US government step in with a bail-out? Unlike local governments, the federal US government is allowed to operate at a deficit.
“With many states and local governments struggling to close large deficits, it is time to acknowledge that defaults could happen, even in large and systemically important municipal issuers,” says Christian Stracke, head of credit research at Pimco, which runs the world’s biggest bond fund.
Concern has arisen about the implications. First of all, a continued squeeze on local spending could restrain the national recovery. The $800bn US economic stimulus introduced to stem a slide into another Depression included multifaceted aid for states and local governments both directly and through programmes such as subsidies for cheap debt. This federal support largely runs out this year. Economists at Goldman Sachs, for example, predict that local government spending cuts required as part of their belt tightening will snip half a percentage point off US gross domestic product this year. More drastic spending cuts could result in an even more significant drag.
Second, many Americans have some of their wealth tied up in muni debt. About two-thirds of the muni bond market is in the hands of individual investors. In many cases, local residents buy the bonds sold by states and cities because those provide tax-free interest income. This means that losses on such bonds would also hurt local residents, further hitting local economies, local banks and US economic growth.
Third, any bail-out could further strain the finances of the federal government, which is already raising eyebrows at home and around the world for its ballooning debt. Lawmakers, particularly Republicans, vehemently oppose local bail-outs, just as many on Capitol Hill are fighting against a rise in Washington’s debt ceiling.
Muni borrowing costs have risen from historic lows, as more investors recognise that the risks in the market have grown. For 10-year bonds, top-rated municipal borrowers pay about 3.1 per cent, up from 2.5 per cent just four months ago and a three-decade low of 2.17 per cent last summer, according to the benchmark index from Thomson Reuters MMD. For the more hamstrung borrowers, the rise is more pronounced.
F ew municipal market experts agree with the predictions of Meredith Whitney, the analyst who foresaw trouble at large US banks ahead of the financial crisis. Ms Whitney caused a stir last year when she warned of 50-100 local muni defaults totalling “hundreds of billions of dollars”. But many now doubt whether the rock-bottom default rates of recent memory can persist.
“The kernel of truth here is that in the case of six or seven states, their long-term financial condition is quite bad if they do not do anything,” says Ken Buckfire, chief executive of Miller Buckfire, an investment bank. “But companies, and by extension states, only default on debt when they run out of cash, not because they have too much long-term debt.”
Mr Buckfire cites Illinois, California, New Jersey, New York, Connecticut, Massachusetts, Ohio and Rhode Island as among the most troubled states. Cities and towns are seen as more vulnerable because they rely on aid from states, which states are cutting, and property taxes. With more than 50,000 diverse issuers in the muni bond market, it is hard to pinpoint the trouble spots.
Wisconsin’s budget battle
‘What will this do to my high school, and to the college I want to go to?’
Jonah Walker has never been involved in politics. But last week the 17-year-old travelled from the small town of Viroqua to Madison, Wisconsin’s capital, to join protests against the state’s proposal to end collective bargaining for its employees, writes Hal Weitzman.
A student with a greasy fringe and an earnest air, Mr Walker says he fears the plan’s effect on his father, a state employee, and on his own education. “What will this do to my high school?” he asks. “What will it mean for the college I want to go to?”
Such unease has fuelled protests for the past 13 days at the state Capitol building against Governor Scott Walker’s “budget repair bill”, which has turned Wisconsin into a battleground between union activism and small-government conservatism.
Mr Walker, a Republican elected in November, says the state must restrict bargaining rights to tackle a $137m budget shortfall, projected to hit $3.6bn within two years. Public-sector unions say they will concede cuts but refuse to budge on bargaining. Indeed, critics accuse the governor of turning the debate into an attempt to weaken the unions, big donors to Democratic party campaign funds. They note that he need not scrap collective bargaining to balance the budget in the short term.
The issue has split the state. While polls suggest most Wisconsinites think unionised state employees enjoy generous pensions and low healthcare costs at taxpayers’ expense, there is little support for ending collective bargaining. Nonetheless, both sides depict the fight as one of national importance, a test of the power of unions relative to states with new Republican majorities seeking to address unsustainable finances.
The bill has been stalled since the week before last, after Democrats in the state senate fled to neighbouring Illinois to deny the Republicans a quorum. Mr Walker warned last week of “dire consequences”, with up to 13,500 state job losses, if they did not return and allow his bill to pass.
The struggle is spreading. Indiana Democrats seeking to block “right-to-work” legislation, which would outlaw making union membership a condition of employment, also fled to Illinois last week, while thousands protested outside the Ohio Capitol against a proposal to limit collective bargaining for state employees.
States are generally expected to muddle through. Compared with cash-strapped eurozone countries such as Greece or Ireland, US states’ debt tends to be much lower relative to the size of their economies. There are also many liabilities that the US government absorbs, such as the cost of bank failures and a chunk of unemployment and healthcare benefits. Using Census Bureau data, Pimco reckons that the median state has debt of just 7.3 per cent of gross state product, the equivalent of GDP.
