Malloy Administration Claims Debt Reduction, But Not Everyone Buys It [CT News Junkie]

January 16, 2014

by Christine Stuart | Article as it appeared on on Jan 9, 2014

(Updated 5:30 p.m.) Gov. Dannel P. Malloy, who has yet to say whether he will seek re-election, touted a report by his budget office that shows the state’s long-term liabilities have been reduced over the past three years by about $11.6 billion. That’s at the same time as state is contributing more money to state employee pensions, which are underfunded, and bonded debt is increasing.

One Republican lawmaker, who is running for governor, called it a work of “fiction” and the head of the Republican Party accused Malloy of using his taxpayer-funded office to campaign.

The Office of Policy and Management report released Thursday prior to the first Bond Commission meeting of 2014 shows that state’s overall debt since 2011 has been reduced about 15 percent from $76.2 billion to $64.4 billion under Malloy’s administration. All of those savings come from the restructuring of retiree health benefits as part of the labor agreement the governor reached with state employee unions back in 2011.

However, Sen. John McKinney, R-Fairfield, is quick to point out that the state doesn’t have to contribute to those retiree benefits until 2017.

“The valuation assumes an annual payment of $130 million by the state beginning in 2017, but the Malloy administration has yet to budget for that payment,” McKinney pointed out in a press release.

Bonded debt, which Republicans have criticized, has increased from $19.8 billion to $20.9 billion since 2011.

“I watch what gets reported and what gets said and I wanted to make sure everyone understands how much progress has been made in the state of Connecticut,” Malloy said after Thursday’s Bond Commission meeting.

Malloy said bonded debt is a portion of what the state is doing to address its long-term liabilities, but it’s not all of it. He said he understands that Republicans are happy to point out how big the state’s long-term liabilities are, but “I’m more than happy to point out how much it shrunk during the three years I’ve been governor.”

Sen. Scott Frantz, R-Greenwich, told Malloy during the Bond Commission meeting that he felt the governor’s co-mingling “bonded debt” and “long-term obligations” was confusing. Bonded debt is used for infrastructure and other capital projects, while the state’s unfunded pension liability is a different type of long-term liability.

He said the state needs to be cognizant of how much additional debt it’s putting on the books and by confusing the two issues the state may lose focus.

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