Should Connecticut absorb Rhode Island?

Josh Barro writing for Forbes suggests it might be in Rhode Island’s best interest to merge with Connecticut.

According to Barro, because of Rhode Island’s lower per capita income, the state has higher taxes AND lower government spending than both its neighbors.

As of 2009, Rhode Island collected 10.1 percent of state GDP in taxes, outstripping Connecticut (9.9 percent) by a little and Massachusetts (8.9 percent) by a lot. But despite that, Rhode Island governments had only $4,638 in per capita tax revenue to work with, less than Massachusetts ($5,014) or Connecticut ($6,434).

Things must be pretty bad next door if they are looking to Hartford for fiscal rescue. Apparently it is the cities and towns in Rhode Island that are heading for a fiscal cliff.

More from Barro:

Last year, the New York Times profiled fiscally troubled Rhode Island as “Greece on the Narragansett.” Like Greece, Rhode Island faces problems with runaway public sector liabilities, particularly for pensions and retiree health care, that may exceed governments’ ability to service them.

A major pension reform last fall significantly improved the state’s finances, but municipal governments, already more troubled than the state, still await a fix. Providence is talking about bankruptcy, and other cities, like Woonsocket and Cranston, are tottering; the small city of Central Falls is already there.

But Rhode Island has another similarity to Greece: a lot of its problems could be fixed through fiscal union with its wealthier, more productive neighbors.

Within New England, Rhode Island faces a major structural disadvantage. Rhode Island’s per capita income in 2010 was $27,700. That’s actually slightly above the national average, but it’s far below Massachusetts ($33,200) and Connecticut ($35,100).

The threat of bankruptcy should put persistent whining from the Connecticut municipal lobby into context.

Read the rest here.

Update: This post has been corrected to properly spell Josh Barro’s name.

zombie_woof says:

Good point- though I have become very skeptical that the intent was to solve anything that affects the working class. By his actions this governor has shown that his main concern is the public sector unions that helped bankroll his gubernatorial campaign and he isn’t above doing significant harm to taxpayers to ensure that these unions get “their” money. I offer as evidence the forced unionization of private day care providers and PCAs- many of whom do not work for a traditional employer per se so there’s no entity to collectively bargain with. It was a pure money grab for union dues…. which the state will conveniently deduct from state subsidies they receive

This governor makes a big noise about the state being open for business but his administration and the legislature saw fit to impose a number of mandates on small businesses as well as enact the largest tax increase in state history during the deepest recession since the great depression. Frankly some of the numbers- if undoctored by politically expedient statistical trickery reveal a situation that in many ways rivals the economic calamity of the 1930’s.

Our government- during this time of significant belt tightening by the working class forges ahead with a billion dollar boondoggle of a bus way that will not bring about any sort of return for New Britain, Hartford, or the state- but is another package of union only labor contracts- which is the way of this state… which enormously drives up the cost being borne by the taxpayer… but clearly there couldn’t possibly be less concern for that beyond the lip service to no further increases when the news of the $200 million dollar deficit surfaced SUBSEQUENT to the largest tax increase in history where revenues to the state increased by.1 billion dollars over the previous year but they say that isn’t enough.

…and there’s talk of taking on Rhode Island’s problems too? Oh, I’m sure the union cronies in Hartford would be salivating at the prospect of handing over innumerable lucrative projects to union only contracts to help rebuild the former Ocean State at a needlessly steep cost to taxpayers while paying loud lip service to fiscal responsibility and GAAP accounting as this has shown itself to be their modus operandi…. though being run into the ground by union thugs may bring a nostalgic air to Rhode Islanders in the short term until they are push fully into bankruptcy, Connecticut style. With an annual per capita income of $27,000.00 their working class can ill afford Connecticut’s kleptocracy… though I have little doubt that the unions would make out okay.

Gerry Guay says:

Connecticut doesn’t need someone else’s problems. We can’t take care of our own, even with Malloy’s gigantic increase in taxes.