Illinois isn’t the only state dealing with financial headaches these days. Connecticut, too, is facing big budget problems as major corporations flee the state’s high taxes and its fiscal future gets murkier by the day.
While Illinois is facing the possibility its credit rating hitting “junk” status, Connecticut has the distinction of the third-worst ratings in the country — behind Illinois and New Jersey.
S&P Global Ratings, Moody’s and Fitch all downgraded the state last month — which threatens to increase the cost of borrowing — in what officials described as a “call to action” for state leaders.
“We’ve been downgraded by everybody in the last six months, and in the last year two or three times,” Senate Republican President Len Fasano said. “If we don’t pass a budget, I think we will see a further downward spiral.”
Connecticut, like 15 other states including Illinois, has yet to pass a fiscal 2018 budget—the deadline to do so is June 30.
“We must immediately take the necessary steps to mitigate the current year deficit and then balance the … budget with recurring measures to reduce spending and structural solutions to our long-term problems,” a spokesperson for the Connecticut Office of Policy and Management said in response to Moody’s downgrade.
Connecticut’s deficit has reached $5 billion. According to an analysis by the Pew Charitable Trusts, the state only has $240 million in its ‘rainy day fund’ — only five states have a smaller cushion. Much of the financial troubles are tied to the state’s pension system, which two-term Democratic Gov. Dannel Malloy’s office is seeking to address with a new plan to save the state $24 billion in “coming years.”
Malloy wants to require new state employees to be covered under a new hybrid pension system. The agreement, which Malloy’s office made with the state union, is tentative and awaiting legislative approval.
“Connecticut can and will adopt a responsible, balanced budget for the coming biennium—the question is how best to handle our finances until that happens,” Malloy said. He offered a short-term “mini-budget” to allow “more time to negotiate a full budget, without making our current problems any worse and without further jeopardizing the state’s bond rating.”
But Fasano told Fox News the governor’s budget is not seeing support on “either side of the aisle.” full story