Unfunded pension liabilities, which are estimated to total between $700bn and $3,000bn, are a looming problem but states still largely have time to address it, though the battle will be tough. Future pensioners can expect to make bigger contributions to their retirements and perhaps enjoy less generous benefits. Existing pensions are difficult to touch, although some politicians may try.
Among the states, Illinois has stood out recently for its deeply underfunded pension pot and because it borrowed to pay its annual contribution. Illinois wants to borrow more to address a backlog of bills for goods and services depending on the state.
As more attention focuses on governments’ efforts to make ends meet, there is the potential for a crisis of confidence in the market that would dry up sources of funding. The millions of individuals who own munis bought the bonds on the assumption that they were safe and that they would always be repaid. Yet in recent months, the market’s turmoil has resulted in paper losses showing up on their account statements.
With so many different types of debt and of individual issuers, some problems may be hidden from view. Munis are not held to the same stringent disclosure requirements as, say, corporate bonds. As investors by and large hold munis for the long term, trading can be thin and prices therefore uncertain. “It is the ultimate shadow market. There are thousands of issuers, it is remarkably illiquid and there is a lack of disclosure,” says Mr Buckfire.
Investors used to rely on bond insurance to protect themselves – but that industry collapsed after many insurers also guaranteed risky mortgage debt.
In response to the growing uncertainties, people have sold their bonds. Since November, retail investors have withdrawn more than $26bn from mutual funds that invest in munis, or about 7 per cent of assets, in the biggest selling rout ever. Roman Orenchuk, a 59-year-old from Sacramento, California, became one such seller in November. Like most investors, Mr Orenchuk, who owns a manufacturing business with his son, lost money when financial markets plummeted in 2008. “When the market starts to go sideways, rather than waiting like I used to, I pull the plug.”
It is this type of behaviour that could turn jitters following one problem area into a more widespread retreat from the muni market. “Because market participants have generally viewed [municipal debt] as a risk-free area, [the question is] whether an individual credit problem can create a broader confidence problem,” says Raymond McDaniel, chief executive of Moody’s, the credit rating agency. “That’s where the systemic implications come in and what we and others are trying to be alert to.”
The potential for systemic risks beyond the municipal markets cannot be excluded, he adds. “We consider it very unlikely. We do not rule that out. There are many different types of credits in the municipal sector, with many different forms of support.”
But municipal experts take comfort in that many bond payments rank high in the priority of bills that state and local governments pay, much like the payments did 35 years ago in New York City. In California, the largest state, these debt payments rank only after education. During its budget crisis two years ago, “California paid its vendors with vouchers instead of cash in part, so it could safeguard cash to pay its bonds”, says Matt Fabian, managing director at Municipal Market Advisors, a research group.
Lawmakers also have believed that they need to protect access to the capital markets. “They aren’t paying us because they love us,” says Joseph Pangallozzi, a credit research analyst at BlackRock, the money manager. “There is not another stream of capital” on which states and municipalities could draw instead.
Many believe that large US banks would step in, however, should the markets ever close for big states. JPMorgan Chase and others provided bridging loans to California during past budget crises. States and local governments also have the power to increase their revenues by raising taxes. Illinois recently boosted its taxes by an average of 67 per cent.
Analysts point out, however, that such moves may ultimately backfire, driving citizens and businesses to healthier parts of the US that impose lower levies. The political mood in many statehouses around the country is also vehemently anti-tax, they note.
At some point, it may become difficult for lawmakers to ask for deep sacrifices from labour unions and citizens without some backlash against bondholders. “The jury is out on whether there will be a spate of defaults and with that a collision of borrowed money and labour,” says Bruce Bennett, a partner at Dewey & LeBoeuf and the lawyer who represented Orange County, California, in its 1994 bankruptcy (in which bondholders were paid in full).
A key factor in whether the municipal stress is contained will be the extent of the US economic recovery. Tax revenues have risen as growth has returned to parts of the US. Preliminary figures for October-December 2010 for 41 states show collections in the period were up 6.9 per cent from a year earlier, according to the Nelson A. Rockefeller Institute of Government. If confirmed in the full fourth-quarter data, the gain would represent the strongest growth in tax revenues since the second quarter of 2006, the research group says.
Political will, however, plays an enormous role in a state or local government’s success in dealing with adverse conditions and the unpopular choices that accompany them. But polarising political lines are now being drawn as states begin to take on unions in an effort to cut labour costs.
Back in 1975, New York successfully negotiated for one of its pensions to lend it money through the purchase of bonds, because the financial markets had shut to the city. So it was able to make both payments by midnight on that day in October. In the year that followed many sacrifices were made. Those included cuts in the municipal workforce, the introduction of tuition fees at city universities for the first time, sharp rises in public transport fares and more borrowing.
“You need political will and the will to sit everyone down at the same table,” says Felix Rohatyn, the Lazard banker who advised New York City at the time. “Now, the lack of relationships between the people making the decisions is part of the problem.”

