(Updated 3:34 p.m.) The state of Connecticut is low on cash, so state Treasurer Denise Nappier is seeking Gov. Dannel P. Malloy’s approval to seek up to $550 million in credit.
In a letter to Malloy, Nappier says that the state has depleted all but $103 million of the $1.4 billion budget reserve as the state’s cash position has steadily fallen.
“As of today, the common cash pool has a negative balance, which has required the temporary transfer of $366 million from bond fund investment accounts,” Nappier wrote.
“Given the fiscal challenges facing the state, I believe it is prudent to prepare for the potential — though still not yet certain — need to borrow funds externally in order to fund cash flow requirements for current operations,” Nappier wrote Monday in her letter to Malloy.
Malloy approved of the measure.
“While not something that is undertaken lightly, this action is necessary because of financial decisions that were made over a long period of time,” Andrew Doba, Malloy’s spokesman, said.
“Allowing access to this line of credit will make sure that service providers and contractors are paid on time for the hard work they do,” he added.
Rep. Vincent Candelora, R-North Branford, who has been watching the state’s cash position closely, said the news doesn’t come as a surprise.
“It puts into question to what extent the state will be able to meet its obligations, including payroll,” Candelora said.
He said he doesn’t believe the situation will work itself out before Nappier is forced to obtain the line of credit.
Nappier’s office insists that it’s a precautionary measure and there’s no indication that the state will need to take the line of credit.
“How many times are we going to be played a fool?” Candelora said.
A negative cash flow will necessitate the state budgeting for it, so the $2.2 billion deficit project for the next two fiscal years will be more like $4 billion, he opined.
As recently as June ,Republican lawmakers were sounding the alarm about plummeting cash reserves.
House Minority Leader Lawrence Cafero, R-Norwalk, said his caucus was “scoffed at” and “pooh-poohed” when they raised questions about the temporary transfers of cash from bonded projects to operating expenses.
“Seven out of 12 months we had to do these temporary transfers to the tune of $1.6 billion,” Cafero said.
Nappier’s office insists the number is much lower because even though they reported temporary transfers from the capital projects account to operating funds some of the funds were returned.
The state has a common cash pool that includes money for operating expenses and capital projects. Temporary transfers are made between the two when necessary. Republican lawmakers have monitored the transfers closely for indications the state was in trouble.
“The state’s cash position is such that we’re going to run out of money and then we’ll be like California handing out IOUs,” Cafero said.
The Malloy administration was quick to point out that seeking a line of credit is different from what then-Gov. M. Jodi Rell did back in 2009.
In 2009, when the state’s revenue was lagging, Rell gave Nappier authority to use $581 million in short-term bond anticipation notes, which in August 2010 were rolled over into $520 million in long-term general obligation bonds.
“It’s also important to note that this is not the same action that was taken by Governor Rell in 2009. In that case, the state used bond funding to cover operating expenses,” Doba said. “We are not doing that. This is a short term line of credit that will cost the state relatively little and allow necessary payments to be made if the treasurer elects to access it.”
Support authentic, locally owned and operated public service journalism!
However, Candelora painted a different contrast, saying that “at least in 2009 there was some demonstration of how the cash pool would recover from the preventative measures the state planned to take.”
The state’s budget deficit and the lack of a robust rainy day fund were cited by Nappier and the Malloy administration as contributing factors to the state’s poor cash position.
“ln addition, we have the uncertainty facing all states regarding the impact of the federal “fiscal cliff” on federal funding, tax rates, and economic growth nationally,” Nappier said.
More State Budget news

Stefanowski Talks Abortion, Employee Raises & Budget In First Press Conference
For a half-hour Wednesday, Bob Stefanowski stood outside the state Capitol and fielded questions on abortion rights and state employee raises in a sign the Republican candidate plans to run a more conventional campaign in this year’s rematch with Gov. Ned Lamont.
Keep reading
Lamont Signs The Budget
Alongside Democratic legislative leaders, Gov. Ned Lamont signed the $24 billion budget adjustment Monday that includes $600 million in tax relief. That’s more than they anticipated they would be able to offer Connecticut residents this Election year because revenue came in higher than expected, but it still creates about an $800 million deficit in 2024. …
Keep reading
ANALYSIS | It’s A Wrap: The Winners and Losers of the 2022 Session
It was a short legislative session, but the House and the Senate were able to move a lot of business this year, including the passage of a $24-billion budget with around $600 million in tax cuts.
