News From Connecticut

The smell of political silliness is in the air here in Connecticut.  An article in the Courant mentions:

• Connecticut is required to have a ballot question every 20 years on whether to call a convention to amend the state’s constitution;
   
• This November will see an appearance of the bi-decadal question on the ballot;
   
• Groups supporting an anti-same-gender amendment to the state constitution and the introduction of the ballot initiative are ramping up a campaign to encourage voters to vote “yes” to the question.

While I’m all for periodically revisiting the fundamentals from which our legal and regulatory system works, I tend to distrust politicians’ and activists’ attempts to improve something that isn’t necessarily broken.  That distrust is doubled when folks seeking to meddle with the status-quo have ulterior motives.

For example, longer-time readers of this blog should be aware of my thoughts on same-gender marriage – I feel that the notion of a bureaucrat or politician dictating whom God or Mother Nature may marry to be silly at best, arrogant at worst.  I wouldn’t mind seeing a roadblock or two set up to interfere with those who would aggravate that silliness/arrogance.

On the subject of ballot initiatives – while I can see the attraction to the idea, I can also see the potential for great mischief to be caused through attempting to game the tyranny of the majority.   Besides, given the small size of Connecticut, both in terms of population and geography, state legislators seem particularly responsive to the will of the people.   For a recent example, consider the recent hoopla over requiring gas company franchises to permit franchisees to grant cash discounts.

We apparently don’t need ballot initiatives in this state to see silliness occur.

Given the level of responsiveness we already have in state government, why the heck should we want to give up the sanity that is supposed to be imposed by filtering legislative changes through theoretically wise elected representatives?

However, I suspect that I’m in the minority on this matter.  So, if we are going to endure the ordeal of ballot initiatives in this state, could I at least get the right to mace aggressive petitioners written into the state constitution, or the state’s do-not-call law amended to prohibit robocalls from political campaigns and campaigns for/against the initiatives of the day?

It looks like the state’s fearless leaders will do anything, including failing to consider the consequences, in order to appear to be doing something about gas prices.  Seen in the Courant:

State legislators joined the crush of politicians eager to act on gasoline prices Thursday by permitting cash discounts and repealing a July 1 tax increase. [...]

The cash-discount provision was sought by retailers, who complained that some franchise agreements barred lower prices for customers paying cash.

Fox said the savings would come from eliminating credit card fees and other costs associated with credit. Retailers now lose two or three days of “float,” the time it takes to actually collect revenue on credit sales, he said.

“The cash customer now subsidizes the credit customer,” he said.

About 75 percent of retail gas purchases in Connecticut are made with credit cards.

Well, at least someone finally acknowledged the subsidy.

In an earlier post on the subject, I hypothesized a 50/50 cash/credit split, which would imply a dime discount for cash customers, and a dime increase for credit customers.  At a 75 credit / 25 cash mix…well, that’s a bit less of a hike for the plastic-wielders.

Still, I think this is quite a bit of fuss being generated over the privilege of charging us more for gas, disguised as an attempt to drive petrol costs down.

I think someone needs a math lesson.

The Courant has an article about Connecticut legislators’ latest attempt to “fix” the state’s honor of having the highest gas prices in the country:

Gasoline prices could drop 10 to 20 cents a gallon if the legislature passes a bill Wednesday that would allow stations to offer cash discounts.

With the support of Republican Gov. M. Jodi Rell and Democratic legislative leaders, the bill will be debated at a time when lawmakers are under increasing pressure to do something — in an election year — about gasoline prices that have blown past $4 a gallon. A special legislative session is scheduled for Wednesday to debate the cash discounts and other issues.[...]

Insiders could not agree Monday on exactly how much consumers could save at the pump, saying that the final prices would be set by the retailers. Attorney General Richard Blumenthal predicted the savings at 10 to 12 cents a gallon, while Fox said that it could be as high as 20 cents. Among the tiny number of stations currently offering discounts, the average savings is now 16 cents a gallon, Fox said. A Hess gasoline station on the Berlin Turnpike was offering a discount of 20 cents a gallon Monday for cash customers.

I see one major flaw in the article and premise of such a measure — there is no such thing as a free lunch.

Currently, gas stations have the expense load coming arising from credit card transaction fees baked into the prices  they charge.  So, if a gas station started offering a discount to cash customers, the revenue to fund that discount would have to come from someplace else — specifically, the prices charged credit/debit-card wielding customers.

A numeric example:

Assume, for the sake of simplicity that 50% of all gas customers pay by plastic.  (That’s a made-up number; I don’t know what the real stat is, and Google isn’t being helpful.)   Assume also that gas is running $4.35/gallon and that credit/debit transaction fees are 5%.

