Need To Borrow Disappears As Revenue Increases
Based on an unanticipated boost in revenue, state officials say they will be taking action in the next week to cancel a plan to borrow about $1 billion in order to balance this year’s state budget.
That’s good news for Connecticut Light & Power and United Illuminating customers, who have been asked to pay back the borrowing the state planned on doing with a surcharge on their electric bills.
Connecticut Light & Power customers have been paying the additional surcharge since January, but lawmakers said there’s currently no plan to refund customers the money they’ve already paid.
Sen. Eileen Daily, co-chairwoman of the Finance, Revenue, and Bonding Committee, said she’s thrilled the state won’t have to tell state Treasurer Denise Nappier to go borrow the bonds. She said it’s also good news for the businesses that rely on the Energy Conservation and Load Management Fund.
The fund helps pay up to 40 percent of certain energy efficiency projects and fund energy audits of homes and businesses, which in turn are able to lower their energy costs. The state had planned to take about $28 million from the fund to pay back the bonds.
Rep. Sean Williams, the ranking Republican on the Finance Committee, said he thought it was a deplorable idea to borrow money for operating expenses in the first place.
The idea to borrow the funds originated with former Republican Gov. M. Jodi Rell whose 2010 budget earmarked $1 billion of revenue for securitization. Rell’s administration and lawmakers struggled in the waning days of the 2010 session to figure out which revenue stream they would use to borrow against.
As for taking money from the Energy Conservation and Load Management Fund, “I thought we learned our lesson in 2003,” Williams said. It’s a sentiment shared by Daily, who as early as January was writing legislation to make sure the fund wasn’t raided.
But Williams said the only reason the state has decided to cancel the borrowing is because it posted additional revenues. According to the Office of Fiscal Analysis the state is projected to have a $656.1 million surplus at the end of this fiscal year.
Williams argued it’s all the more reason to lower the $1.4 billion in taxes the state plans on raising next fiscal year.
Sen. Joe Markley, R-Southington, who challenged the idea of taking the surcharge on customers’ electrical bills to pay off the borrowing in court, said he never expected this to be the outcome when he filed the lawsuit.
Markley lost his appeal at the Supreme Court and said he would feel better about things if the state decided not to pass a budget which increases taxes.
Nappier had held off on borrowing the recovery revenue bonds because of the lawsuit, but her office sent a letter to Sen. President Donald Williams and House Speaker Chris Donovan this week reminding them to cancel the legislation requiring her to go to the bond market to borrow the money.
“While we may be out of the red, our statutes still contemplate the issuance of as much as $646.6 million in economic recovery revenue bonds (ERRBs) to eliminate a deficit for FY11 that no longer exits. Not only is the issuance of the ERRBs no longer necessary to balance the current year budget, I do not believe that going through with the sale would be in the best interests of the state,” Nappier wrote.
Daily said the language to eliminate the borrowing will be included in one of the budget implementers that is still being drafted.