At last week’s State Bond Commission meeting Governor Dannel Malloy responded to a question by admitting that that his administration was informing Wall Street analysts that Connecticut would be dramatically increasing the use of the state’s credit card this year.
The CT Mirror’s story about the stunning announcement was entitled, “Malloy to Wall Street: Expect state borrowing to jump 40 percent this year.”
There wasn’t a lot of other media coverage about the statement despite the fact that it is probably the single most important thing that Governor Malloy has said since he falsely claimed, during last year’s gubernatorial campaign, that there was no state budget deficit this year and that he would be able to solve next year’s projected $1.4 billion budget deficit without raising taxes or cutting vital services.
- Recall that with less than a week to go before Election Day 2014, Malloy said the state was enjoying a budget surplus, although we now know that this year’s budget deficit has added up to over a quarter of a billion dollars and continues to get worse.
- And as to his “Read My Lips” promise of no new taxes and no cuts to critical programs, the proposed budget that Malloy announced in February included $900 million in additional tax revenue, shifting about $300 million in existing spending onto the state credit card, along with a series of devastating and irresponsible cuts to essential state services.
But forgetting that Malloy didn’t tell the truth about the status of this year’s state budget deficit while misleading voters by promising to do the impossible when it comes to next year’s budget, the latest news that he plans to put another $2.4 billion onto the state credit card this year should be front page, top of the fold, large font headline news in every media outlet in the state.
Although the amount of state debt already makes Connecticut one of the worst states in the nation when it comes to how much debt our taxpayers must pay back over the next two decades, we now have a governor who increased the amount of annual borrowing from about $1.4 billion to $1.8 billion a year in his first term and has now announced that he is planning to borrow forty percent more this year.
As Keith Phaneuf explained in his CT Mirror article last week,
“Malloy notified the State Bond Commission on Tuesday that he increased what is commonly referred to as the “soft bond cap” from $1.8 billion to $2.5 billion for the 2015 calendar year.
That’s up almost 40 percent from last year, and almost 80 percent from 2012, when Malloy had set the cap at $1.4 billion.”
In an attempt to explain why the state would borrow such an excessive amount this year, Malloy told reporters,
“[M]oney continues to be relatively cheap and that can’t be guaranteed to last forever…Let’s try to capitalize on getting the cheapest possible money that we can when we have that opportunity.”
To put that statement into perspective, imagine calling a family meeting and telling your spouse and kids,
“Hey everyone, we just got a credit card in the mail with a low interest rate so you should all go out and buy all the things you want because we don’t know how long we’ll have access to low rates like these…and then when your youngest asks, but dad, how will we pay for the high monthly minimum payments that will be due each month for the next twenty to thirty years, you pat him or her on the head and say, I’m impressed you understand that point but don’t worry about it, we’ll cross that bridge when we get to it.”
In response to Malloy’s breathtakingly irresponsible announcement, the General Assembly’s Republican leaders on the Finance, Revenue and Bonding Committee pointed out not only does Connecticut rank as one of the most indebted states — per capita — in the nation, but observed that, “During these tough fiscal times we should be reining in borrowing.”
Of course, after their political shot at Malloy and the Democrats, the Republicans on the Bond Commission then voted for all the new bonding that was on the agenda for this month.
It should be noted that Malloy’s obsession with excessive borrowing is hardly new.
As the CT Mirror’s story notes,
“In the last two years leading up to the 2014 gubernatorial election — which Malloy won by defeating Greenwich Republican Tom Foley — the governor and the legislature’s Democratic majority also moved hundreds of millions of dollars of operating expenses onto the credit card to avoid pre-election tax hikes.
These steps included:
Refinancing debt to push $392 million in payments owed then until after the election.
Bonding $173 million in new municipal aid.
Bonding $57 million for pollution abatement and stem cell research grants that previously were paid for out of the operating budget.
Borrowing an extra $39 million so that debt payments tied to converting state finances to Generally Accepted Accounting Principles could be deferred until after the election.
And finally, as if to prove just how out of touch all of Connecticut’s leaders are on the issue of the growing burden they are placing on Connecticut’s taxpayers by borrowing more and more money, the CT Mirror story concludes with,
“Malloy spokesman Devon Puglia countered Wednesday that Republican lawmakers are not critical of state borrowing whenever the funds support projects in their home districts.
“I’ve never seen such hypocrisy out of the GOP,” Puglia said. “It’s unbelievable.”
Both Frantz and Davis [The Republican’s two top leaders on the General Assembly’s Finance Committee] serve on the bond commission and have voted to approve financing for various projects in their communities, or in those of their colleagues…”
Great, just great….
Rather than address the real problem, the Democrats and Republicans spend their time hurling insults at each other while they all just keep using the state’s credit card knowing that it is Connecticut’s residents who will end up having to pay off the enormous cost of the principal and interest they are racking up.