A Tale of Two Bonus Pools

This CT News Junkie story about the thousands of state employees to receive longevity bonuses this week recalls another recent bonus story.
According to the Wall Street Journal, jobs in the financial sector continue to shrink–and along with them their usually hefty salaries and bonuses.
For Connecticut, the connection is clear: Fairfield County, which at times has been the source of 45% of Connecticut’s overall personal income tax collections, was particularly hard hit by the collapse of Wall Street. Thousands of jobs were lost, not to return.
Many Fairfield County residents’ incomes are tied to the financial services industry, and their high salaries and generous bonuses traditionally have helped buoy state income tax receipts.
However, that usual, go-to tax revenue strength was severely sapped by the recession’s shock.
And as the Journal notes, the situation may continue to worsen before it gets better.
Why is that significant?
After the election, state lawmakers will begin preparing for the new session of the General Assembly. And the No. 1 issue will be a new, two-year state budget.
While the years change, the theme remains the same: We have to keep state spending within taxpayers’ means.
But despite a huge tax increase two years ago, the state budget still ran in the red and is again heading in that direction.
Clearly, we continue to spend beyond our means and we cannot sustain further tax increases. Our state unemployment rate—even given some doubts about its recent credibility—is still too high and higher than the U.S. rate.
Economists say it will be years before Connecticut fully climbs out of the recession’s rut.
While the state-employee bonuses are automatic (and regardless of economic conditions), bonuses in the private sector—or even compensation and jobs themselves—depend on actual results and success in business.
So the state-employee bonuses will go out as scheduled; we’ve made the commitment. (Voters should ask their legislative candidates how they stand on the issue, however.)
The question is, in January, will policymakers crafting the new state budget deal with the hard reality of a still-struggling economy, as evidenced by the shock waves still being felt on Wall Street and consequently our own Fairfield County?