Lawmakers cut some of their projects, and some of the governor’s as well

The legislature’s bonding panel offered its own plan Monday to keep state government under its credit limit.

But while the Finance, Revenue and Bonding Committee recommended canceling more than 180 projects previously approved for funding – including dozens of community and regional projects in lawmakers’ home districts – it also targeted millions in economic development funds under Gov. M. Jodi Rell’s control.

The committee unanimously approved canceling nearly $413 million in authorizations for next fiscal year, $171 million more than the level needed to keep government under its statutory bonding cap. The bill now heads to the Senate.

It also declined to approve $21 million in new borrowing sought by Rell to move state government’s information technology center from East Hartford to Cedarcrest Hospital in Newington.

bonding panel

Which projects get the ax? Finance Committee members discuss canceling bonding for dozens of projects.

“Our goal was to take aggressive action,” said Sen. Donald J. DeFronzo, D-New Britain, co-chairman of the bonding subpanel that compiled the cancellation list. “The proposal moves the state well below the bonding cap … and is an essential step in controlling future debt for the state of Connecticut.”

Connecticut’s reputation on Wall Street and its ability to finance capital projects at low interest rates both were put at risk last fall. Two major bond rating agencies,  Moody’s and Standard & Poor’s, assigned a “negative outlook” to state government late last year, a move generally perceived as a warning before a bond rating is lowered.

The rating agencies also complained about the large amounts of revenue from one-time sources – such as the budget reserve and emergency federal stimulus grants – being used to support ongoing programs.

With more than $19 billion in outstanding bonded debt, Connecticut ranked second in the nation in debt per capita last year, the legislature’s nonpartisan Office of Fiscal Analysis said.

“We should not give any outside rating agencies any more reasons for negative outlooks,” Rep. Carlo Leone, D-Stamford, the bonding subcommittee’s other co-chairman.

Both Rell and state Treasurer Denise L. Nappier warned the legislature earlier this year that state government was at risk of violating its self-imposed bonding cap next fiscal year by $242 million. That limit, set by law, reduces the state’s capacity to borrow as tax revenues shrink.

The administration recommended canceling $388.7 million in projects that had been given preliminary approval by the legislature – most between 2004 and 2009 — but that never received the final green light from the State Bond Commission. That panel, which is chaired by the governor, has sole authority to determine when, if ever, state government actually will finance most capital projects.

The finance committee did recommend canceling or reducing funding for dozens of earmarked projects in legislators’ home districts. Many of the projects eliminated entirely, such as park improvements in East Hartford, an outdoor track at Farmington High School and new sand for a public beach in Milford, were described by some committee members as the least essential.

Many others that were deemed to have a potential for future job growth, such as grants for Goodwin College in East Hartford or commercial zone rehabilitation work in Manchester, Meriden, Cromwell and other communities, were preserved intact or at a reduced funding level.

The funding for projects for each of the state’s three largest cities, Hartford, Bridgeport and New Haven, were merged into three new project pools. The bill would reduce the total amount available for each community  by 15 percent, and give local officials authority to choose which projects would receive the remaining dollars.

“I’d have to look at it more closely, but it looks like it was fair,” Rep. Christopher L. Caruso, D-Bridgeport, a member of the finance committee, said afterward. “It’s not like the current governor was releasing a lot of funding for projects in the cities anyway.”

The committee also targeted nearly $70 million in preliminary bonding for programs or agencies that the governor largely controls. This includes $10 million for the Urban Act Program, an initiative that allows the governor to award large economic development grants for projects in urban centers, and $57 million for Connecticut Innovations Inc., a quasi-public agency that provides investment capital for emerging high-tech industries.

DeFronzo defended the reductions, saying the targeted agencies had not taken advantage of tens of millions of dollars in bonding reserved for them in recent years. “We left more than an adequate amount to anticipate needed spending,” he said. “If the money’s not being used, not being cleared out of there in any routine pattern, why is it there in the first place?”

The New Britain lawmaker added that many on his committee have questions about the proposed move for the Department of Information Technology.

Rep. Vincent J. Candelora of North Branford, the ranking House Republican on the committee, said the Democrat-controlled committee “made an effort to be equitable. It is up to the governor now to let us know what bonding is absolutely necessary.”

Rell’s budget director, Office of Policy and Management Secretary Robert L. Genuario, declined to comment about the committee’s proposed bonding reductions for the administration, saying only that he was still analyzing the bill and looking forward to “meaningful discussions” with committee leaders.

Administration officials have said they believe the proposed data center transfer would save over $60 million over the next 20 years. State government currently leases 14,000-square-feet in an office tower at 101 E. River Drive in East Hartford, a site that officials said has become too small to accommodate rapidly growing information technology needs.

In other action Monday, the finance committee voted to adopt bills:

  • Mandating a detailed study of the entire state tax system. The study group, to include administration officials and appointees by legislative leaders, would have to provide an initial report to the General Assembly in December, and a final report in January 2012. The bill now heads to the House of Representatives.
  • Ordering state lottery officials to screen winners of lottery prizes worth $5,000 or more against the state’s tax delinquency list and to withhold payments to cover back taxes. This measure now heads to the Public Safety Committee.