Posted on January 23, 2019 by jdooley
Common Sense Amendment Would Have Allowed Loans Without Taxpayer Liability
HARTFORD — In response to proposed legislation that would require the state to guarantee certain private loans in default, 54 members of the General Assembly, including 12 members of the Conservative Caucus, today supported an amendment that would protect individuals affected by the federal government shutdown without requiring state taxpayers to repay those loans if they go into default.
The amendment, introduced by Rep. Fishbein, vice chair of the Conservative Caucus, would have removed Connecticut Housing Finance Authority (CHFA) as a loan guarantor and taken the Connecticut taxpayer out of the equation, and removed the 9-month interest free provision of the original bill and replaced it with a 60-day grace period that converted it to a conventional loan. The amendment left in-tact the provision to allow local municipalities to create deferments of property tax to provide local relief.
The amendment failed by a vote of 88 to 54.
“It is unprecedented for State government to interfere or provide guarantees to loans made to private individuals regardless of the underlying circumstances,” Rep. Craig Fishbein said. “The amendment proposed today would still guarantee affected employees are protected without placing those guarantees on the backs of Connecticut taxpayers. Many banks have already modified their loan terms to assist struggling federal employees and the amendment would continue to protect their right to do that.”
Under the original proposed bill – H.B. 5765 – An Act Establishing the Federal Shutdown Affected Employees Loan Program and Providing Additional Assistance to Federal Employees – “affected employees are eligible for up to three loans, each equal to their monthly after–tax pay, up to $5,000, less unemployment benefits,” prohibits interest charges for 270 days after the end of the shutdown and authorizes municipalities to establish a tax-deferment program for personal property or motor vehicles taxes.
The bill also allows banks to submit claims to the state for the amount of the loan if it is not paid back within 180 days of the end of the grace period. If approved, repayment to the bank would be made through the General Fund with the state then being responsible for collection efforts.
“The language of the original bill – that we tried to amend to more favorable terms for taxpayers – puts the state in the position of money lender and lien holder to private citizens and is fundamentally at odds with the role of state government,” Rep. Mike France said. “One concern is that other groups will leverage this precedent and demand state government secure their loans and provide repayment if they fall short. Considering our state is facing another massive budget shortfall of nearly $4 billion in the next two years it’s irresponsible to take on the risk of more debt, even a potentially small amount, to secure loans provided by private banks. This is not and should not become a state issue.”
“Every one of us is sympathetic to the Connecticut workers impacted by Congress’s failure to reach agreement and keep them working,” Sen. Sampson said. “Unfortunately, as my colleagues and I have said, this is not a state issue, it’s a private matter between the lending banks and those who are applying for no interest loans. I firmly believe the banks would have still awarded these loans without the state’s guarantee, and in fact, many have already begun doing so.”
The Connecticut General Assembly Conservative Caucus is a group of Connecticut legislators dedicated to the principles of limited government, economic freedom, and individual liberty. Its members foster open debate about the role of government in society, adherence to the Constitution, and the rule of law. They propose and advocate for legislation that promotes the freedoms, individual rights, and prosperity of all Americans.
The members of the Conservative Caucus are: Rep. Mike France, Chair (R-42); Rep. Craig Fishbein, Vice Chair (R-90); Rep. Anne Dauphinais, Secretary (R-44); Rep. David T. Wilson, Treasurer (R-66); Senator Rob Sampson (R-16); Rep. Tim Ackert (R-8); Rep. Doug Dubitsky (R-47); Rep. Rick Hayes (R‑51); Rep. Kurt Vail (R-52); Rep. John Piscopo (R-76); Rep. Gale Mastrofrancesco (R-80); Rep. John Fusco (R-81); and Rep. Vincent Candelora (R-86).