HARTFORD – The costly Hartford assistance deal signed off on by Gov. Malloy has raised questions concerning the state bond cap and how Connecticut will account for the $534 million in city debt it has assumed for the next two decades.
House Republican Leader Themis Klarides today questioned whether the additional borrowing costs will exceed the state bond cap and whether needed construction projects, and future construction jobs around the state, might have to be defunded in order to stay under the cap.
“Issues have arisen in the wake of the assistance deal regarding the bond cap and bond allocations that might be squeezed out of the pipeline if the borrowing limits are exceeded,” Klarides said. She said she is seeking clarification from the State Treasurer’s office.
Despite the assumption of the city debt, Hartford’s five-year financial plan still includes $20 million in more borrowing for capital expenditures. The plan also shows a deficit in the city budget within three years.
Klarides and other legislative leaders last fall in negotiating the state budget agreed to a two-year assistance deal for Hartford. But the contract subsequently negotiated by the city and the Malloy administration amounts to a 20-year deal costing the state more than $550 million.
In order to get underneath the bond cap the State Bond Commission meetings might have to be put off for months. That would allow the state to gradually reduce the amount of borrowing.
“This deal for Hartford will have a lasting effect on the state’s and city’s finances but it is also likely to have immediate implications for all of Connecticut,” Klarides said.
“The bond cap was put in place for a reason,” she added. “Legislative leaders negotiated in good faith a two-year deal for Hartford. This problem with the bond cap is the result of doing a contract in secret between the city and state and not letting the public know what is going on.”