Republican Lawmakers Say Malloy Needs To Be Honest With Wall Street
by Christine Stuart | May 1, 2012 11:27pm
(12) Comments | Commenting has expired
Posted to: State Budget, Taxes, State Capitol
Republican legislative leaders claimed Tuesday that Gov. Dannel P. Malloy’s decision to use $222 million that had been reserved to pay off 2009 borrowing won’t help the state’s credit rating.
Just two months ago, the Malloy administration told the Wall Street credit agencies that it would pay off the 2009 Economic Recovery Notes.
“It is of crucial importance that the governor, at very least, be honest with the bonding agencies,” House Minority Leader Lawrence Cafero, R-Norwalk, said Tuesday.
Sen. Minority Leader John McKinney called the plan to balance the budget “fiscally irresponsible.” He said Republicans are asking the governor if he’s alerted the rating agencies that the information his administration provided in March is no longer correct.
The state makes two presentations a year to the three credit rating agencies.
“The diversion of these funds to finance operational expenses is fiscally irresponsible and will lead to another downgrade by the agencies and ultimately higher interest rates on future bond issuances,” McKinney and Cafero wrote in a letter to Malloy on Tuesday.
The duo claimed that the Malloy administration made a presentation to credit rating agencies touting legislation which required the payment of the Economic Recovery Notes.
Ben Barnes, secretary of the Office of Policy and Management, said in a phone interview Tuesday evening that payment of the notes obviously “didn’t make a difference to them.”
He said the same information was included in a previous presentation to the three rating agencies. One of the three, Moody’s Investor Services, downgraded the state.
“Our efforts to pre-pay the Economic Recovery Notes didn’t carry much weight with the rating agencies,” Barnes said.
Moody’s Investor Services downgraded Connecticut’s rating from Aa2 to Aa3 in January noting “Connecticut’s high combined fixed costs for debt service and post employment benefits relative to the state’s budget; pension funded ratios that are among the lowest in the country and likely to remain well below average; and depleted reserves with slim prospects for near-term replenishment.”
The state is facing a deficit in the current fiscal year and the administration has a responsibility to present the General Assembly with a deficit mitigation plan, Barnes said. Using money reserved to pay off the notes is part of the solution the administration is putting forth. In addition, Barnes said he gave the chairs of the Appropriations Committee a list of spending cuts for the 2013 budget.
The Republicans seem to be suggesting the administration should do something else to erase the deficit, but Barnes pointed out “they don’t offer some other alternative for closing this gap.”
McKinney and Cafero called the use of the funds a “gimmick.”
“It’s a long litany of broken promises by this governor,” Cafero said. “. . . That he would not borrow money to pay operating expenses — he’s broken that promise as well.”
Malloy bristled at the use of the word “gimmick.”
“For Republicans to lecture me on what is or is not an appropriate way to balance the budget — listen I didn’t run up a structural deficit of $3.6 billion,” Malloy said. “I didn’t spend every dollar that was in the cookie jar.”
Malloy made clear that he inherited a $3.6 billion deficit created by the previous administration.
Asked if spending cuts would be harder, Malloy said “spending cuts are hard. Change is hard. Try living my life and telling people they have to change.”
He maintained that the budget shortfall wasn’t as bad as some were making it out to be.
“It’s a one percent miss. I’ll admit that,” Malloy said. But he refused to accept the Republicans’ argument that it makes his first budget a failure.
“I think the failure in Connecticut’s most recent history is the building of a $3.6 billion structural deficit,” Malloy said.
Tags: Economic Recovery Notes, republican, Moody's, Ben Barnes, Gov. Dannel P. Malloy, bonding, credit rating, dh
(12) Comments
posted by: GoatBoyPHD | May 2, 2012 12:14am
And the $750 million deficit that begins accruing in 14 months is a win?
Yes, some people will have to change. Wait til Moody’s assesses that deficit and looks at the pension returns and the increased bonding debt and simply says “Junk”.
posted by: skyrocket27 | May 2, 2012 12:46pm
Note to Ben Barnes: the likely reason that your promise to pay the ERNs didn’t “carry much weight” with the credit rating agencies is because, unlike the general electorate, they saw through your shame budget.
