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House Democrats Call For Adapting Low Interest Rates

Anthony Zepperi, Staff Writer

HARTFORD – With the pandemic battering the economy and carving deep deficits in state finances, House Democrats recently called for Connecticut to increase borrowing to preserve key programs and to take advantage of low interest rates.

But the move could put them at odds with Gov. Ned Lamont, who tried unsuccessfully to force his fellow Democrats in the legislature on a “debt diet” during his first year in office.

And while House Democratic leaders insisted there is considerable room for more borrowing under one statutory bonding cap enacted three years ago, they failed to note a second legal limit that could make it difficult to put more on Connecticut’s credit card.

“It’s no secret that Connecticut faces big challenges when it comes to our economy and our budget,” said Rep. Sean Scanlon, D-Guilford, who replaces East Hartford Democrat Jason Rojas as the new House chair of the Finance, Revenue and Bonding Committee.

Rojas, who was elected last week as the new House majority leader, joined Speaker-elect Matt Ritter, D-Hartford, Tuesday in announcing House leaders of the legislature’s budget panels.

Ritter said the House Democrats, which hold 97 out of 151 seats, are not necessarily planning to dramatically increase borrowing, but he suggested Connecticut has plenty of room on its credit card.

State government borrows funds for most capital projects by selling bonds on Wall Street, and Ritter noted Connecticut has hardly strained the credit card limit it sent in 2017.

That provision limits general obligation borrowing, bonds paid off in the budget’s General Fund, at $1.9 billion per year. Connecticut issued $1.6 billion last fiscal year and $1.25 billion two years ago.

And Rep. Patricia Billie Miller, who co-chairs the finance panel’s Bonding Subcommittee, noted that borrowing has become crucial for Connecticut cities and towns. More than $150 million in non-education grants provided to municipalities annually comes from borrowed funds rather than from the state budget.

When legislators adopted a two-year state budget in May 2019, they assumed there would be $17.4 billion in tax receipts flowing into the General Fund this fiscal year. Legislators normally would have adjusted the forecast this past May, just two months before the 2020-21 fiscal year began, but they ended the session early because of the coronavirus pandemic.

Though legislators returned to the Capitol for special sessions in July and October, the revenue schedule was not revised. Republicans charged Democrats were delaying suspending capital projects, many of which were planned in their home districts until after the Nov. 3 state elections.

“I asked the finance committee to fulfill its statutory obligation to revise the revenue schedule and that was completely ignored,” Rep. Vincent J. Candelora of North Branford said.

Connecticut ranks among the most indebted states, per capita, in the nation, and debt service costs consume more than 10 percent of the annual budget, a problem that prompted Lamont to press for his debt diet immediately upon taking office in January 2019.

Connecticut has regained about 60 percent of the jobs lost since the pandemic struck in March, and the state Department of Labor still is issuing more than 200,000 unemployment benefits per week.

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