Like a moldy box of leftovers in the back of the fridge, nobody wants to touch the idea of securitizing $1.3 billion in future revenue to balance the 2011 budget.
The controversy over securitization – which is the practice of borrowing against an existing or new revenue stream – has been brewing since Gov. M. Jodi Rell first proposed the concept in her February 2009 budget address to the General Assembly. Later, the legislature’s Democratic majority included securitization in the budget that Rell refused to sign in September. Since then, both sides have been reluctant to embrace the idea.
Rell’s administration followed through with its legislatively mandated responsibility of laying out a number of revenue options, such as the state’s Energy Efficiency and Clean Energy funds and Keno, a lottery-type game.
But none of those options appealed to lawmakers on the Finance, Revenue, and Bonding Committee Monday.
“There has to be a better way,” Sen. Eileen Daily, co-chairwoman of the Finance Committee, said Monday evening after a day-long public hearing.
“There’s no consensus on what to securitize against,” she said.
Rep. Cam Staples, co-chairman of the Finance Committee, said Rell’s administration didn’t even help draft legislation to implement securitization.
“No one likes idea of securitization, but it’s here and we have to deal with it,” Michael Cicchetti, Rell’s deputy budget director, said Monday. He said the Office of Policy and Management and the state Treasurer’s office came up with a menu of options for the legislature, but the administration can’t draft legislation until the legislature picks one.
“The notion that we could have a $1.3 billion revenue stream without somebody having to make a hard choice is just not reasonable,” Cicchetti said.
He said it’s up to the legislature now to make the difficult choice of picking a revenue stream.
Howard Rifkin, deputy state treasurer, said lawmakers should not look at borrowing against general fund revenues and would prefer they look at non-general fund revenues, like the energy funds, or new revenues, like Keno the lottery-type game that 70 percent of voters in the last Quinnpiac University poll opposed.
“I wish they were easier ideas, but they’re not,” Rifkin said. “It’s all hypothetical.”
He said whatever the legislature does it needs to get it done this session, so they can sell the revenue stream before the end of the calendar year.
“There’s a lot of discomfort over the securitization proposal,” Staples said last week following a closed-door meeting of the House Democratic caucus.
Cicchietti told lawmakers Monday that it would be best to use the energy funds because they’re already an existing source of revenue, or Keno, a new source of revenue.
If the energy funds were used no one’s electrical bill will go up because it’s already part of everybody’s bill, Cicchetti said.
But dozens of executives who run clean energy or energy efficiency businesses told lawmakers Monday that their businesses will suffer as a result.
Michael Trahan, executive director Solar Connecticut Inc., said the Clean Energy program has worked tremendously well and has helped homeowners lower the cost of solar installations.
“If the funds are taken away over next 10 years those reductions go away, installers go away,” he said.
Christopher Phelps, executive of Environment Connecticut, said he could give lawmakers a litany of reasons why it should divert the energy funds, but will give them just one: jobs.
“The programs created by these funds create and retain well-paying jobs in Connecticut’s clean energy economy,” Phelps said in his written testimony. “Eliminating these funds and replacing them with a tax on electric bills will kill jobs, hurt our economy, and harm every Connecticut family that pays an electric bill.”
Chris Jobson of Green Star Energy Solutions said he was able to double his payroll with the programs as the demand for weatherization improvements and energy audits grew.
“Please don’t undermine the success of the programs to fulfill short-term fiscal needs,” Jobson said.