Connecticut’s debt level as of July 1 will be $2.7 billion below the state’s statutory limit, or 89.33% of the overall limit, according to state Treasurer Denise Nappier.
As of July 1, total outstanding bonds, notes and indebtedness would be $16.8 billion, not including authorized but unissued bonds.
Nappier released a certification Wednesday night, when lawmakers passed a $20.8 billion second-year budget adjustment to the fiscal 2018-19 biennium.
The certification accounted for bond projects the General Assembly authorized and canceled by the legislature on Wednesday. Cancellations of existing authorizations totaled $406.3 million.
House Minority Leader Themis Klarides, R-Derby, wrote Nappier earlier in May, inquiring about the impact of the debt deal with capital city Hartford on the state’s debt capacity. Under that deal, to which state officials and Hartford Mayor Luke Bronin agreed in March, the state will backstop roughly $540 million of Hartford’s general obligation debt over 20 years.
“While there may be differences of opinion over how bond funds should be authorized and allocated, at the Treasury we are focused on the precise calculations of where the state’s debt stands.” Nappier said. “The certification we just issued shouldn’t be seen as a license to borrow, but it does confirm that the state is well within its limit.”
State law requires debt-limit calculations on Jan. 1 and July 1 of each year, before state Bond Commission meetings, before any GO bond issuance and before legislative passage of any bond authorizations.
The state’s debt limit is calculated at 1.6 times general fund tax receipts that the legislature’s finance, revenue and bonding committee.
When the debt level reaches 90% of the debt limit, the governor must submit recommendations to repeal bond authorizations to the legislature for consideration.
An additional calculation shows that the state’s debt level will be $170.3 million below 90% of the limit as of July 1.
“While the debt limit does not legally restrict activities of the legislature or State until it is actually reached, the 90% level is an important early warning threshold that bears close watch,” Nappier said.