The House Republican leader said “it encourages that bad behavior that we’ve seen out of legislators.”
State government added more than $550 million to its enormous debt burden over the past five years through its controversial practice of using borrowed funds effectively to support operating costs. An analysis prepared by Treasurer Denise L. Nappier’s office also noted, however, that the interest costs on these bond premiums are more manageable than some critics realize.
Gov. Dannel P. Malloy’s new budget proposal could be $50 million to $74 million out of balance if state Treasurer Denise L. Nappier and the legislature’s nonpartisan analysts are correct about what Connecticut owes on its credit card.
The state’s controversial practice of borrowing to pay off debt now threatens to poke new holes in the budget — a small one this fiscal year and a larger one after June — just a few weeks after lawmakers and Gov. Dannel P. Malloy wrapped a special session to balance the books.
One of the most vocal critics of Gov. Dannel P. Malloy and Democratic legislators, Senate Minority Leader Len Fasano, discovered recently it’s not so easy to balance a budget without compromising on fiscal principles.
To offset new taxes that have rankled business groups, Gov. Dannel P. Malloy proposed trimming up to 1.5 percent of discretionary spending in the new state budget. But the administration’s proposal shows the bulk of the cuts would likely fall on education, municipal aid, health care and social services. And a key legislator has warned that most of those areas could face even deeper cuts once the new fiscal year is underway.
State Treasurer Denise L. Nappier unveiled a compromise plan Monday to reform state bonding practices while also giving Gov. Dannel P. Malloy and the legislature some flexibility to use borrowed funds to balance the next two-year budget.
EAST HARTFORD – Despite recent arguments that his new state budget proposal is out of balance and over the constitutional spending cap, Gov. Dannel P. Malloy said Wednesday he wouldn’t propose more spending cuts or otherwise adjust his plan.
Updated 1:25 p.m. Tuesday
Tensions built Monday between Gov. Dannel P. Malloy’s administration and state Treasurer Denise L. Nappier over the governor’s controversial proposal to use $325 million in borrowed funds to pay off debt over the next two years.
State Treasurer Denise L. Nappier warned Gov. Dannel P. Malloy on Friday that one component of his new budget could harm Connecticut’s reputation on Wall Street. In a letter released to the media Friday evening, Nappier – a Democrat – called the Democratic governor’s plan to rely on $325 million in borrowing to cover operating costs “too aggressive.”
Gov. Dannel P. Malloy’s new budget would need more than $300 million in borrowing to cover operating costs over the next two years if projections from nonpartisan analysts and the treasurer’s office are correct. The governor’s budget relies on a controversial fiscal practice that faces increasing scrutiny and drives up the interest rates Connecticut pays to borrow funds for school construction and other capital projects.
Republican legislative leaders hope they have a key Democratic ally in their fight to reform state budget practices tied to borrowed funds. Both Treasurer Denise L. Nappier, a Hartford Democrat, and nearly a half dozen GOP lawmakers have said they want to restrict how the state uses proceeds from bonds sold at premium rates.
The state budget deficit shrank modestly over the past month to $32 million, Comptroller Kevin P. Lembo reported Friday. But the state’s chief fiscal watchdog also noted that the deficit would have been larger were the budget not bolstered somewhat by borrowing that has become increasingly controversial in recent years.
Though Gov. Dannel P. Malloy insists spending cuts will be used to close this year’s $100 million budget deficit, GOP lawmakers say the Democratic governor is poised to use a rarely publicized bonding tool to effectively close much of the shortfall with borrowing.
Despite decrying the budget gimmicks of his Republican predecessors, Gov. Dannel P. Malloy is employing some fiscal tricks himself, using $70 million in borrowing and other gimmicks to balance his latest spending plan.