Friday January 25, 2008
When you attend the usually monthly meetings of the State Bond Commission – held regularly except when Gov. Jodi Rell is punishing majority Democrats – you can see how fast millions – in today’s case billions – of dollars can be put into motion.
Most of today’s meeting – held in the hour before the fur flew between Rell and Democrats over her politically charged “soft on crime” fallout from this week’s special legislative session on criminal-justice reforms – was classic, archetypal Bond Commission.
A first-floor meeting room of the Legislative Office Building was standing-room only with state bureaucrats and other interested parties, making sure their previously approved bucks finally got allocated.
As items were approved, usually with no discussion and a quick voice vote, a suit or two or three would quietly rise and dissipate the room like smoke through the opening door.
Usually, relatively small items get more scrutiny than the big-buck projects and bond sales that go through without a peep from the commission, made up of Rell, the constitutional officers and leaders of the Finance, Revenue and Bonding Committee.
To his credit, Rep. Craig Miner, R-Litchfield, ranking member of the Finance Committee, wanted to know why $100,000 to replace door hardware at South Connecticut State University, was an expense for which the state has to go into debt.
It was part of a $843,155 item for SCSU. That sparked a bit of a discussion, indeed one of the longer discourses on what state bonding should be used for, in a 44-item agenda.
Miner was filling the role long held by the late Rep. Dick Belden, the Republican from Shelton who died last summer and whose absence is felt every day when legislators talk about debt and finance. Belden was always on the lookout for operating expenses that bureaucrats were attempted to dress up as capital expenditures.
Today, amid fanfare from State Treasurer Denise Nappier, who rarely speaks during a commission meeting, they okayed a whopping $2-billion bond sale so Connecticut can catch up with its long under-financed Teacher’s Retirement Fund.
“This will be a prudent approach to straightening the soundness and integrity of the Teacher’s Retirement Fund well out into the future,” Nappier said. “It’s good for the teachers and it’s good for the taxpayers of our state.” But for those listening carefully, it sounded as if the sale blows through the state’s $1.2-billion cap on long-term debt.
Indeed, Bob Genuario, Rell’s secretary of the Office of Policy and Management, another commission member, confirmed it, adding the caveat that Wall Street rating agencies see the state as addressing the liability of under-funded pension benefits for public school teachers, who are not eligible for Social Security.
“We owe this $2 billion whether we issue the bonds or not,” Genuario said of the rating agencies. “They’ll view this as a net savings.”
“The agencies view this as not part of net tax-supported debt,” Nappier added. “We’re not borrowing money to put in the General Fund. We’re borrowing it to put into the retirement fund.”
Oh yeah, and our current liability is $6.9 billion, thanks to years of legislative and governmental neglect that began to be turned around a couple years ago when teachers pressured and shamed lawmakers.
Nappier pitched it – the deal was cut by the Legislature last year – as an unbeatable scheme in which the state will reap 8.5-percent interest investing the money and pay a mere 5.25-to-5.5 percent in debt service. She said that over the last 20 years, the state has seen a return of between 8.9 percent and 10 percent.
“We can, in fact, weather any storm in the market,” Nappier said.
So come I can’t do this with my checking account? you ask.