Keep reading
Connecticut Acts To Help Its Lead-Poisoned Children
After decades of inertia, Connecticut is finally moving to help its thousands of lead-poisoned children and prevent thousands of other young children from being damaged by the widespread neurotoxin.
Keep reading
Bill Bolstering Contracting Oversight Board In Jeopardy After Lamont Administration Raises Concerns
It passed unanimously in the Senate, but a bill that would give the State Contracting Standards Board greater oversight over state contracting appeared stalled in the House Wednesday on the last day of session. “The governor and I have not talked about the bill,” House Speaker Matt Ritter said. “The commissioners have sent us a…
Keep reading
Senate Approves Tax Cuts, Sends $24B Budget to the Governor
The state Senate gave final approval late Tuesday to a $24 billion election year budget plan that includes around $600 million in tax relief while enabling the state to make an $3.5 billion payment on its unfunded pension debt. Senators voted 24-12 at around 10:30 p.m. to send the midterm budget adjustment to the desk…
Keep reading
House Green-Lights $24B Budget
On a party-line vote early Tuesday, the House passed a $24 billion budget adjustment package containing more than $600 million in tax cuts which Democrats heralded as “historic” and Republicans derided as temporary. Lawmakers voted 95 – 52 at around 12:20 a.m. to send the 673-page budget document to the Senate for consideration before the…
Keep reading
Budget Materials
The General Assembly is preparing to debate adjustments to the $24 billion state budget. Below are a few of the documents we’ve been provided as back-up materials. The budget, HB 5506. Town runs. Car tax impact on municipalities. Finance Committee Power Point.
Keep reading
Lawmakers May Vote for First Pay Increase in 20 Years
With legislative retirements mounting, lawmakers on both sides of the aisle were considering Monday raising the salaries of General Assembly members for the first time in more than two decades and indexing their pay in the future. During a morning press briefing, House Speaker Matt Ritter told reporters that funding for pay raises had been…
Keep reading
Amid Surging Revenue, House Prepares to Vote on Budget Adjustments
Connecticut’s House of Representatives was expected to vote Monday on a $24 billion budget adjustment package, buoyed by revised revenue predictions that exceeded expectations by more than $350 million. The revised consensus figures released Monday confirm the surge in revenues that enabled Gov. Ned Lamont and legislative Democrats to reach an agreement last week on…
Keep reading
Dems Detail Budget Deal With $500 Mil in Tax Cuts, Extension of Gas Tax Holiday
Legislative Democrats and Gov. Ned Lamont’s administration announced Wednesday the details of a $24.2 billion budget adjustment package, which they say provides around $500 million in tax relief including extending a gas tax holiday until December. Lamont and legislative leaders outlined the agreement during an afternoon press conference in the state Capitol building. Both chambers…
Keep reading
Health Care Workers Call for New Hires
After a record number of health care workers are expected to retire this year, health care staff called on Gov. Ned Lamont to commit to filling 1,000 vacant positions by August 1 of this year. A record 1,137 state workers who notified the state that they will retire this year comes at a moment of…
Keep reading
Senate Joins House And Votes To Give Raises, Bonuses To State Employees
The Senate gave final approval by a 22-13 vote on a plan to give unionized state workers a set of raises and bonuses. The plan, negotiated by Gov. Ned Lamont’s administration and a coalition of public sector labor unions, provides three years of 2.5% raises and step increases as well as a total of $3,500…
Keep reading
House Advances Labor Deal In Historic Vote
Lawmakers in Connecticut’s House of Representatives signed off on a plan to give state workers a set of raises and bonuses Thursday in a mostly partisan vote on a negotiated labor agreement. The House voted 96 to 52 in support of the deal with 1 Republican, Rep. Tom Delnicki of South Windsor, joining all Democrats…
Keep reading
Republicans Propose Last-Minute Tax Package
Legislative Republicans pitched a $1.2 billion tax relief plan Thursday which reduces state income, sales and gas taxes and proposes to join other states in suing the federal government to challenge restrictions on spending pandemic relief funds. House and Senate Republicans announced the plan during a state Capitol press conference Thursday morning. It cuts the…
Keep reading
The Budget Battle Begins To Take Shape
Tax collections have improved and pushed Connecticut’s budget surplus to $4 billion, but the state budget still relies heavily on federal funding and without it the state would end up running a “sizeable operating deficit.” The Office of Policy and Management told state Comptroller Natalie Braswell Wednesday that if not for the use of the…
Keep reading