HARTFORD, CT — It took nine years, but the state of Connecticut has finally paid off the Economic Recovery Notes it borrowed to keep the lights on back in 2009.
Under former Gov. M. Jodi Rell, the state borrowed $950 million to close the budget deficit.
The move, which was approved by the Democrat-controlled House and Senate at the time in 2009, would saddle Democratic Gov. Dannel P. Malloy’s administration with the responsibility of paying off the debt.
“Completing payment on the Economic Recovery Notes closes a regrettable chapter in Connecticut’s financial history,” Malloy said Tuesday. “Surely, reasonable minds agree that we must avoid repeating this costly decision. It is my sincere hope that present and future state leaders learn from this experience and take the necessary steps to keep the budget in balance during the course of the fiscal year.”
The final payment on the debt was completed on Jan. 1, 2018.
The state ended up paying a total of $1.09 billion, which included which included $923.8 million of principal and $166.3 million in interest over the course of nine years.
The bonds were refinanced twice, once in 2013 and again the following year. The refinancing lowered the interest costs from $170.1 million to $166.3 million and extended the repayment period from seven years to just over nine years. These changes allowed the state to lower its annual payment to approximately $178 million from a projected $208 million.
“It is always good news when we are able to retire state debt, but we must remember why we incurred this debt in the first place,” State Treasurer Denise Nappier said. “Keeping the budget balanced and building up the budget reserve fund remain daunting tasks but ones we must adhere to. We must employ innovative ways to address the state’s fiscal problems, such as the recently adopted tax-secured bonding program, which my administration proposed as a way to earn higher credit ratings and to lower borrowing costs while rebuilding the reserve fund.”