by Christine Stuart | May 1, 2012 11:27pm CTNewsJunkie.com
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Republican
legislative leaders claimed Tuesday that Gov. Dannel
P. Malloy’s decision to use $222 million that had been reserved to pay off 2009
borrowing won’t help the state’s credit rating.
Just two
months ago, the Malloy administration told the Wall Street credit agencies that
it would pay off the 2009 Economic Recovery Notes.
“It is of
crucial importance that the governor, at very least, be honest with the bonding
agencies,” House Minority Leader Lawrence
Cafero, R-Norwalk, said Tuesday.
Sen.
Minority Leader John McKinney called the plan to balance the budget “fiscally
irresponsible.” He said Republicans are asking the governor if he’s alerted the
rating agencies that the information his administration provided in March is no
longer correct.
The state
makes two presentations a year to the three credit rating agencies.
“The
diversion of these funds to finance operational expenses is fiscally
irresponsible and will lead to another downgrade by the agencies and ultimately
higher interest rates on future bond issuances,” McKinney and Cafero
wrote in a letter to Malloy on Tuesday.
The duo
claimed that the Malloy administration made a presentation to credit rating
agencies touting legislation which required the payment of the Economic
Recovery Notes.
Ben
Barnes, secretary of the Office of Policy and Management, said in a phone
interview Tuesday evening that payment of the notes obviously “didn’t make a
difference to them.”
He said
the same information was included in a previous presentation to the three
rating agencies. One of the three, Moody’s Investor Services, downgraded the
state.
“Our
efforts to pre-pay the Economic Recovery Notes didn’t carry much weight with
the rating agencies,” Barnes said.
Moody’s
Investor Services downgraded Connecticut’s rating from Aa2 to
Aa3 in January noting “Connecticut’s high combined fixed costs for debt service
and post employment benefits relative to the state’s budget; pension funded
ratios that are among the lowest in the country and likely to remain well below
average; and depleted reserves with slim prospects for near-term
replenishment.”
The state is facing a deficit in the current fiscal year
and the administration has a responsibility to present the General Assembly
with a deficit mitigation plan, Barnes said. Using money reserved to pay off
the notes is part of the solution the administration is putting forth. In
addition, Barnes said he gave the chairs of the Appropriations Committee a list
of spending cuts for the 2013 budget.
The
Republicans seem to be suggesting the administration should do something else
to erase the deficit, but Barnes pointed out “they don’t offer some other
alternative for closing this gap.”
McKinney and Cafero called the use of the funds a “gimmick.”
“It’s a
long litany of broken promises by this governor,” Cafero
said. “. . . That he would not borrow money to pay operating expenses — he’s
broken that promise as well.”
Malloy
bristled at the use of the word “gimmick.”
“For
Republicans to lecture me on what is or is not an appropriate way to balance
the budget — listen I didn’t run up a structural deficit of $3.6 billion,”
Malloy said. “I didn’t spend every dollar that was in the cookie jar.”
Malloy
made clear that he inherited a $3.6 billion deficit created by the previous
administration.
Asked if
spending cuts would be harder, Malloy said “spending cuts are hard. Change is
hard. Try living my life and telling people they have to change.”
He
maintained that the budget shortfall wasn’t as bad as some were making it out
to be.
“It’s a
one percent miss. I’ll admit that,” Malloy said. But he refused to accept the
Republicans’ argument that it makes his first budget a failure.
“I think
the failure in Connecticut’s
most recent history is the building of a $3.6 billion structural deficit,”
Malloy said.
http://www.ctnewsjunkie.com/ctnj.php/archives/entry/republican_lawmakers_say_malloy_needs_to_be_honest_with_wall_street/