Connecticut Gov. Dannel Malloy said Thursday that he would consider issuing revenue bonds if the state’s budget impasse continues.
Malloy has been running the state by executive order since Saturday.
"In the long run, I’m not going to shut down transportation projects on highways," said Connecticut Gov. Dannel Malloy.
“I don’t think in the short run that’s our intention, but in the long run, I’m not going to shut down transportation projects on highways and effectively lose the next five and a half months of building time if the projects going to be unfunded,” Malloy told reporters at a ceremony marking that the Interstate 95 bridge replacement project connecting New Haven and West Haven is three months ahead of schedule.
“If you’re asking me are we scheduling a [State Bond Commission] hearing now, the answer’s no,” said Malloy. “If it was necessary, would I schedule one, the answer’s yes.”
The House of Representatives, which would not consider Malloy’s proposed $317.5 mini-budget to last through July, has offered a two-year, $40 billion proposal that that Speaker Joe Aresimowicz, D-Berlin, said could go up for a vote on July 18.
Connecticut, which last week borrowed $300 million through a private placement with Barclays Capital, has received six bond-rating downgrades over 13 months, with rating agencies citing budget imbalance, dwindling income-tax receipts and high fixed costs.
Moody’s Investors Service rates Connecticut general obligation bonds A1, while S&P Global Ratings and Fitch Ratings assign A-plus ratings. Kroll Bond Rating Agency rates them AA-minus.
The only other states with ratings below double-A are Illinois and New Jersey.
Malloy also urged voters to approve a constitutional amendment scheduled for November that would provide a lockbox for transportation funds.
According to Malloy, 47% of state maintained roads are in fair or poor condition.
“We need to upgrade our transportation network in order to be competitive with surrounding states,” he said.
Several projects, including the I-95 work and repairs to the “Tunnel of Heroes” through West Rock Ridge in New Haven on the Wilbur Cross Parkway, are under construction or planned under the governor’s 30-year “Let’s Go CT” transportation infrastructure investment plan. He urged more spending on infrastructure for Connecticut to retain and attract business.
General Electric Co. moved to Boston from Fairfield, Conn., last year and insurer Aetna Inc. last week confirmed it would relocate to New York from state capital Hartford.
State Comptroller Kevin Lembo said Connecticut is on track to end fiscal 2017 with a $107.2 million deficit.
In a letter to Malloy, Lembo said the state’s budget reserve, or rainy-day fund, will dwindle to $128.38 million after closing any remaining deficit, based on projections.
“Long-term planning must be a priority to prepare for ongoing uncertainties and developing trends in the national and state economies that will likely influence future budgets as well,” said Lembo.
According to Lembo, those factors include a statewide population decline and shift – as well as a plan announced by the Federal Reserve to reduce its balance sheet by $2 trillion from the end of this year through 2022.
“The Federal Reserve’s plan could cause a disruption in the stock market, with unknown ramifications on the state and national economies,” said Lembo.