Markley, Barnes Spar Over State’s Credit Limit
Sen. Joseph Markley, R-Southington, said he wasn‘t looking for another issue, but he had concerns about information given a few weeks ago regarding the cap on the state’s credit card
In a letter to Office of Policy and Management Secretary Ben Barnes Markley asked exactly how close the state is to the bonding cap since the numbers he heard presented a few weeks ago were higher than previously stated.
“The numbers just don’t add up,” Markley said. “There are a lot of general obligation requests out there. The temptation to break the cap will be great, but doing so would be disastrous.”
But Barnes told Markley at the Nov. 29 meeting that the $1.5 billion and $1.6 billion in his presentation were the bonding authorization limits which are approved by the legislature, and the $1.4 billion is what will be allocated by the state Bond Commission.
“We may have authorized more in 2013 or in 2012, but some of those authorizations are assumed to be allocated and spent in years into the future, so we allocating under $1.4 billion,” Barnes told Markley at that meeting. Barnes also said the numbers look bigger since they are based on a calendar year, rather than a fiscal year.
Markley said he doesn’t understand how the numbers could change based on whether the calendar starts in July or January, but he admitted he’s not an expert on the revenue side of the budget.
Markley may have been seeking to start a dialogue about the issue, but not Barnes.
Barnes’ response to Markley’s letter Wednesday was not as polite as his comments at the Nov. 29 meeting.
“Senator Markley is having trouble understanding something that the Governor and I have made clear time and time again,“ Barnes said in a statement Wednesday. “I’ll say it once more, as simply as I can: under this administration, Connecticut is not going to exceed its spending cap or its bonding cap. Period.”
The state’s budget is $1 million away from the state spending cap, which is much closer than the state’s bonding cap.
The bonding cap for the state is 1.6 times the general fund tax receipts. When the 90 percent bonding threshold is exceeded, the governor is required to recommend unallocated bond authorizations for cancellation to bring indebtedness below the 90 percent limit. The 90 percent limit is $20.2 billion. The state is currently well below that as long as revenue projections hold, but Republican lawmakers seem to be waiting with baited breath for the Malloy administration to come and ask them to go over the cap.
But Barnes maintained that’s not going to happen in the first Democratic administration in 20 years even though it happened during the last two Republican administrations.
“It’s hard to miss the inherent irony in Senator Markley pointing to what he calls a ‘lack of financial management’ given the budgetary practices that recent governors from his own party relied so heavily on – practices that drove our state into a $3.2 billion dollar deficit,” Barnes said in his statement. “The truth is that Connecticut’s current budget is not only honestly balanced, it’s completely free of the gimmicks and short-term fixes that have plagued us in the past. The reason? We have a Governor that’s willing to have tough, honest discussions about our problems, and then follow through on the necessary solutions.”
Barnes’ suggestion to Markley, “rather than offering knee-jerk opposition to anything and everything the Governor does, rather than recklessly talking about debt downgrades in order to score political points, that he instead join us in creating a more financially stable and economically vibrant future.”
Connecticut’s current bonded indebtedness is $19.5 billion and in 2009 Connecticut had the fourth highest debt per capita in the nation at $8,078 per person. The amount of money the state is paying in debt service has doubled since 1999. But currently Connecticut has favorable ratings from all three bond rating companies.