Free Daily Headlines :

  • COVID-19
  • Vaccine Info
  • Money
  • Politics
  • Education
  • Health
  • Justice
  • More
    • Environment
    • Economic Development
    • Gaming
    • Investigations
    • Social Services
    • TRANSPORTATION
  • Opinion
    • CT Viewpoints
    • CT Artpoints
DONATE
Reflecting Connecticut’s Reality.
    COVID-19
    Vaccine Info
    Money
    Politics
    Education
    Health
    Justice
    More
    Environment
    Economic Development
    Gaming
    Investigations
    Social Services
    TRANSPORTATION
    Opinion
    CT Viewpoints
    CT Artpoints

LET�S GET SOCIAL

Show your love for great stories and out standing journalism

Connecticut ‘locks’ into new budgetary restraints in three weeks

  • Money
  • by Keith M. Phaneuf
  • May 25, 2018
  • View as "Clean Read" "Exit Clean Read"

Jacqueline Rabe Thomas :: Ctmirror.org

State Treasurer Denise L. Nappier (file photo)

In less than three weeks, state government will contractually bind itself to a new series of budgetary controls for the next five years despite numerous warnings the maneuver could cause fiscal chaos.

State Treasurer Denise L. Nappier announced this week she will issue $500 million in bonds on June 4 on Wall Street — bonds that will include the so-called “bond lock” provision mandated by the General Assembly.

“This bond covenant is a declaration to the municipal finance marketplace of Connecticut’s seriousness in addressing its fiscal challenges,” Nappier said. “Every bond issued with this covenant will include a pledge that the state will address its long-term liabilities, rein in spending and borrowing, and rebuild its Budget Reserve Fund.  This is the clearest message yet that Connecticut is on a much needed disciplined path in managing its fiscal affairs.”

In late October 2017, the General Assembly approved four new fiscal controls as part of a bipartisan budget deal.

  • A spending cap that says the annual growth in this area cannot exceed average personal income growth in Connecticut or inflation, whichever is greater.
  • A bond cap that prohibits the state from issuing more than $1.9 billion in bonding per year. The limit is adjusted annually to reflect the federal Consumer Price Index’s rate of inflation.
  • A volatility cap that forces the state to save, rather than spend, any income tax receipts from quarterly filings — which stem chiefly from capital gains and other investment earnings — in excess of $3.115 billion per year. This limit is adjusted annually to reflect growth in personal income.
  • And a revenue cap that also forces the legislature to save more funds. Lawmakers can appropriate only 99.5 percent of all estimated revenues, starting in 2020. The other one-half of 1 percent must be saved. This target gradually increases annually until 2 percent must be saved starting in 2026 and continuing at that level thereafter.

To make sure these caps stay in place, legislature mandated the state must pledge not to alter these caps for 10 years in the covenants accompanying bonds issued after May 15, 2018. The covenant essentially is a contract between the state and the investors that buy its bonds.

This bond covenant is a declaration to the municipal finance marketplace of Connecticut’s seriousness in addressing its fiscal challenges

Denise Nappier
Connecticut Treasurer

But several individuals and groups warned this would leave Connecticut with little flexibility to respond to a fiscal crisis. This included Gov. Dannel P. Malloy; the state Commission on Fiscal Stability and Economic Growth; some Democrats and Republicans on the legislature’s Finance, Revenue and Bonding Committee; and progressive policy groups like Connecticut Voices for Children and 1,000 Friends of Connecticut.

Former Norwalk Mayor Alex Knopp, a member of 1,000 Friends and also a former state representative, dubbed it the “doomsday bond covenant” and “possibly the worst piece of legislation enacted in Connecticut” in more than 50 years.

“It commits the state’s finances to an automatic, irreversible course of self-destruction with no realistic, built-in escape mechanism or effective emergency delay provision,” Knopp said about the bond-lock provision earlier this year in testimony before the fiscal stability commission.

Legislators agreed this spring to reduce the “bond-lock” pledge from 10 years to five.

They also stipulated this pledge must lock into place an existing debt limit statute for the next five years. This measure says general obligation debt — bonds paid off using resources from the General Fund, such as income, sales and corporation taxes — may not exceed 1.6 times General Fund tax receipts.

The “bond-lock” pledge does have an emergency provision that allows the legislature to alter any of the new caps or the debt limit statute during the five-year restricted period provided:

  • The governor signs a declaration of fiscal emergency.
  • And three-fifths of both the House and Senate support the change.

Sign up for CT Mirror's free daily news summary.

Free to Read. Not Free to Produce.

The Connecticut Mirror is a nonprofit newsroom. 90% of our revenue comes from people like you. If you value our reporting please consider making a donation. You'll enjoy reading CT Mirror even more knowing you helped make it happen.

YES, I'LL DONATE TODAY

ABOUT THE AUTHOR

Keith M. Phaneuf A winner of numerous journalism awards, Keith Phaneuf has been CT Mirror’s state finances reporter since it launched in 2010. The former State Capitol bureau chief for The Journal Inquirer of Manchester, Keith has spent most of 31 years as a reporter specializing in state government finances, analyzing such topics as income tax equity, waste in government and the complex funding systems behind Connecticut’s transportation and social services networks. A former contributing writer to The New York Times, Keith is a graduate of and a former journalism instructor at the University of Connecticut.