Note to Governor Malloy: you’re right you didn’t run up the structual deficit in previous budgets. However, it is almost exclusively the fault of the Democratically controlled legislature (the legislative Republicans didn’t vote for that budget). Additionally, this budget is yours (you proposed, you worked over the legislature, you signed it. As part of your budget, we (Connecticut residents) are swallowing a $3.8 Billion tax increase to right the ship. The fact that your budget is failing is on you and the Democratically controlled legislature. Be a man. Do what you ask all of us to do, be accountable.
posted by: DrHunterSThompson | May 2, 2012 12:49pm
Am I the only one sick of this partisan BS? These guys can’t go home quick enough. The budget will remain under stress until someone gets the courage to cut aid to the towns and cities.
HST
posted by: Matt W. | May 2, 2012 4:18pm
Doc I disagree. There’s useless/childish partisan bickering like setting up fake twitter accounts or blaming a previous administration for the ills of the world and then there’s one party trying to hold another accountable by shinning a light on the train wreck that their “solution” has become and for which we will all pay a price. I think that holding the other side in check is what the two party system was designed to do. Unfortunately we have only one party and regardless of which party it is, that never works out well for the people.
posted by: state_employee | May 2, 2012 4:59pm
“It’s not my fault, I didn’t so it.”
Can that man ever just step up to the plate. He is a joke.
posted by: ALD | May 2, 2012 6:32pm
Yes, I am also sick of the partisan BS. But here in Connecticut the voters have consistently demonstrated that they place a higher value on incompetence with those we send to Hartford than they do on problem solving.
We place an even greater value on incompetence with those we send to Washington.
So one party knows it can safely run the state into the ground and not be held accountable, while the other party throws sand, and does everything it can possible do to make themselves as unattractive as possible so as to never be accountable. It works, if your an elected politician from CT. It just dosen’t work for those who vote for them.
We elect these people, look in a mirror, we are to blame for what we get.
posted by: realist always | May 3, 2012 4:20am
Mr cafaro you said “at the very least the gov. should be honest with the bonding agencies” bully malloy has not been honest about anything or to anyone,there is no way his pathalogical lieing is going to stop now or ever.once is an accident twice is stupidity i will not ever believe him nor will i ever vote for him again nor will i vote for anybody bully malloy endorces.
posted by: William Wallace | May 3, 2012 11:11am
Malloy, all bully and arrogance, is now up against it. This deficit may hit 400 million by 6/30/12. It is hard to imagine ANY scenario where he is re elected.
posted by: Reasonable | May 3, 2012 2:28pm
Gov. Dannel Patrick Malloy should be impeached , but his Democratic partners in the Connecticut General Assembly, are Malloy’s co-conspirators, and it won’t happen as they do not want to be implicated in their cooperative continual financial destruction of a once great State of Connecticut.
Malloy’s “legislative rubber-stamps should be impeached, also!”
State voters didn’t analyze who they were voting for—and now this motley bunch is haunting, all remaining business, industry, and the over-taxed taxpayers in Connecticut.
We did it to ourselves!
posted by: Reasonable | May 3, 2012 3:05pm
Encourage House Minority leader Lawrence Cafero to run for office—as the Democrats have buried this state—and we desperately need a bright leader like Lawrence Cafero
“to put us back in black ink, as the present Malloy gang is red-inking the state blind!”
posted by: Reasonable | May 3, 2012 3:51pm
DrHunterSThompsom: The Republicans are powerless to try cut the aid to
towns and cities—and for Gov. Malloy, and his cronies in the General Assembly—that’s “politically incorrect!” That’s what happens—when you elect a Democratic majority. The state stays—out of balance, and unfortunately it’s a big deficit balance! !
posted by: skyrocket27 | May 3, 2012 10:08pm
At the conclusion of the Malloy legacy we will need someone who has the intellectual knowledge and experience to put an honest budget in place. Someone who is able and demonstrated an ability as well as a willingness to invite all stakeholders into the room to reach a solution that will clean up the mess Malloy and his pack have caused and left behind.
John McKinney is such a man.