So, that $4.35/gallon could be broken down as:  4.35 ÷ [1+(5%×50%)] = 4.24 in actual underlying cost for gas, and $0.09 in “plastic load”.

If a gas station were to go to a two-tiered cash vs. plastic pricing system, then arguably it could charge $4.24/gallon to cash customers, and (4.24×1.05)=$4.45/gallon to credit card customers.

In reality, the actual prices would obviously vary.  Some gas stations might see some additional revenue bump from having additional customer traffic inside the store (rather than many folks just paying at the pump), but perhaps there would also need to be an offset due to a possible need to hire an extra cashier to handle the additional cash business, etc., etc., etc.

Also lost in the discussion is the fact that many people (myself included) prefer to use plastic these days rather than cash because of the fees associated with withdrawing funds from ATMs (true, they can be avoided, but…), as well as the rebates we get for card use.

And finally, we still have the matter that higher gas prices are still not necessarily a bad thing, if they get people to adopt a conservation-oriented mindset, start living in a more sustainable manner, and stimulate growth in new/alternative power technologies.   I realize that that’s a difficult argument to stomach when filling up a gas tank will seriously eat into your gadget budget, but maybe it’s worth listening to the global warming hype (and to consider that air temperatures in New England are flirting with 100°F a week and a half before the official start of summer) to consider why some pain now might do us all some good in the long term.

Seen at CTNewsJunkie:

Gov. M. Jodi Rell today asked legislative leaders to expand the legislature’s special session next week to allow for a vote on postponing the July 1 increase in one of the state’s two gasoline taxes. [...]

Earlier this week Rell said in order to postpone the half percent increase in the gasoline gross receipts tax the legislature would have to help her find $25 million in spending cuts to make up for the lost revenue, a suggestion that has one former Democratic state legislator crying foul.[...]

“Even if gas prices don’t increase at all from this point forward—the most basic simplistic assessment reveals that in FY 09, the General Fund will not receive the $311 million (that was projected last June) but will actually receive well over $410 million,” Pelto said in an emailed statement titled, “Reality Check on Gas Tax Issue.”

Although my inner conservationist was looking forward to Nutmeggers being further encouraged to conserve from the incremental increase in gas prices, I do have to admit that I get a depressing pang in my stomach every time I drive by a gas price sign.  Not accelerating the increase in those numbers would be nice.

I am, however, truly disappointed that our state legislature seems disinclined to take the opportunity to have a revenue cut be an excuse for cutting other costs.  After all, our state government agencies are, by and large, horribly inefficient.  If we aren’t going to get a bang for our tax bucks, why not fund them according to the quality of service they currently provide?

Besides, the CTNJ article also points out that the state is expected to run at a deficit next fiscal year, in which case reducing spending in the face of reduced revenues is the sort of good sense you’d expect an elected leader to exhibit.

This evening, after submitting my scantron in the second town budget referendum, I had the dubious honor of buying gas for $4.279/gallon.  Then I cam home and saw this article in the Courant:

[T]he state’s gross receipts tax on both gasoline and diesel will be going up July 1, and those prices are based on the wholesale price of fuel.

As a result, the state tax on diesel fuel in Connecticut will rise 7.7 cents per gallon, the tax department announced Monday.

And gasoline prices will jump three to four cents per gallon, depending on the wholesale price on that day. The increase is in addition to the 25-cent-per-gallon state tax on gasoline.

Well, I did say that higher gas prices would incent efficiency and conservation, and I am all for efficiency and conservation.

But still…unless there’s a significant drop in diesel prices before then, we’ll pass the $5/gallon diesel barrier that we’ve been flirting with locally for the past couple of weeks.

On her blog at the Courant, Loretta Waldman has posted pictures of a proposed overpass for the US44 / Route 10 intersection at the foot of Avon Mountain.  The intersection is infamous as the site of a couple of spectacular crashes in the past few years, due to trucks’ brakes failing on the steep downgrade.

This problem was supposed to be resolved by an ugly runaway truck ramp recently installed, but apparently ConnDOT still has some grand plans.  "Before" and "after" pictures are up:

I’ve commented previously about a lack of boating sounds coming from a nearby reservoir, as an ominous sign of just how expensive gas has become.  (And, FWIW, I did hear a little bit of boat noise…for a little while…on Sunday and Monday.)

It seems that the price of marine fuel has become worthy of an article in Sunday’s Courant:

But there’s a major cost issue during this year of ascending gasoline prices and growing concern about global oil supplies. Marine gas generally sells at 50 to 75 cents a gallon over auto fuel, and last week, as the Memorial Day weekend approached, fuel was already selling at $4.66 a gallon on the East Lyme docks. By the height of the power boating season in July, the Pratts and their marina friends expect to pay $5 or more a gallon for fuel.

