Sen. Markley to Barnes: Show me the numbers

December 13, 2011

Hartford, CT – Senator Joe Markley (R-Southington) is asking Office of Policy and Management (OPM) Secretary Ben Barnes [PDF] to show him the math behind the state plan to remain under the bonding cap Governor Malloy said he would follow.

“The numbers just don’t add up,” Markley said. “I am concerned the Governor’s publicly stated “soft” bond cap of $1.4 billion will be disregarded. There are a lot of general obligation requests out there. The temptation to break the cap will be great, but doing so would be disastrous. Taxpayers would pay dearly if Connecticut were to be downgraded by the credit rating agencies.”

In a letter to Barnes, Markley asks the OPM Secretary to provide him and staff with a full accounting of how exactly the state will remain in the “soft” cap range.

The request comes on the heels of a recent Fiscal Accountability Presentation that took place on November 29, 2011 regarding the state’s planned allocation of General Obligation (G.O.) bonds.

During the meeting Sen. Markley expressed concern over the five year projections. Senator Markley noted that the Governor’s publicly stated “soft” cap is $1.2 – $1.4 billion, while OPM’s report says:

  • in fiscal year 2012 the bond total is $1.5 billion
  • in fiscal year 2013 the bond total is $1.6 billion

“While I understand that the state’s “soft” bond cap is measured each calendar year, I do not understand how the state could live within the amounts publicly stated by the Governor,” Markley said. “Each fiscal year has such high anticipated G.O. allocations.”

In his letter, Senator Markley points out several areas that may contribute to the state going over the cap in the next few calendar years ultimately setting the stage for a downgrade by credit rating agencies:

  • The cash flow needs of the Local School Construction Program in CY 2011 possibly resulting in an increased need over the next few calendar years.
  • The anticipated Manufacturing Assistance Act (MAA) needs of the Second and Third First Five Program
  • The lack of an allocation in calendar year 2011 for other big ticket items such as the Clean Water Fund.

As you know, such a display of a lack of financial management and discipline could result in the state being downgraded by said agencies resulting in higher interest rates for our bond issuances and therefore, higher debt services for years to come.