SEE WHAT READERS SAID

RELATED STORIES
House approves big municipal aid pledge, tax incentive bills
by Keith M. Phaneuf and Mark Pazniokas

The House approved bills Wednesday pledging $100 million-plus in new municipal aid and offering tax incentives to attract data centers.

CT legislature poised to make early budget pledge to help cities and towns
by Keith M. Phaneuf

The state House is expected to approve more than $100 million in new, annual PILOT grants to municipalities.

Boston Fed chief predicts strong economic recovery begins in 2nd half of 2021 if vaccine reaches enough people
by Keith M. Phaneuf

A strong economic rebound also depends on states helping those hit hardest by COVID-19, a federal reserve official said.

A pledge to share sales tax receipts with towns still goes unfulfilled. Was it a case of fiscal bait-and-switch?
by Keith M. Phaneuf

Hundreds of millions of dollars have yet to arrive, leaving municipal leaders wary of new proposed aid.

Finance panel eyes cap on property tax hikes, gears up for another battle over CT’s credit card
by Keith M. Phaneuf

Lawmakers raised bills to cap property tax hikes, and potentially battle Gov. Ned Lamont for control of Connecticut’s borrowing.

Support Our Work

Show your love for great stories and outstanding journalism.

$
Select One
  • Monthly
  • Yearly
  • Once
Artpoint painter
CT ViewpointsCT Artpoints
Opinion Lamont’s new vaccination priorities are simple and smart
by Richard Davies

Connecticut Gov. Ned Lamont’s new age-eligibility vaccine plan is simple, smart and straightforward. The more complicated the rules are, the greater the chance of screw-ups and of well-connected people getting their shots before they should. The governor is doing a good job.

Opinion Gas pipeline will threaten water quality, wildlife and wetlands
by Susan Eastwood

The Connecticut Department of Energy and Environmental Protection has granted tentative approval of the 401 water quality certification for the Pomfret to Killingly natural gas pipeline. I urge DEEP to deny the 401 certification, as the proposed pipeline would violate the Connecticut’s water quality standards, and the conditions in the draft certification fail to protect our streams, wetlands, and wildlife.

Opinion Connecticut and the other Connecticut. Which will endure?
by Ezra Kaprov

What comes to mind when you hear the word ‘Connecticut’? Possibly, you think of a 43-year-old Puerto Rican man who arrived here with his family following Hurricane Maria. He works full-time as a machinist at the Sikorsky plant, and he coaches a prizefighter on the side.

Opinion COVID-19 increases urgency for legislature to pass medical aid-in-dying law
by Dr. Gary Blick

The COVID-19 crisis has exposed the profound tragedy of loved ones dying alone, in a hospital or nursing home, without the care and comfort of loved ones surrounding them. This pandemic also demonstrates the fragility of life, the limits of modern medicine to relieve suffering, and has magnified the systemic racial disparities in our healthcare system, resulting in higher hospitalization and death rates for people in communities of color. We must eradicate these disparities, so everyone has equal access to the full range of end-of-life care options.

Artwork Grand guidance
by Anne:Gogh

In a world of systemic oppression aimed towards those of darker skintones – representation matters. We are more than our equity elusive environments, more than numbers in a prison and much more than victims of societal dispositions. This piece depicts a melanated young man draped in a cape ascending high above multiple forms of oppression. […]

Artwork Shea
by Anthony Valentine

Shea is a story about race and social inequalities that plague America. It is a narrative that prompts the question, “Do you know what it’s like to wake up in new skin?”

Artwork The Declaration of Human Rights
by Andres Chaparro

Through my artwork I strive to create an example of ideas that reflect my desire to raise social consciousness, and cultural awareness. Jazz music is the catalyst to all my work, and plays a major influence in each piece of work.”

Artwork ‘A thing of beauty. Destroy it forever’
by Richard DiCarlo | Derby

During times like these it’s often fun to revisit something familiar and approach things with a different slant. I have been taking some Pop culture and Art masterpieces and applying the vintage 1960’s and 70’s classic figures (Fisher Price, little people) to the make an amusing pieces. Here is my homage to Fisher -Price, Yellow […]

Twitter Feed
A Twitter List by CTMirror

Engage

  • Reflections Tickets & Sponsorships
  • Events
  • Donate
  • Newsletter Sign-Up
  • Submit to Viewpoints
  • Submit to ArtPoints
  • Economic Indicator Dashboard
  • Speaking Engagements
  • Commenting Guidelines
  • Legal Notices
  • Contact Us

About

  • About CT Mirror
  • Announcements
  • Board
  • Staff
  • Sponsors and Funders
  • Donors
  • Friends of CT Mirror
  • History
  • Financial
  • Policies
  • Strategic Plan

Opportunity

  • Advertising and Sponsorship
  • Speaking Engagements
  • Use of Photography
  • Work for Us

Go Deeper

  • Steady Habits Podcast
  • Economic Indicator Dashboard
  • Five Things

The Connecticut News Project, Inc. 1049 Asylum Avenue, Hartford, CT 06105. Phone: 860-218-6380

© Copyright 2021, The Connecticut News Project. All Rights Reserved. Website by Web Publisher PRO