The Connecticut State Bond Commission approved two transactions totaling $1.47 billion at a special meeting on Tuesday. Both deals are expected to price before the end of the calendar year.
The offerings include up to $950 million of special tax obligation bonds comprising $600 million of new money and, depending on market conditions, up to $350 million of refunding bonds. The state issues special tax obligation bonds — secured by transportation-related taxes and fees — for transportation projects.
The second-largest transaction on the agenda is a $520 million general obligation deal that will likely price in October and include a taxable Build America Bond component. The transactions will finance previously authorized projects. The commission authorizes bond-financed projects so that state and local governments can begin spending money on them and then be reimbursed later with bond proceeds.
The commission also authorized $260 million of bond-financed capital spending to upgrade a 62-mile rail corridor between New Haven and Springfield, Mass., and lay the foundation for an eventual high-speed rail network between New England cities.
The bond proceeds would be Connecticut's match if it receives a competitive grant from the federal government. This month the state applied to the U.S. Department of Transportation for $220 million for the initial phase of the network. Planned upgrades include reinstalling double track along sections that currently have a single track, installation of signal and control systems, and improvements to train stations.
The Bond Commission meeting had originally been scheduled for last week but was postponed after one of its members, state Rep. Vincent Candelora, R-East Haven, complained that he could not obtain information from the state treasurer's office about its practice of issuing short-term debt.
From fiscal 2006 through fiscal 2008 the state didn't issue bond anticipation notes to fund capital projects, relying instead on bond proceeds or cash for which it would later be reimbursed through bond proceeds. In 2009, Connecticut began using Bans to finance capital projects ahead of long-term bond issues.
Candelora said he was concerned that the state was using borrowing for operating expenditures.
The treasurer's office responded in a letter that although the state can borrow from its bond funds for short periods of time for cash-flow purposes, the $934 million of Bans issued in fiscal 2009 and fiscal 2010 would be used for capital spending and eventually would be fixed with long-term bonds.
Candelora voted against the bond issues on Tuesday.