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Malloy Defends Bonding Policy

by | Sep 27, 2013 1:42pm
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Posted to: State Budget, Taxes

Christine Stuart photo

Rep. Vincent Candelora

Gov. Dannel P. Malloy and Republicans lawmakers clashed Friday at the state Bond Commission meeting over the amount of money the state is borrowing for things like roads, schools, and bridges.

On Friday the Bond Commission approved $395.5 million in borrowing for dozens of projects including $10 million for school security and $10 million in stem cell research. In addition, it also approved $31 million in bonds for Bass Pro Shops in Bridgeport. About $22 million of that will be repaid to the state over 20 years through sales tax revenue collected by the outdoor retailer.

Rep. Vincent Candelora, R-North Branford, who is one of two Republicans on the Bond Commission, didn’t oppose any of the projects on Friday’s agenda, but he expressed concern about the amount the state is borrowing and the rapid rate at which it’s approving projects.

After today’s meeting the Bond Commission is $20 million away from Malloy’s $1.8 billion self-imposed bonding limit for the year. Republican lawmakers also complained that the state Bond Commission is approving projects at such a rapid rate that it’s about $3 billion behind getting the money out the door to actually fund the projects. The Center for Economic Analysis reported last week that if that money was released it would create 16,000 to 28,000 jobs.

“These projects continue to put pressure on our credit card,” Candelora told Malloy.

But Malloy was ready for the criticism. He said the state’s bonded indebtedness was $19.97 billion the month before he was sworn into office and today that number is down to $19.76 billion.

“As I stand before you today, we have less bonded debt,” Malloy emphasized at a press conference following the Bond Commission meeting.

Christine Stuart photo

Gov. Dannel P. Malloy

During the meeting he acknowledged that there’s many ways to look at the numbers, but “what’s important is that we build schools, that we build bridges, that we build housing opportunities, that we invest in economic development so that we turn the corner on the net job loss in the state of Connecticut.”

Sen. L. Scott Frantz, R-Greenwich, the other Republican on the commission, said debt is something in a low interest rate environment “that is very tempting.” But he urged the governor to look at the whole picture.

“You may be getting a good deal on the interest rates out of it, but you still have to put yourself on an amortization schedule and you do have to pay that money back,” Frantz said. “It puts a huge burden on future generations if you take a look at the bigger picture of unfunded liabilities.”

Malloy thanked Frantz for the advice and said he’s already taken it when he decided to cancel $1 billion in bonding authorized by the legislature and former Republican Gov. M. Jodi Rell.

At the press conference following the meeting, Malloy explained that Connecticut shows up in national reports as one of the most indebted states in the country because it does things a little differently. Unlike other states Connecticut has no county government, which typically picks up the tab for school construction. In Connecticut, the state funds school construction projects through bonds.

Malloy also pointed out Connecticut ranks poor nationally when it comes to its roads. The American Society of Civil Engineers 2013 Report Card on the Nation’s Infrastructure says that Connecticut’s roads are tied with Illinois as the worst in the nation. Malloy said Friday that’s because there was little investment in transportation infrastructure before he took office.

Even though he plans on going over his $1.8 billion self-imposed limit, Malloy made a promise to Connecticut residents Friday to structure the debt in a responsible manner. 

“What I will do is structure our debt with the need to address the needs of the people,” Malloy said. “And keep them safe, and educate the next generation, and create jobs.”

But the other concern for Republicans was the rate at which the state Bond Commission is approving projects. They pointed to the Center for Economic Analysis report which found that the number of unissued bonds has doubled since 2010.

“We are approving projects at a greater pace than we’re funding them,” Candelora said.

But Malloy said there’s sometimes a reason for that.

Christine Stuart photo

Sen. John McKinney

He used the new M-8 rail cars for Metro-North as an example of why money isn’t being bonded or released by the state. He said he decided to complete the purchase of the cars initially approved under the Rell administration. As of today, the state has only taken possession of about half those cars, which is why the money hasn’t been released.

Was it hypocritical for his Republican colleagues to vote for the projects on Friday’s agenda, but criticize the overall amount of money the state is bonding?

“This isn’t about any one project,” Sen. Minority Leader John McKinney, who is also running for governor, said. “This is about our overall level of borrowing and the priorities you make.”

He said it’s about “fiscal responsibility. It isn’t about any one project.”

Office of Policy and Management Secretary Ben Barnes shot back with a press release saying that if McKinney wants to be taken seriously he should “show his math.”

“What is the exact level of bonding that he believes is appropriate for Connecticut right now, and exactly which projects would he defund to get there?” Barnes said.

