Governor Lamont Abandons “Debt Diet”

Senate Republican Leader Len Fasano (R-North Haven) raised concerns about Governor Ned Lamont exceeding his debt diet in agreeing to the bonding package negotiated by Democrats and scheduled to be voted on today in the General Assembly.

The bond package Democrat lawmakers negotiated with Governor Lamont results in $1.9 billion in General Obligation Bond authorizations and $1.5 billion in Special Tax Obligation Bond authorizations for the 2020 Fiscal Year including prior authorizations. Last year, Gov. Lamont said he would scale back annual bond authorizations to less than $1 billion — a reduction of 39 percent. During eight years under Gov. Dannel P. Malloy, the state averaged approximately $1.59 billion worth of general bond authorizations per year. Only once in eight years did Gov. Malloy exceed the General Obligation Bond authorizations Gov. Lamont is now supporting, and Gov. Malloy never authorized anywhere near the level of Special Tax Obligation bonds Gov. Lamont is supporting this year.

“Governor Lamont has repeatedly told the public that he was committed to limiting bonding to the core functions of government. He has blasted his predecessors for overusing the state’s credit card. He told credit rating agencies, investors, businesses and taxpayers that he would be different. But today he is going back on that promise,” said Sen. Fasano. “In February 2019 Gov. Lamont proposed scaling back on bonding authorizations by 40%. But the bonding package he negotiated with Democrat lawmakers far exceeds Gov. Malloy’s average bonding authorizations. The governor laid out a principled goal of prioritizing needs over wants. But that’s not the package before us today.”

Sen. Fasano also raised concerns about abandoning the “debt-diet” after Gov. Lamont represented to credit rating agencies last year that the state was moving forward with a dramatically scaled back bonding package. Gov. Lamont claimed that the promise of reduced bonding resulted in those rating agencies upgrading the state’s financial outlook.

“The governor sold credit rating agencies a promise that he is failing to keep,” said Fasano. “I am gravely concerned about the consequences of not following through with the representations made and I will be asking the Comptroller and Treasurer to weigh in about the impact of a bond package that will result in historically high authorizations that exceed Governor Malloy’s bonding packages.”

Gov. Lamont’s “debt-diet” broken promises.

“The state has had a problem putting costs on Connecticut’s credit card that it simply can’t afford to pay…it is essential we look at our state’s borrowing and how the size of those future debt service costs will pile onto existing obligations – impacting our future, and our children’s. To trim costs down the road, we have to reduce our bloated capital spending starting right now.”

Governor Ned Lamont, February 2, 2020

“I announced a self-imposed Debt Diet that reduced authorizations to Connecticut’s decades-old addiction to bonding by 40%…Wall Street was watching: Connecticut received its first positive ratings outlook from Standard & Poor’s in years, and spreads on Connecticut general obligation bonds continue to narrow, reducing our borrowing cost.”

Governor Ned Lamont, June 24, 2019

“Our Debt Diet was reviewed favorably by the ratings agencies and resulted in an outlook upgrade.” Governor Lamont, May 1, 2019

“Given our current economic situation, we need to be extremely cautious about using our state’s credit card, as Standard & Poor’s noted in their recent ratings report supporting my efforts to put Connecticut on a debt diet.”

Governor Lamont, March 26, 2019

“Reducing the amount of borrowing is seen as a positive for the investor community…Wall Street invests on tomorrow.”

Treasurer Wooden, July 25, 2019

“The credit rating agencies, investors, businesses around the globe, and our taxpayers are watching what we do and have responded positively—so far…As we move forward we cannot let them down by returning to old, bad habits and hoping for a different result.”
Gov. Lamont, July 9, 2019

“The markets have spoken and we need to heed their warnings. Connecticut cannot bond its way to prosperity.”
Governor Lamont, May 1, 2019

“If it is not tied to economic or workforce development, or cost-saving shared services, Connecticut is on a debt diet – and I am going to make sure we stick to that plan.”

Governor Lamont, February 20, 2019

“It’s clearly a reaction to the governor’s debt diet which S&P, Fitch, Kroll, and Moody’s ratings agencies have applauded and rewarded the state with an increased outlook.”

Governor Lamont, May 1, 2019

“Governor Lamont’s efforts to control spending and reduce our reliance on bonding is good for businesses and taxpayers, and the positive reaction from the marketplace shows we are on the right track to getting our fiscal house in order and restoring confidence in Connecticut.”

DECD Commissioner Lehman, July 26, 2019