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Bond Commission Meeting Sparks Borrowing Debate

by | Feb 28, 2014 5:35pm () Comments | Commenting has expired | Share
Posted to: Business, The Economy, Labor, State Budget, Pensions, Taxes, State Capitol

Christine Stuart file photo The state Bond Commission approved $510 million in general obligation bonds Friday for a variety of projects, which sparked a debate over whether the state is borrowing too much money.

“We are borrowing at what I would consider an alarming rate, which doesn’t mean that any of these projects are bad,” Sen. L. Scott Frantz, R-Greenwich, told Gov. Dannel P. Malloy. “But it does raise the question about how much can the state sustain going forward.”

Malloy tried to reassure Frantz that his self-imposed bonding cap would be in line with where it was last year without tying it to a specific number. Last year, Malloy said the state wouldn’t borrow more than $1.8 billion.

In 2013, it came within $10 million of the cap after canceling six scheduled meetings, including one in October shortly after Republicans pointed out how close Malloy was to his self-imposed cap.

On Friday, Malloy said he is concerned about what the state did to drive its bonded indebtedness to the point where it is today and his administration has begun to address that by trying to lower different types of long-term debt.

“I look at bonding . . . as really taking care of the gutters,” Malloy said. 

He said he thinks they can agree on the need to reduce debt, but he doesn’t necessarily believe that means there has to be a reduction in bonded debt. According to a report released earlier this year by his own budget office, the reduction in the state’s long-term debt by $11.6 billion comes mostly from the restructuring of retiree health benefits as part of the 2011 labor agreement.

“Some folks would like to draw more attention to bonded debt, as opposed to the overall indebtedness. That’s what got us in trouble in the first place,” Malloy told Frantz Friday. “I know prior administrations made promises in contractual agreements that they also agreed not to fund.”

Malloy was referring to the administration of former Republican Gov. M. Jodi Rell, which decided not to fund about $300 million in state employee pension obligations. The decision was made with union cooperation.

“I’ve worked tirelessly, at least my own description, to make sure that those mistakes of the past are not repeated in the future,” Malloy said.

He said he just met with a bond rating agency this week and he’s confident they understand Connecticut is “putting its house in order.”

Some of the $510 million in projects on Friday’s Bond Commission agenda included $31.2 million on capital improvements at the XL Center in Hartford, $57 million to resurface 200 miles of highway, and $3 million for Newtown to help finance ongoing design costs for the new Sandy Hook Elementary School. About $200 million of the bonding approved Friday is for the Connecticut Bioscience Innovation Fund will be distributed through 2022 with about $10 million being distributed in 2014 and $15 million in 2015.

Asked about why the state is spending $31.2 million on the XL Center in Hartford instead of building a new one, Malloy said he’s trying to stretch the life of the building. He said he’s trying to get another 8 to 10 years out of it.

“There’s no way that we could build a replacement facility overnight or quite frankly in the next two years,” Malloy said. “So either we close it and have no functions being run in Hartford, or we put some money into it and stretch its life.”

The state Bond Commission also approved about $16.1 million in manufacturing assistance grants to five companies, including at least one that is considered a “First Five” company.

CareCentrix, the home healthcare company the state helped move from East Hartford to Hartford, will receive $4.7 million. That’s the third payment the Bond Commission approved for the company as part of its $24 million state assistance package.

The company will get a $12 million grant if it retains its current staff of more than 200 jobs for a five-year period, and another $12 million if it adds close to 300 positions.

Rep. Sean Williams, R-Watertown, was the only member of the Bond Commission to vote against the item.

“I voted for the ‘First Five’ at its inception thinking that it would help jump start the economy,” Williams said Friday. “I didn’t know it would become a big corporate welfare program.”

He said he made a mistake voting for the concept, which was the centerpiece of bipartisan legislation approved in October 2011.

“It’s not beneficial to the taxpayers,” Williams said Friday. “And we shouldn’t be funding it.”

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posted by: Lawrence | February 28, 2014  8:25pm

April 16, 2011

A $498,697 grant has been approved for Watertown to help pay for an indoor recreation facility at Veterans Memorial Park, state Representative Sean Williams and state Senator Rob Kane announced today.

The grant will help pay construction costs for a 20,000 square foot metal building to be used as an indoor recreation facility at Veterans’ Memorial Park. The building will be installed on a concrete foundation in an area of the park that is currently not in use, the legislators said.

“The new facility will provide additional recreational opportunities for Watertown residents,” said Representative Williams, R-68th District. “Watertown has always prided itself on the variety and quality of its recreational facilities. The new facility will enhance the recreational options available to residents. It will enable them to enjoy indoor recreational activities regardless of weather conditions. I’d like to thank Governor Rell and the State Bond Commission for supporting this grant.”

posted by: Commuter | March 1, 2014  2:07pm

@ Christine - a couple of points for clarification:
The piece seems to say that the bond commission has authorized $200 million for the bioscience fund, but will only actually bond $10 million in 2014 and $15 million in 2015. Is this correct, and if so, does that mean that the increase in the state’s debt burden will not actually rise by $200 million, but by the $10 million and $15 million in the respective years?

Is this approach a new one under the Malloy administration?

It seems like there are three kinds of items on the bond commission agenda, the first authorizes the total amount for a given item, and the second actually dispenses portions of previously authorized amounts, and the third does both at the same time - is this correct?


posted by: Lawrence | March 1, 2014  11:26pm

State Bond Commission agenda
July 26, 2013
Item 31-E

August 1, 2013

“Finance firm on the move”

Greenwich is getting a boost to its local business community after Gov. Dannel Malloy announced this week that his office had approved a $5 million investment in loans and grants to FSC CT, Inc. to relocate Fifth Street’s operations to town.

The specialty finance company, through its Fifth Street affiliates, will bring approximately 50 jobs from its present location in White Plains, N.Y., to Greenwich and said it plans to add at least 46 more jobs as the company grows over the coming decade…

The Department of Economic and Community Development (DECD) will provide a 10-year, $4 million loan for the purchase and fit-out of 44,000 square feet of space in a building located in Greenwich. As the company reaches hiring milestones, up to $3 million of the loan may be forgiven. DECD will provide a $500,000 grant to fund job training and a $500,000 grant for the installation of a fuel cell, wind or solar-powered energy system at the Greenwich site…

The project is expected to create approximately 498 construction jobs and 615 support jobs.

“Connecticut has long been a world leader in finance and investment management,” said State Senator L. Scott Frantz (R-Greenwich). “We must focus on helping this important segment of our economy remain and grow in our own state. This assistance will help Fifth Street relocate and create jobs right here in Connecticut.”

recent STEAP grants (bonding) for Greenwich:

2011 Greenwich Installation of dry hydrants and pre-built cisterns for water storage $250,000

2012 Greenwich renovate and expand the town’s Department of Health Laboratory $100,000

2013 Greenwich upgrade town communication network   $245,000

posted by: LongJohn47 | March 3, 2014  10:17am

Good work, Lawrence.

Art, Stan, Joe, Vet—where are the usual comments about Malloy running CT into the ground?

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