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There’s Agreement That The State Is Cash Poor, But Disagreement On When To Act

by | Jun 6, 2012 3:54pm
() Comments | Commenting has expired
Posted to: State Budget

Courtesy of the State Treasuer's Office

(Updated 10:41 p.m.) It’s been three months since state Treasurer Denise Nappier and Republican lawmakers squabbled about the state’s cash flow, but this week the Democrat and Republicans seemed to be on the same page.

In a June 1 letter to lawmakers Nappier said the state’s cash position was “adequate, but the common cash pool balance has fallen substantially during the year.” Last month, the cash pool balance stood at $121 million, when last year at around the same time it stood at $895 million.

Republican lawmakers have sounded alarm bells for months on this issue and have gone so far as to write op-eds in their local papers describing how the state has been transferring bonded money to pay for operating expenses.

In March, Nappier fired back at Republicans telling them “either the legislators who wrote the flawed opinion pieces do not understand the nuances of how we manage the state’s cash, or they chose to purposely mislead the general public for political ends.”

Turns out that may have just been a battle of semantics.

“For months we have been calling upon the legislature to deal with the fact that Connecticut spends more money than it takes in but were rebuffed each time and accused of playing politics,” House Minority Leader Lawrence Cafero Jr. said. “After all the assurances we were given that ‘everything is fine,’ the Treasurer’s office has finally gotten around to acknowledging the depths of this problem.”

Nappier cited the $200 million intended to pay off the 2009 Economic Recovery Bonds lawmakers diverted to close the budget deficit, the inability to fund the General Accepted Accounting Principles differential, and the lack of a rainy day fund as factors contributing to the cash flow problems.

In an effort to continue to pay contractors and state employees, the Treasurer’s office has been making temporary transfers between capital expenses and operating expenses within the same account.

Cafero alleged that Nappier and Democratic lawmakers have conveniently ignored the state’s worsening fiscal conditions until now and he expects Gov. Dannel P. Malloy to announce sometime this summer that money will be borrowed to cover operating expenses.

“It looks like we are left with one option right now — borrow more money to pay the bills,” Cafero said.

And that’s where their agreement over the situation ends.

“While the need for external funding sources is possible, it is not probable at this point,” Nappier said in a statement Wednesday evening. “We are not currently planning to request authority for any short-term cash flow borrowing.”

Nappier laid out several options for lawmakers in her letter, but warned that it hasn’t gotten to that point just yet.

“This decline could trigger periods of cash flow pressure, which would require more extensive transfers to the common cash pool and possibly the need for external funding sources (e.g., short-term options include temporary notes, or a line of credit, longer-term options include issuance of bonds to more rapidly fund the GAAP deficit),” Nappier wrote.

Nappier warned that the situation is dependent upon changes in revenues and expenditures over the last few weeks of the fiscal year.

Malloy’s Budget Director Ben Barnes said the administration is always mindful of the state’s cash position and is worried in general that “we are at a low level of cash. ”

He cited the lack of a rainy day fund and the $1 billion GAAP deficit as contributing factors, but said he was confident the Treasurer would be able to manage it.

“My office will be prepared to address this potential situation, when and if necessary, and will do so in a timely manner,” Nappier said Wednesday. “In the meantime, I have no intentions of splitting hairs over the timing of and/or degree to which the state’s cash flow has and continues to experience pressure.”

“Make no mistake: Our cash flow is inextricably linked to the state’s fiscal challenges.”

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(11) Archived Comments

posted by: lkulmann | June 6, 2012  4:57pm

Would collecting court ordered child support help? CT DSS doesn’t go after deadbeats. My son is 17yrs old disabled and his dad is living the high life and not paying one dime to CT. Thank you taxpayers for supporting my son. I’m sure my ex thanks you too!

posted by: lkulmann | June 6, 2012  5:09pm

Oh, for whatever its worth, I tried to take my case to court privately and the judge didn’t want to be bothered with enforcing court ordered child support.
Just raise the taxes…taxpayer will pay…

posted by: GoatBoyPHD | June 7, 2012  12:34am


So the state is cash poor and the pension fund is in the Red for the Fiscal Year. Fitch and Moody’s will come along with a downgrade of CT bonds.

