Since January state Treasurer Denise Nappier and House Minority Leader Lawrence Cafero, R-Norwalk, have been arguing back and forth about the state’s cash flow and whether temporary transfers of bond funds are a sign of worsening fiscal conditions, or just a part of day-to-day operations.
After reading a handful of editorials about the state’s cash position, Nappier sent out a letter to legislative leaders Thursday to clarify the reason for the transfers. She said the transfer from the bond proceeds to the common cash pool were necessary to address mismatches in receipts and disbursements.
Republican lawmakers have called the transfers “borrowing” which Nappier objects to because she said her office is not borrowing any capital when the transfers occur.
Cafero urged Nappier on Friday to appear before the Finance and Appropriations Committees to explain her position.
“We have an issue that apparently needs to be cleared up and that is, borrowing money to pay for operational expenses because the state is out of money due to continued spending and a shortfall of revenue,’’ Cafero said in a press release. “Treasurer Nappier’s response has been that we Republicans do not understand how the state’s finances are managed and we are ignorant of the budget process. We would like her to come to the legislature and explain this.”
Nappier’s spokesman said the letter she sent speaks for itself.
“There is no casual connection, per se, between interfund transfers and per capita debt burden or credit rating risk,” Nappier wrote. “I can assure you , however, that there is a clearer potential for headline risk associates with misinformation concerning the state’s fiscal condition.”
“Either the legislators who wrote the flawed opinion pieces do not understand the nuances of how we manage the state’s cash, or they chose to purposely mislead the general public for political ends,” she added.
Under the state’s laws, transferring money from bond proceeds within the common cash pool is legal, but Republicans have for years objected to the practice, which they believe allows the state to hide its actual fiscal health.
Rep. Vincent Candelora, R-North Branford, a former member of the Bond Commission, has said that these types of transfers have only occurred two times in the recent past: once in 2003 and once in 2009. Both events occurred when the stock market underperformed and the global economy tanked.
“Historically this has never happened at a time when revenues are projected to be on target,” Candelora has said.
The Malloy administration has previously attributed the need to do this at a time when revenues to the state are projected to be healthy is the result of years, and years of poor long-term financial decisions that were made by past administrations.