The Senate voted unanimously Friday to tighten the limit on state government’s credit card as lawmakers adopted a bill to cancel or reduce planned borrowing for dozens of community and regional projects in their home districts.
The measure, which now heads to the House of Representatives, also reduces bond authorizations for tourism programs, open space preservation and park improvements, energy efficiency projects, renovations to prisons and other state buildings and a host of economic development programs.
“We are all compelled to advocate for projects in our districts and we shouldn’t apologize for that,” said Sen. Donald J. DeFronzo, D-New Britain, who as co-chairman of the legislature’s bonding subpanel, tackled the unpopular task of asking his colleagues to cancel many projects they already had touted back home. “But over time they accumulate.”
The reductions and cancellations would bring state government nearly $180 million under its borrowing limit for the new fiscal year, which begins July 1, said DeFronzo, who cut funds for projects tied to his community’s Polish American Foundation and YWCA.
The bill was developed in response to sluggish state tax revenues which only recently have begun to rebound for the first time in two years. The statutory debt limit, which covers both borrowed funds and bonding given preliminary approval, shrinks when tax revenues decline.
All bonding given preliminary approval by the legislature also must be endorsed by the State Bond Commission, a 10-member panel chaired by Gov. M. Jodi Rell and comprised of other administration officials and constitutional officers as well as leaders of the legislature’s Finance, Revenue and Bonding Committee.
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, according to the legislature’s nonpartisan Office of Fiscal Analysis.
To help Connecticut’s three largest cities deal with a 15 percent reduction in bonding for their local projects, the bill places the remaining $58.6 million into undefined funding pools and allows municipal leaders in Bridgeport, Hartford and New Haven to distribute the resources among projects in their respective communities.
Legislators wouldn’t be the only ones forfeiting initiatives commonly referred to as “earmarks” or “pork-barrel” projects. The bill also eliminates $13 million from the Urban Act Program, which provides the governor with significant discretion to award state resources for economic development projects in large communities.
Jeffrey Beckham, spokesman for the governor’s budget agency, the Office of Policy and Management, said Friday that the administration proposed a major reduction in planned bonding back in February and still supports that concept. Beckham added that the administration is still analyzing the bill adopted in the Senate and declined further comment.
Republicans, who are in the minority in both chambers, urged their Senate Democratic colleagues to be as open to cutting spending as they try to balance the 2010-11 state budget as they were in forfeiting bond funds for local projects.
“Let’s not forget what we’re facing as we move forward,” said Sen. Andrew W. Roraback, R-Goshen. “The move that we’ve made here is substantial, it’s significant and it’s important. But there’s more to do.”
The preliminary $18.93 billion budget adopted last September for 2010-11 has been projected to be $726 million in deficit by the legislature’s nonpartisan Office of Fiscal Analysis since early February. A new forecast, based on new signs of revenue growth, is expected to reduce but not eliminate that shortfall. That report is likely to be completed by Monday, legislators said.