Friday, February 25, 2011

OUR TAXES ARE GOING UP 3% PLUS ALL DEBT SERVICE ... DO WE NEED MORE?


Wants to cast vote on 'complete package'

Published 06:05 p.m., Thursday, February 24, 2011
The push by our first selectman to fast track a proposed new library should raise serious concerns for us taxpayers. John Hodge stated in the Feb. 17 News-Times that a library project has been pending for nearly a decade. This is completely false and misleading. Never has any library related project been bid until fairly recently.
Hodge is claiming the present building is too small. Really? The existing building is 13,000 square feet on two floors while a new building would be 14,000 square feet on one floor without any basement space for storage.
A new library will cost $2.5 million, but don't forget the property was purchased a while ago with taxpayer's funds for $575,000. That cost should be factored into our tax liability for a new library, raising total investment to $3,075,000.
First Selectman Hodge also stated in the article, "If this gets turned down, none of the issues with the current library will go away."
This is very true; but it is also very true those same issues would need to be dealt with once the building is renovated. Hodge wasn't willing to advise what the building renovation costs to us taxpayers will be. But, if his $4 million-plus figure is correct, we are now looking at a total cost that we taxpayers must ante up of $3,075,000 for new construction and renovation of the old library for use by other town departments costing $4 million for a total of $7,075,000 and counting.
The taxpayers of New Fairfield should be voting on a complete package so we all know what our total tax liability will be for the next 20 years, not just the new construction cost we have been shown.
Please think long and hard about this project before you cast your vote.
Doug Thielen
New Fairfield


Read more: http://www.newstimes.com/default/article/Wants-to-cast-vote-on-complete-package-1029372.php#ixzz1EzgI7LWP

Wednesday, February 23, 2011

THEY STILL SHOT HORSES DON'T THEY?


http://media.townhall.com/Townhall/Car/b/lb0218cd20110218040126.jpg


IS CONNECTICUT FAR BEHIND (SEE CONNECTICUT'S UNFUNDED LIABILITY AFTER THIS STORY) ALONG WITH MANY OTHER STATES?  CAN’T FIX STUPID!
WONDER WHAT INTEREST RATES THEY WILL BE PAYING, Hmmmmmm

Illinois seeks a $3.7 billion bailout to cover pensions
Written by CAA National on February 23, 2011, 01:45 PM

http://conservativeactionalerts.com/uploads/Image/022311_AP_RahmEmmanuel.jpg
Double Whammy: Illinois -- in addition to their 
money problems – gets Rahm Emanuel to run their largest city.

Having fallen behind in funding its state pensions, Illinois is seeking to raise $3.7 billion through a bond issue this week, as the debate over government budget shortfalls roils state capitols.

The Illinois bond sale is viewed as a sign of how investors see the fiscal troubles in some overburdened states, where budget controversies have led to unrest and protests in places such as Wisconsin. If investors shy away from the bonds, other states, too, may have to pay higher rates when borrowing, making it harder for them to raise money.

The bond sale comes as several states are suffering fiscal shortfalls precipitated by the economic crisis. Moves by governors and Republican legislators to cut spending have drawn protesters to state capitals in Wisconsin and Indiana - where Democratic lawmakers have staged walkouts - and Ohio. In New Jersey on Tuesday, Gov. Chris Christie (R) unveiled a budget plan that would give property-tax credits to homeowners if government workers pay more than triple what they do now for health insurance. Christie is also urging legislators to enact his proposal to reduce state employee pension benefits.

Pensions for government workers are one of the prime targets in the budget debates, at least in part because most private-sector workers no longer receive them, and as the record in Illinois shows, because those obligations can grow quickly.

Illinois' pension system is one of the most poorly funded in the nation, with less than 40 percent of its $139 billion in liabilities funded, according to state figures.

