State Credit Card Reaching Its Max

by Christine Stuart | Feb 1, 2010 12:56pm
(1) Comment | Commenting has expired
Posted to: State Budget

As if things weren’t bad enough, Gov. M. Jodi Rell’s administration warned lawmakers last week that the state is on the verge of blowing through its credit card limit.

In this letter to the chairs and ranking members of the Finance, Revenue, and Bonding Committee, Rell’s Budget Director Robert Genuario warned lawmakers that the state is approaching its bonding cap. This means it may need to consider scaling capital projects already approved by the state Bond Commission.

The bonding cap is tied to the amount of projected state revenues, which have fallen considerably over the past few months.

At a budget forum last week, state Comptroller Nancy Wyman said income, payroll, and sales taxes are all declining and that most of the revenue loss is related to the loss of 90,000 jobs.

Revenue estimates are off $342 million already this year, according to Rell’s budget office and the legislature’s Office of Fiscal Analysis. Wyman is expected to release the latest revenue estimates later this afternoon, but not much is expected to change.

If revenue estimated continue to fall Genuario warned that by the Spring the state could blow through the cap by about $242 million. If that happens Rell and the legislature would be required to come up with a list of projects to scale back or delay a few years.

Since the bonding cap is based on revenues, the state could also raise taxes to boost its revenue projections. Last year Rell and the legislature negotiated about $800 million in tax and fee hikes, which were included in the $18.9 billion state budget for fiscal year 2010-11.

Currently Connecticut’s bonding debt is $18 billion.

Comment

posted by: thomas hooker | February 1, 2010  1:44pm

Christine Stuart writes, “As if things weren’t bad enough, Gov. M. Jodi Rell’s administration warned lawmakers last week that the state is on the verge of blowing through its credit card limit.”

Actually, given that the state’s annual budget is about $19 bn, the $242 million amount by which the Rell administration thinks that spending will exceed revenues amounts to barely 1.5% of the budget.  That is a very small amount, and hardly constitutes “blowing through” anything.

And stating that “as if things weren’t bad enough” really amounts to hyperbole.  The General Assembly has closed virtually all of the serious deficit with which it was confronted by this major economic downturn.  The current deficit is not much more than a rounding error, though our press corps continues to treat it as if it were a major catastrophe.

And if the economy continues to revive, as it did in the fourth quarter of last year, that deficit could quickly turn into a surplus.

So a bit of circumspection is in order, rather than the megaphoning of Rell administration viewpoints.