It was heralded a year ao that the hedge funds are going to leave CT under Malloy’s tax and burn plan.


Sure enough the revenue shortfall is real and the funds are moving. Eddie Lampert announced yesterday. Hedge funds are like lemmings. Competitive advantage drives them.

posted by: Jesterr72 | June 7, 2012  6:27am

The Democrats are driving CT over a fiscal cliff.  They have no idea how to cut back and continue to spend while telling everyone else they are stupid for not understanding “nuances”.  Take a look at Detroit - that is Hartford’s future.

posted by: Jesterr72 | June 7, 2012  6:31am

It’s outrageous that the State won’t go after deadbeat Dads - Malloy needs to answer for this…after he jacked up taxes and was willing to pay $300,000 to fix up the Communist Party headquarters.  What the hell are these morons in Hartford doing???

posted by: Noteworthy | June 7, 2012  9:20am

Remarkable. Pathetic. Lame. Deceitful. False bravado. It all leads to a lack of confidence in those who run this state.

posted by: NOW What? | June 7, 2012  3:46pm

Connecticut’s governor, legislators and state agency administrators (commissioners) had better learn how to establish and adhere to a RIGID, hard and fast hiring freeze - to get the total employee numbers down further - ASAP or things will only continue to get worse. Guaranteed. There is no other viable and politically acceptable way to address the situation.

posted by: brutus2011 | June 7, 2012  10:23pm


to “Lkulmann:” My child is 12 and the non-custodial parent is 20K in arrears for court ordered child support. CT DSS told me to file a contempt order in Superior Court as their policy did not allow them to go after dead beats with little discernible assets.
I thought about it overnight and sent an email to the Support Enforcement Administrator in Hartford and I was notified an hour later that a contempt action was undertaken. Perhaps you should go to the top and see if they can help you.
Good luck.

posted by: lkulmann | June 8, 2012  9:18am

@brutus…I’m glad you have some resolution or at least a response. My case is so much more involved and messy than a simple phone call. I have actually asked for help from the regional child support enforcement agency in Boston. They oversee all of New England. My case, in a nutshell, involves SS Fraud and I went to the top. I went OVER the top! Bottom line is…CT does not enforce court ordered child support unless you access Cash Assistance program… PERIOD. So, over the years I have proudly taken care of my son wondering why don’t they collect child support. Since my son is disabled, I have accessed CT Medicaid and many public services over the years resulting in a significant taxpayer expense. At that time, I was working paying taxes so I figured it was a wash, but still wondered why don’t they try to recoup their monies from my ex who has SIGNIFICANT assets…Meanwhile, DSS tries to cut spending and cuts back on home support for the disabled. Eventually, without the appropriate and other unmentionables I can’t work, pay taxes, pay medical and on and on and on. So, I access the cash assistance program and NOW there is an interest in my ex…go figure…right? So, I did. CT logic is as follows: My son’s cost are mainly financed through the federal government so who cares…the SECOND I applied for Cash Assistance the hunt for my ex is on…The problem is that the taxpayers are getting whacked by higher Federal taxes AND higher State taxes because of the bullshit at DSS. If you think that DSS is inefficient and antiquated and all that, think again. Within a week a lien was placed on MY ‘assets’ for accessing cash assistance…they know exactly what is going on and its pretty good game they’ve got going…dumb but good. Thanks taxpayers!

posted by: lkulmann | June 8, 2012  9:57am

Oh, and another taxpayer $$$ gaping wound at DSS…when I had private medication insurance coverage, the State knowingly paid 100% of about $2000.00/month for my son. Thanks taxpayers! I’m sure BC/BS thanks you too!

posted by: krmin | June 8, 2012  10:12am

To butus2011
My ex is over $9000 behind in child support, not as much as you but still quite enough.  I have brough contemp orders against him to no avail.  He is never made to pay anything except they instill a new order which attaches arrerages to his already low obligations.  To which to that, he still does not pay.  I am fed up with the enforcement agency and their lack of conciousness to those single parents that are struggling to stay of state assistance.  It is a joke to me and insults all us single parents doing the best we can, alone.