Double Whammy: Illinois -- in addition to their money problems –
gets Rahm Emanuel to run their largest city. (AP Photo)

Connecticut's unfunded pension liability hits 22-year high

December 10, 2010

By Keith M. Phaneuf

The state's pension fund now holds less than 45 percent of the funds its needs to meet obligations to workers, plunging below the halfway mark for the first time in more than two decades, according to the latest, biennial report from fund analysts.

The actuarial valuation prepared by Cavanaugh Macdonald Consulting of Kennesaw, Ga., also found that while fund investment earnings rebounded over the last year, they could not overcome significant losses from 2009, coupled with various pension-weakening gimmicks ordered to prop up the state budget.
And that analysis, which covers the fund's history through the end of the last fiscal year on June 30, doesn't even address another $100 million pension contribution that is being deferred in the current year.
The state's annual pension contribution, which currently stands at $844 million, is projected to grow just beyond $1 billion next year.
And even if that is met, the contribution is on pace to leap by 50 percent by 2017, double by 2026 and triple by 2038, based on a consultants' report issued earlier this year for a state panel studying retirement benefits.
"We know we have to get things back on track," Rep. John Geragosian, D-New Britain, co-chairman of the legislature's Appropriations Committee, said Thursday. "This is one of many challenges that we have to begin dealing with in the next session.
State government had $9.35 billion in assets in the pension fund as of June 30, compared with $21.1 billion in obligations, which together represent a funded ratio of 44.4 percent. Actuaries typically cite a ratio of 80 percent as fiscally healthy. The last time the ratio hovered close to 45 percent was in 1988.
The ratio, which peaked at 63 percent in 2001 and has declined gradually since, stood at 52 percent in June 2008, according to previous actuarial reports.
But the slipping accelerated over the past two years as Connecticut and the nation plunged into recession.
Investment earnings, which fell by $1.7 billion in the 2008-09 fiscal year, were partially offset by an $825.8 million gain in 2009-10.
But problems on Wall Street weren't the only problem the pension fund faced.
A May 2009 concession deal negotiated by Gov. M. Jodi Rell and ratified by state employee unions and the General Assembly deferred $214 million in pension contributions over the past two fiscal years, and allowed another $100 million deferral this year.
That deal also allowed the state to offer a retirement incentive program in 2009, which increased pension benefits for about 3,800 eligible employees.
Though popular among workers, these incentive programs have been criticized by economists, legislators and some union leaders for providing illusory savings, offering a short-term reduction in salary costs that eventually is offset by larger, long-term losses suffered by a pension savings account robbed of investment earnings.
And retirement data shows state employees tend to defer their retirement plans to take advantage of these lucrative incentive programs.
State government has offered five retirement incentive programs in the past two decades, providing them in 1989, 1992, 1997, 2003 and 2009.
According to records from Comptroller Nancy Wyman's office, retirements since 1987 have averaged 738 workers in years without incentives, and 4,285 in years with them.
Connecticut's pension fund has been struggling to reform a pension system that began as a pay-as-you-go system.
For nearly four decades, state government saved nothing, and therefore gained no investment earnings, to cover pension costs.
Annual contributions into a savings account, which began in the early 1980s, fulfill two purposes: Meeting the "normal cost," or saving to cover the benefits earned by workers during the year; and making up - over a 30-year schedule - for the dollars Connecticut should have saved in decades past to meet its obligations.
Veteran state union leader Salvatore Luciano said unions realized the pension fund really couldn't afford either the contribution deferrals or the incentive program built into the concession package. But given Rell's preference for social service cuts program over tax hikes, it was the least objectionable alternative, he said.
"They were looking at cutting lead (poisoning) screening for children," he said. "Those were the kinds of choices we were making."
Rell, who repeatedly has charged the Democrat-controlled legislature with being unwilling to consider substantial cuts to any segment of state spending over the past two years, declined to comment about the new valuation.
State Treasurer Denise L. Nappier, who oversees investments of pension funds, also declined to comment.
The State Employees Bargaining Agent Coalition, which negotiates health and retirement benefits for all state workers, rejected the administration's proposal for another retirement incentive program this year.
"We don't want to see public services harmed anymore," SEBAC spokesman Matt O'Connor said Thursday adding that state unions also want restoring the fiscal health of the pension fund to be given high priority.
Though he has provided no details about what concessions he may seek from state employee unions, Gov.-elect Dan Malloy has said on several occasions that state government must reduce its reliance on fiscal gimmicks as its addresses the $3.67 billion deficit projected for the next fiscal year.
"This is another reminder of just how deep a hole our state is in," Malloy said Thursday. "The news is grim, the decisions are tough and the sacrifices will be many in order to get Connecticut's fiscal house in order.  But let me be clear: we will get there."