Gov. Dannel P. Malloy and the state Bond Commission borrowed more than $300 million Friday at a time when Washington can’t agree on how to increase the nation’s debt ceiling.
The Bond Commission approved more than $315 million in general obligation bonds and more than $398 million in special revenue bonds Friday.
Malloy said he isn’t concerned about borrowing money to meet the state’s infrastructure needs, a point he made clear to Republican lawmakers who voted against a few items they didn’t see as necessary.
“In the transportation arena it accesses well over a billion in federal money and unlocks that money to be spent in our state producing jobs as well as addressing an infrastructure which is woefully inadequate,” Malloy said of Friday’s agenda.
But Sen. Andrew Roraback, R-Goshen, said he couldn’t vote to approve $400,000 to build a playground in Hamden for disabled children at a time when the state is sending out thousands of layoff notices to state employees.
“I have to draw the line because we are on the cusp of Armageddon,” Roraback said.
He said he thinks there would be a moratorium on playgrounds and other similar capital projects.
“In this economy how can you square spending money on playgrounds,” Roraback, who voted against a playground in his own district months ago, said.
Malloy, who remained silent up until today about the Republican objections to bonding for certain projects, said he wants them to understand the state is not spending more than it has planned and is not borrowing to cover operating expenses.
“Some of the comments, although not necessarily intended to, might lead people to believe there’s no different between a capital dollar and an operating dollar,” Malloy said explaining why he decided to speak up at today‘s meeting. “I’ve stated previously I have not, nor do I intend to bond for operating expenses, which was done by my predecessor administration.”
“We’re not facing Armageddon in Connecticut,” Malloy said. He said children with disabilities deserve an opportunity they have long been denied to have recreational opportunities.
As for the situation in Washington, “I think it’s crazy.” He said he supports President Barack Obama’s plan to lower the deficit by $4 trillion over the next 10 years.
“I think it’s an unbelievable opportunity missed,” Malloy said.
But what does it mean for Connecticut?
“Clearly a default by the federal government is potentially a cataclysmic event played out on a world stage with implications far beyond our own borders,” Malloy said.
“What I’m most worried about initially is the breaking of faith by the national federal government where it would not honor the commitments that have been previously made to the bond market. I fear the interest rate repercussions both short and long term. I fear the drag down effect on the economy as interest rates for individuals would most likely rise, as well as interest rates for municipal and state governments and the impact that might have on infrastructure investment. So for all of those reasons I am fearful of the event that I have described, but hopeful it will not occur.”
The other part of the debate in Washington Malloy fears is what happens if an agreement to increase the debt ceiling requires programs like Medicaid to be block granted.
“I oppose and hope we don’t go to a federal block grant model for Medicaid. It sets off a 50 state race to the bottom,” Malloy said.
Malloy supports Maryland Governor Martin O’Malley’s proposal to achieve approximately $100 billion in federal savings by improving how government serves ‘dual eligibles‘.”
Dual eligibles are those individuals eligible for both Medicaid and Medicare and are considered the most expense, and most sickly individuals in the system, who, according to O’Malley, get the most expensive care bouncing between nursing homes and hospitals and also some of the lowest quality care.
O’Malley has said the “ping pong” of costs for these individuals gets shifted from Medicaid to Medicare and Medicare to Medicaid and the cost savings get lost in the back and forth. He said if the government was better able to managed those costs in a more “holistic way,” it could save the $100 billion the president is looking for in Medicaid savings.