Cash flow battle continues at the Capitol
The regular General Assembly session has been over for almost two months, but the partisan battle over state government’s cash flow continues to percolate at the Capitol.
A veteran Republican representative voted against all 22 items on Friday’s State Bond Commission agenda to protest what he called a disturbing trend: The state is approving projects faster than it can release funds to implement them.
Deputy House Minority Leader Vincent J. Candelora, R-North Branford, said that the bond panel approved nearly $2 billion worth of capital projects to be financed with bonding and repaid with tax dollars collected in either of the General or Special Transportation funds. But, with the fiscal year set to end Saturday, the state has issued bonds to cover about $1.32 billion of that $2 billion.
The legislature agreed in May to suspend $300 million in borrowing for transportation projects to reduce debt costs.
But even given that decision, that still leaves a gap of close to $400 million between approved project costs and the funding the state has borrowed to pay for them.
“I think it only exacerbates our cash flow problems,” Candelora said, adding that they already are “significant.”
A former member of the bond commission, Candelora was designated temporarily to fill the commission seat of Rep. Sean J. Williams, R-Watertown, who was absent from Friday’s meeting.
Minority Republicans in the General Assembly have warned that the state’s cash pool has been dangerously low throughout much of the calendar year, despite more than $1.5 billion in state tax increases enacted in May 2011 to help balance the budget.
State Treasurer Denise L. Nappier notified the legislature earlier this month that her office has temporarily transferred funds away from capital project accounts at four different times this calendar year to help the state cover its operating bills on time.
And though Nappier also wrote on June 1 that total available cash remains “adequate” right now, she added that pressures on the state’s cash flow continue to mount.
There has been a “significant decline” over the past 12 months, Nappier wrote. The cash pool balance stood at $121 million May 26, down from $895 million at the same point in 2011.
Weekly disbursements from the entire common pool average approximately $540 million, according to the treasurer’s office.
But Gov. Dannel P. Malloy’s budget director, Benjamin Barnes, said “it is possible for a project to be allocated (by the bond commission) and the funds to be drawn down … well into the future.”
“We will bond as monies are required,” Malloy, a Democrat, added.
But Candelora said he worries this trend, coupled with existing cash flow challenges, may force state government to borrow in the coming months just to pay its operating bills.
Rep. Betty Boukus, D-Plainville, co-chairwoman of the legislature’s bonding subcommittee, said the state might not need to borrow funds for approved projects for many months or longer simply because necessary design work is taking longer than anticipated.
“I wish Vinnie had come to us and we would have looked at this together,” she said, referring to Candelora. Boukus added that she has heard no complaints from legislators of either party that key projects in their districts have been waiting too long for overdue state funding.
And most state legislators are running for re-election this fall.
“I haven’t been hearing anything so far,” she said. “We’d be happy to look at it, but no one has been complaining.”
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