Nobody’s pretending that 33-footers like the Wenweken III — there are dozens of them along the neighboring slips — are anything but gas-aholics. The Pratts’ boat, powered by twin, 250-horsepower Yamaha outboards, burns 30 gallons an hour — and that’s just, as Ken says, “loafing along at 30 mph.” Their fuel tab this summer will come to $150 an hour, but the Pratts have few worries about running low. The Wenweken III’s tanks can hold 350 gallons.

“We’re looking this summer at our first $1,700 fill-up, but you have to remember that it’s just as much fun sitting here at the marina enjoying the boat and our friends,” said Wendy Pratt. “When I saw these fuel prices beginning to climb this spring, I said to Ken, ‘Honey, no more running over to Greenport for lunch, OK?’ We’ll just use our plastic spatula [credit card] for takeout food right here on the dock.”

Ugh; a $1700 tank of gas?

Meanwhile, just to add to that happy news — when I went out last night to get enough gas to tide me over until my next trip to the cheap gas stations on the Berlin Turnpike, I happened to notice the neighborhood price for diesel was up to $4.899/gallon.

The high price of diesel troubles me, since so many homes around here are heated by oil.  Maybe it’s time to get over my pyrophobia, and start getting the fireplace ready for next winter.

One of the accomplishments the Connecticut state legislature is proud of for this past legislative season is a new law which would permit small businesses, nonprofit organizations, and towns to join the pool insuring state employees.

However, it seems like legislators might have forgotten about actuarial and economic realities in the measure.  From the Courant:

On Monday, Rell released a letter from Anthem Blue Cross and Blue Shield of North Haven that said the insurer would be forced to increase its rates by 4 percent — or more than $24 million — for the fiscal year that starts July 1.

Anthem President David R. Fusco said “we must also rescind the second- and third-year rate caps for 2009 and 2010″ that the company had agreed to in its three-year bid to provide health insurance for state employees.

Since the bill would open the pool to more than its current clients, Anthem says that is “a material change to the underlying assumptions of the bid” and allows it to recalculate the bid.

Oops.

Once the dust settles on incremental gains from marketing  arrangements and volume efficiencies, not to mention the shuffling of dollars to cover uninsured patients and uncollectable bills, the fact remains that certain populations are fundamentally more or less expensive to underwrite than others.

If a group is receiving a low rate due to a better expectation of future results, and the doors are opened to higher-risk insureds…well, the difference in cost is going to have to be made up someplace.   The net result may be beneficial for some, but others will definitely be left with a higher bill.

That is, of course, one of the challenges facing the country in the current health care debate.  While many (most?) folks would love to see everyone have access to affordable healthcare, frequently through some form of a universal health care plan….the details are a little fuzzy when it comes to generating a credible estimate of how much it’s going to cost, and exactly who is going to pay how much to make that happen.

Wow.

Today was budget referendum day here in Windsor.  I didn’t mention it here, in part because hardly anyone from Connecticut, much less Windsor, reads this blog, and in part because it seemed like a non-issue.   The proposed budget called for a 2½% hike in the mill rate, plus an additional 4½% hike in revenues coming from grand list growth.

I voted against it on general principle — any non-obligatory increase in spending seems unwise in the current economic environment — but I expected that the last two years of holding the line on the mill rate, combined with no visible opposition would pass muster with municipal voters.

It didn’t.

Referendum failed  - 1571 votes no, versus 843 votes yes.

I may have to go to the next town council meeting.  It could be rather entertaining.

Oh, and on the off chance that any of the town leaders do end up reading this, I offer a word to the wise:  robocalls suck.  If you want to call us to advocate for the next iteration of the budget, feel free to do so, but please put a human on the line, not a machine.  

Seen in the Courant:

The new policy was implemented after Gov. M. Jodi Rell’s ordered state agencies to reduce gasoline consumption by about 10 percent before June 30. She wants a 25 percent reduction during the next fiscal year, which begins July 1.

The state Department of Public Safety says it goes through about 2.7 million gallons of gas each year, most of it in vehicles used by Connecticut’s more than 1,200 troopers.

The story focuses on the cuts coming from restricting troopers’ off-duty fueling privileges.  However, the need to reduce police fuel consumption by 25% immediately calls an image to mind:

Anyone else want to see Ponch and John patrolling the Berlin Turnpike?  :)   Surely a motorcycle is more fuel efficient than a trooper cruiser.