Even after enduring the largest tax hike in history, the state still cannot pay its bills.
Connecticut is borrowing millions of dollars to cover state employee salaries and everyday operating expenses despite this year’s record-setting $1.8 billion tax hike, according to the State Treasurer’s most recent report issued this week.
Even worse, the state’s cash on hand is near record low levels, further evidence that Connecticut’s fiscal health is in question, contrary to assertions made by the executive branch. Republicans called for a hearing before the Finance and Appropriations committees to look into the matter.onnecticut is borrowing millions of dollars to cover state employee salaries and everyday operating expenses despite this year’s record-setting $1.8 billion tax hike, according to the State Treasurer’s most recent report issued this week.
Unfortunately, the state treasurer’s report only acknowledges what House Republicans have been saying for quite some time, Connecticut is borrowing to cover daily expenses and keep state government running.
Borrowing for daily expenses, some as simple as keeping the lights on, is a slap in the face to each and every taxpayer.
In the report dated Jan. 3 State Treasurer Denise Nappier admitted that, “Bond proceeds were borrowed for the Common Cash Pool during December.’’ Though this was the first mention of borrowing in her regular reports, we and our legislative colleagues charged that borrowing was in practice as early as two years ago. Nappier dismissed the assertions then as political posturing, insisting there were no borrowed monies used for operating expenses in the two years since the legislature mandated that she submit the regular reports to the legislature.
On Nov. 26 the state’s cash balance fell to $195 million, just 13 percent of the state’s available cash. In a previous report Nappier stated that the cash level of $600 million then was insufficient. “$600 million, while substantial on the surface, is lower than the cash balance necessary to ensure the adequate and timely coverage of the state’s obligations to municipalities, state beneficiaries, vendors and employees.
The $195 million would pay for roughly two and one-half days of expenses. Connecticut has the highest debt per capita of any state in the country.
Keep in mind, on June 4, 2010, Fitch Ratings Services downgraded the state’s credit because of excessive borrowing to cover operating costs. This report shows Connecticut has not heeded the warning of the rating agencies, and we now risk further downgrading.
The state’s credit downgrade reflects the state’s reduced financial flexibility, illustrated by its reliance on sizable debt issuances during the current biennium to close operating gaps,” the agency wrote, explaining its decision to lower the rating from AA+ to AA.
Nappier also dismissed the downgrade and not too long after the change, we were faced with the Governor’s Budget and the massive $1.8 billion tax hike.
Connecticut taxpayers were promised a balanced budget. Even with the large number of tax hikes, the size and cost of government was not reduced, further proving how our state is unsustainable at current spending levels. We need to look at real, sweeping changes to make state government smaller and more efficient. We owe the taxpayers of Connecticut more accountability for their tax dollars.
In the end, this is not a Democrat or Republican problem, but a Connecticut one. We need to be honest about facts, figures, and policy. To that end, we stand ready to work with both sides of the aisle to make sure we don’t suffer another credit downgrade. We will also endeavor to make Connecticut known as a great place to do business and visit.