{"id":87672,"date":"2017-08-23T12:41:38","date_gmt":"2017-08-23T12:41:38","guid":{"rendered":"http:\/\/usa.timesofnews.com\/drowning-in-debt-connecticut-faces-budget-crunch.html"},"modified":"2017-08-23T12:41:38","modified_gmt":"2017-08-23T12:41:38","slug":"drowning-in-debt-connecticut-faces-budget-crunch","status":"publish","type":"post","link":"https:\/\/usa.timesofnews.com\/breaking-news\/political\/drowning-in-debt-connecticut-faces-budget-crunch.html","title":{"rendered":"Drowning in debt, Connecticut faces budget crunch"},"content":{"rendered":"<p data-reactid=\"35\">HARTFORD (Reuters) &#8211; Connecticut, home to hedge fund billionaires alongside cities mired in poverty, is racing against the clock to pass a budget or face further spending cuts to education and municipal aid across the state.  <\/p>\n<p data-reactid=\"36\">Nearly two months without a budget, Connecticut is getting crushed by a burdensome debt load that has squeezed spending and amplified legislative discord. <\/p>\n<p data-reactid=\"37\">State lawmakers must agree on a biennial budget soon or else Governor Dannel Malloy&#8217;s executive order to slash state aid to municipalities and eliminate school funding for some districts will go into effect in October. The state faces a $3.5 billion deficit over the next two years.      <\/p>\n<p data-reactid=\"38\">Among the wealthiest in the United States, Connecticut has been strained by already high taxes, outmigration, falling revenues and $50 billion of unfunded pension liabilities.   <\/p>\n<p data-reactid=\"39\">Some $23 billion of outstanding municipal debt has also constrained spending. Bondholders must be paid ahead of most other expenses like non-essential services and payments to vendors.     <\/p>\n<p data-reactid=\"40\">The $2.85 billion of principal and interest the state paid on its bonds in fiscal 2017 was the highest in six years, according to preliminary unaudited information from State Treasurer Denise Nappier&#8217;s office that has not yet been published. <\/p>\n<p data-reactid=\"41\">&#8220;The state invested in the wrong things for a period of time. It allowed its higher educational institutions to suffer while it sought to placate communities with respect to other forms of local reimbursement,&#8221; Malloy told Reuters during an interview in his office on Thursday. <\/p>\n<h4 class=\"RelatedCoverage_related-coverage-title_1iRhG\" data-reactid=\"43\">Related Coverage<\/h4>\n<ul data-reactid=\"44\">\n<li data-reactid=\"45\"><img decoding=\"async\" src=\"\/\/s1.reutersmedia.net\/resources\/r\/?m=02d=20170823t=1i=1198238325r=LYNXNPED7M0Z1\" alt=\"Connecticut governor eyes economic investments amid fiscal crisis\" data-reactid=\"48\"\/><span class=\"RelatedCoverage_related-headline_3gcXy\" data-reactid=\"49\">Connecticut governor eyes economic investments amid fiscal crisis<\/span><\/li>\n<\/ul>\n<p data-reactid=\"57\">&#8220;We built too many prisons, which we&#8217;re still paying off even while we&#8217;re closing them,&#8221; he said. The Democrat took office in 2011 and is not seeking a third term.  <\/p>\n<p data-reactid=\"58\">Further, the state&#8217;s budget crunch is threatening its cities including the state capital of Hartford, which is considering bankruptcy due, in part, to its dependence on state aid. <\/p>\n<p data-reactid=\"59\">Connecticut has borrowed for decades to fund school construction, whereas nearly all other states typically borrow at the local level for those projects. <\/p>\n<p data-reactid=\"60\">Lack of county governments means some other local costs are picked up by the state, including for all of its detention facilities.  <\/p>\n<p data-reactid=\"68\">Connecticut has piled on debt to bolster its public pensions, selling $2.3 billion of bonds in April 2008. <\/p>\n<p data-reactid=\"69\">And again in December 2009, the state sold $916 million of economic recovery notes to close a budget deficit after depleting its rainy day fund during the Great Recession.   <\/p>\n<p data-reactid=\"70\">By many measures, Connecticut&#8217;s debt levels are the worst of the 50 U.S. states. <\/p>\n<p data-reactid=\"71\">It has the most net tax-supported state debt per capita in the nation at $6,505, versus a median of $1,006, according to Moody&#8217;s Investors Service.     <\/p>\n<p data-reactid=\"72\">It has the highest debt service costs as a portion of state revenues, as well as debt relative to gross domestic product, Moody&#8217;s said.  <\/p>\n<p data-reactid=\"73\">Connecticut was downgraded by all three major Wall Street credit rating agencies in May. <\/p>\n<p data-reactid=\"74\">Both Republicans and Democrats in the state legislature have proposed solutions, including a hard cap on annual bond sales. <\/p>\n<p data-reactid=\"75\">Democratic legislators met with Millstein  Co., the same restructuring firm that advised Puerto Rico over its suffocating debt burden, according to The Connecticut Mirror newspaper. <\/p>\n<p data-reactid=\"76\">Nappier proposed a new tax-secured revenue bond program in lieu of general obligation debt, which she says will lower borrowing costs and boost reserves. <\/p>\n<p data-reactid=\"77\">But until lawmakers craft a budget, the state&#8217;s fiscal uncertainty is causing havoc among municipalities. Some are considering whether to delay the start of school or dip into reserves. <\/p>\n<p data-reactid=\"78\">And for Hartford, the longer the state goes without a budget, the closer the city comes to a possible bankruptcy filing, said Hartford Mayor Luke Bronin, a 38-year-old former U.S. Treasury official. <\/p>\n<p data-reactid=\"79\">&#8220;The lack of a state budget&#8230; makes a liquidity challenge come that much faster,&#8221; he said. <\/p>\n<p class=\"Attribution_content_27_rw\" data-reactid=\"81\">Reporting by Hilary Russ in Hartford; Editing by Daniel Bases and Diane Craft<\/p>\n<p>Article source: http:\/\/feeds.reuters.com\/~r\/Reuters\/PoliticsNews\/~3\/nFF1qi9Tmek\/us-connecticut-debt-idUSKCN1B318N<\/a>\r\n<\/p>","protected":false},"excerpt":{"rendered":"<p>HARTFORD (Reuters) &#8211; Connecticut, home to hedge fund billionaires alongside cities mired in poverty, is racing against the clock to pass a budget or face further spending cuts to education and municipal aid across the state. Nearly two months without a budget, Connecticut is getting crushed by a burdensome debt load that has squeezed spending [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[84],"class_list":["post-87672","post","type-post","status-publish","format-standard","hentry","category-political","tag-political"],"_links":{"self":[{"href":"https:\/\/usa.timesofnews.com\/breaking-news\/wp-json\/wp\/v2\/posts\/87672","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/usa.timesofnews.com\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/usa.timesofnews.com\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/usa.timesofnews.com\/breaking-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/usa.timesofnews.com\/breaking-news\/wp-json\/wp\/v2\/comments?post=87672"}],"version-history":[{"count":0,"href":"https:\/\/usa.timesofnews.com\/breaking-news\/wp-json\/wp\/v2\/posts\/87672\/revisions"}],"wp:attachment":[{"href":"https:\/\/usa.timesofnews.com\/breaking-news\/wp-json\/wp\/v2\/media?parent=87672"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/usa.timesofnews.com\/breaking-news\/wp-json\/wp\/v2\/categories?post=87672"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/usa.timesofnews.com\/breaking-news\/wp-json\/wp\/v2\/tags?post=87672"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}