McKinney ticked off a number of projects on past Bond Commission agendas that he wouldn’t approve. The first was the $2.8 million the state spent on a new scoreboard for Rentschler Field. He said he also wouldn’t approve $30 million in borrowing for a Hartford parking garage assessed at much less, and he wouldn’t spend $88 million to move state employees from one office to another state office.

“I’m here today because the $1.79 [billion] to date is a 28.6 percent increase over last year,” McKinney said. “That type of borrowing and increasing our debt is unsustainable and fiscally irresponsible.”

Barnes pointed out that to date the state has less bonded debt than when Malloy took office.

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Comments

(8) Archived Comments

posted by: Fisherman | September 27, 2013  4:34pm

Interesting how Representative Candelora is concerned about “the amount the state is borrowing and the rapid rate at which it’s approving projects.”

I believe that Representative Candelora is presently working hard to push through millions in unnecessary bonding for a new water line from Middletown to Durham; even though Durham has more than enough potable water available in its own back yard; while Middletown doesn’t have enough for its own future needs.

posted by: art vandelay | September 27, 2013  9:07pm

art vandelay

Wait a minute!  I want to set up a business & have the state pay for my up front expenses.

I’ll gladly pay back the loan in sales tax revenue my new venture will generate.  Give me a break!  There are many people in this state who are mortgaging their homes to start a business.  The revenues they generate have to pay state sales tax anyway.
Who’s kidding who.  Bass Pro Shops is getting free money from the state to start up a retail store.  By the way.  This store sells GUNS.  Didn’t the state run a few manufactures of guns out of this state a few months ago after Newtown.  Now taxpayers are footing the bill to bring in a retail outlet that sells them.  To make matters worse the store is going to be loctated in Bridgeport which has one of the highest murder rates in New England.  Talk about hypocrites in Hartford!!!!!

posted by: lkulmann | September 27, 2013  9:36pm

The State was neglected and now its time to clean up and update. There’s a difference between spending money and investing in property. Its starting to shape up nicely. At least Governor Malloy is actually producing results with the spending unlike previous administrations. Its nice knowing CT is being taken care of so well~ thanks!

posted by: Noteworthy | September 27, 2013  10:21pm

The headline is wrong. It should be: “Malloy Makes Excuses for His Debt Program with subtitle: “Ego Ignores Warning Signs.”

Just a note about county govenment - the lack of one is a novel excuse for why we have the highest per capita debt in the nation. But it’s not a reason.

posted by: Commuter | September 29, 2013  2:30am

“This isn’t about any one project…” No, Senator McKinney, it’s about all these individual projects put together. And of the $1.79 billion in bonding to date, you approve of $1.67 billion, over 93% of what has been approved. That includes 100% of funding for spending that impacts your district. Why is it good enough for your constituents and not for the people in other parts of the state?

Wait, I know the answer to this one: your constituents are paying the bills, right? So they deserve to get their projects funded. All those takers in other parts of the state should just take what they get and be happy. Is that it?

posted by: Commuter | September 29, 2013  2:36am

Fact check:
Not one gun manufacturer has been run out of the state. One manufacturer (maybe two) has announced it’s choice to leave, however nobody was forced out.

The lack of county government is why the rankings are skewed, since Connecticut doesn’t have county government, unlike the rest of the country outside of New England. If you factor in the taxation and indebtedness of counties, it changes the picture significantly.

posted by: dano860 | September 30, 2013  7:23am

Commuter is correct as I see it too.
The companies did go to states where they felt that they and their products were more welcome in. Many other companies that in the state are leaving or choosing not to grow. Here for other reasons.
Connecticut is about the size of three counties in Pennsylvania or Wisconsin yet we have 169 fiefdoms that muck up everything. Each one perceives themselves as the ‘best’ in the state to offer their taxpayers little tax deductions a superior education…they just need a little more ECS money, from the state of course, to crest that ever growing hill. Each little fiefdom has a duplication of efforts, from the road crew to the fire boys and gals. They all must have superintendents and principals for the schools and support staff. Somehow the residents believe that their 50 square miles is the center of the universe yet they have one representative at the state level covering multiple fiefdoms begging for the same things. Ya, I know I am being selfish in wanting to see costs come down and the whole state change the system.

posted by: art vandelay | September 30, 2013  11:27am

art vandelay

To Dano860,
Yes I agree there is duplication of services which can be regionalized to save money.  The downside is do you want a uniform regional property tax rate? Do you want uniform regional school districts?  I don’t. I don’t want to pay for unionized fire departments or be forced to send my kids to substandard urbanized schools.  I don’t want my kids subject to all the riff raff that goes on in these schools.  I worked hard to own my house in the suburbs and I don’t want to be penalized.