Connecticut is near Gov. Dannel Malloy’s self-imposed “soft cap” bonding limit of $2.5 billion for the year, and one lawmaker said that should concern bond-rating agencies.
“I don’t think the message is sinking in,” state Sen. Scott Frantz, R-Greenwich, said in an interview after the state Bond Commission approved $94 million for a variety of projects Tuesday at a special meeting in Hartford. Frantz sits on the 10-member panel, which Malloy chairs.
“The rating agencies will be looking closer and closer into our situation,” said Frantz, who is deputy minority leader of the Senate Republican Caucus and ranking member of the General Assembly’s finance and commerce committees.
Fitch Ratings, Standard & Poor’s and Kroll Bond Rating Agency rate Connecticut’s general obligation bonds AA, while Moody’s Investors Service assigns its Aa3 rating.
Fitch in July removed its negative outlook and restored it to stable. Moody's and Kroll also assign stable outlooks while S&P assigned a negative outlook in March.
Malloy, a Democrat, told Wall Street in February that the state would borrow up to $2.5 billion in 2015. Connecticut is just $63 million shy of that limit with two more commission meetings left.
“Everything gets rubber-stamped,” said Frantz. “There’s very little debate. Should we be doing everything that’s on the wish list?”
His comments prompted a rebuttal from state budget Director Benjamin Barnes.
“We noticed Sen. Frantz decried bonding – however, the senator has not cast a clear ‘no’ vote on a bond project since 2013,” said Barnes.
“This calendar year hundreds of projects have been through the Bond Commission, with a value of about $2.4 billion in general obligation bonds," Barnes said. "Over this period, the senator’s colleagues put out press releases celebrating bonding for their own districts. They need to make up their minds.”
The bond panel on Tuesday approved $7 million to allow the state Department of Transportation to purchase buses and other capital equipment necessary to expand the CTfastrak rapid bus service east of the Connecticut River into East Hartford and Manchester.
It also approved $620,000 to enable a new nonprofit to purchase the Amistad replica slave ship in New London out of receivership, and a further $300,000 to the Tennis Foundation of Connecticut for renovations at the Connecticut Tennis Center.
State Rep. Diana Urban, D-North Stonington, who for nearly a decade prodded state officials about the shaky finances of the Amistad’s previous owner, justified the borrowing as essential given the ship’s educational value, but wants to assure small businesses shortchanged by the previous owner, Amistad America, that they will receive full payment.
The sale price won’t cover the $2.2 million in debt still owed such businesses.
Situated in New Haven next to the Yale Bowl football stadium, the tennis center hosts an annual pro tournament that’s essentially a warmup for the U.S. Open grand slam event in New York.
The Amistad and the tennis money both concern Frantz.
“As a state, should we be in the business of supporting tennis tournaments? Should we be in the business of supporting boat projects?" he said. "They’re wonderful, but boats tend to be a large hole in the water in which you throw a lot of money.”
The next bond panel meeting is scheduled for Oct. 30.
According to Frantz, Connecticut faces challenges on several fronts. It has one of the slowest-recovering post-recession economies and job growth, he said, “is acceptable but not where it should be.”
A projected loss of $100 million in tax receipts could mean a budget deficit of up to $1 billion by the end of 2016.
