Malloy Defends Bonding Policy
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.
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.
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.