Malloy Says State Saving Billions In Long-Term Debt; McKinney Says Report Is Distorted And \”Complete Work Of Fiction\’\’

by Categorized: 2014 Election, Gov. Dannel Malloy, John McKinney, Larry Cafero Date:

Gov. Dannel P. Malloy’s budget office issued a new report Thursday that said the state’s long-term debt situation is getting better, but Senate Republican leader John McKinney ripped the report as “a complete work of fiction’’ that is filled with distorted facts “in a disingenuous attempt to explain’’ the state’s large debts.

Malloy’s budget team said the overall long-term obligations have been reduced by $11.6 billion – as the amount owed in the future is projected to drop from $76.2 billion to $64.6 billion.

The complicated political question of debt is expected to come up in this year’s gubernatorial campaign as multiple Republicans seek to unseat Malloy at a time when the state’s economy is slowly recovering from the deepest recession in decades.

 The new report was issued Thursday, at Malloy’s request, in advance of the first State Bond Commission meeting of the year. Malloy told reporters at the state Capitol complex that the reduction was an achievement, but Republicans downplayed the numbers as futuristic savings on paper. In turn, Republicans said that the report was clearly political, while Malloy said the report – issued in an election year – was not political.

Malloy said that Republicans had voted in the past with Republican governors to delay payments into the state\’s pension fund, thus increasing the unfunded liability.

\”I\’m proud of my record,\’\’ Malloy told reporters. \”I\’m not sure they should be proud of theirs.\’\’

“It won’t happen overnight, but we are taking the steps we need to pay down debt and shore up the state’s long-term fiscal health,’’ Malloy said in a statement. \”We are tackling our long-term debt in a responsible way, while still making the bold, necessary investments needed to help create jobs and grow our economy. Reducing the state\’s debt will increase our financial stability over the long haul, and allow us to avoid repeating some of the bad mistakes that got us into trouble in the past.\’\’

But McKinney, who is running for governor against Malloy, said the numbers simply don’t add up.

“The Malloy administration’s latest report on state debt is a complete work of fiction,’’ McKinney said. “As Governor Malloy once said in describing budget gimmicks when he was a candidate, ‘it fools only those who want to be fooled.’ While I’m happy to see that my criticism of the governor’s reckless use of state borrowing has finally gotten his attention, I’m frustrated by his reaction. He should be using the resources of the governor’s office to address the problem, not to distort facts and figures in a disingenuous attempt to explain it away.’’

McKinney added, “Fact: as reported by the Treasurer’s Office, bonded indebtedness has increased by $1.1 billion under Governor Malloy and is scheduled to continue to rise dramatically for the remainder of his term and beyond because of decisions he has made.

“Fact: Governor Malloy has used state bonding to cover $1.5 billion of expenses that used to be covered by the general fund. This is the equivalent of a family using its credit card to pay its utility bills.

“Fact: Governor Malloy allocated $1.79 billion in general obligation bonds in 2013 alone – $398 million more than he allocated the previous year and the most any administration has ever allocated in a single calendar year.”

Malloy noted that the state would be saving money in the future because of agreements with the state employees to create a new, less-lucrative pension tier for new employees, increase the payments by the state into the pension fund and require a 3 percent contribution into the retiree health care trust fund.

The Moody’s Investors Service ratings agency downgraded the state’s debt in 2012, but the Malloy team sharply criticized the independent ratings agency for its statements at the time.

House Republican leader Larry Cafero said he applauds any improvements that Malloy made to reduce the future obligations, but he added that the biggest reduction in pension costs was made by then-Gov. M. Jodi Rell in 2009. Under an agreement with the state employee unions, Rell pushed for the Rule of 75 – meaning that a state employee could not receive retiree health benefits without reaching the combined total of 75. As such, a person at age 55 would need 20 years of state service to reach the 75 total. A person who wanted to retire at age 50 would need 25 years of state service.

Cafero added that the Malloy administration had recently downplayed the state’s projected deficits in the so-called “out years’’ in the future. Now, he said, the administration is touting the future numbers.

“You can’t have it both ways,’’ Cafero told Capitol Watch. “A couple of weeks ago, he was pooh-poohing the future. Now, because it suits his purposes, he is looking to the future. You can’t have it both ways.’’

Cafero said the discussion of the state’s debt is clearly political.

“I assume this is going to be the question of the 2014 race: is the state better off today than it was before Governor Malloy, and he is desperately trying to find these little facts and figutes to say: Look what I’ve done\’ ’’ Cafero said. “We’re going to see more and more of this as the election draws near. It’s always these grandiose statements: \’If I was governor, the Hartford Whalers would not have left. I run faster. I jump higher. I leap tall buildings in a single bound.\’ Baloney.’’

After the Republican criticism, Malloy spokesman Andrew Doba said, “The Republicans never fail to let the facts get in the way of their baseless attacks. When the official unemployment rate falls to its lowest point since 2009, they point to dreamed up hypotheticals and ignore reality. When a project gets approved, they criticize it, unless of course it’s in their district. And now, when presented with a complete accounting of our debt reduction, they cherry pick their facts and continue to ignore the $11.6 billion that Governor Malloy has saved for Connecticut taxpayers. It’s time for Republicans to stop rooting for Connecticut to fail.”

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