by Jon Pelto from Wait, What
The 2013 session of the Connecticut General Assembly ended with the adoption of record amounts of additional state borrowing.
They adopted $750 million in state bonds to pay a portion of the cost associated with moving Connecticut to Generally Acceptable Accounting Principles (GAAP). Then there was the $1.6 billion for Malloy’s UConn initiative “to overhaul the state’s flagship university over the next decade”, this coming after the state’s $2.3 billion UConn 2000 program. And then, of course there are hundreds of millions more in programs and services that should be funded out of the State’s General Fund rather than state borrowing, such as Malloy’s massive corporate welfare program and the state’s Stem Cell Research Program.
The fact is that the FY14-FY15 state budget relies heavily on record borrowing.
And this is occurring in a state that already has record amounts of debt.
Even before this latest bonding spree, the balance on Connecticut’s state credit card was more than $19.3 billion.
Referred to as “bonded indebtedness,” it is the amount of outstanding debt that Connecticut’s taxpayers must pay back, with interest, over the next 20 years.
This amount does not include the taxpayer funds that must also be paid to fund the state’s various unfunded liabilities such as the state and teachers’ pensions, health and other post-employment benefits. That amount adds another $40 billion plus to the state’s fiscal ledger.
When it comes to the level of state debt, no other state in the nation comes close to the level of official indebtedness facing Connecticut and its citizens.
The average per capita debt burden among the 50 states is $1,408. That is, every man, woman and child in the average state is “on the hook” for $1,408.
In Connecticut, the per capita debt burden is $5,096.
But that’s not all.
When it comes to facing the ramifications of the growing debt, Connecticut’s elected officials actually took a giant step backwards this year.
Not only did Malloy and the legislature add record amounts of debt, they ducked debt payments that were supposed to be made during this upcoming budget cycle, thereby pushing the burden until after the next gubernatorial election.
Back in Fiscal Year 2009, Governor Rell and the Democratic controlled legislature addressed a massive state deficit by approving a series of special, short-term bonds called Economic Recovery Notes. Each year the state is supposed to be paying off a portion of those notes.
However, the two year budget just passed by the General Assembly delayed $196 million in Economic Recovery Note payments next year and the year after. The additional interest cost to Connecticut taxpayers for this “restructuring” will be about $45 million.
Ironically, when you strip away all the political spin, that amount is about what Malloy and his administration added to education spending in Connecticut…and had the gall to claim was a “historic” investment in education.
During the last gubernatorial campaign candidate Dan Malloy called these types of budget gimmicks, “kicking the can down the road,” and promised never to do it.
Now Governor Dannel Malloy is making these gimmicks a regular approach to his budget plans.