Gov. M. Jodi Rell is sounding alarms after a top debt-rating agency downgraded its outlook Connecticut’s ability to pay its borrowings.
State Treasurer Denise Nappier said she was “disappointed” in the downgrade and vowed to help the governor and policymakers plot the state’s best course. But Nappier cautioned the downgrade does not automatically translate to higher bonding costs for the state.
Rell sent lawmakers copies of the Moody’s Investor Services report in which the New York bond rating agency lowered its outlook for the state’s general obligation bonds from stable to negative. Moody’s also revised its outlook for eight other states, she said.
The state bond commission is scheduled Friday to issue millions of dollars in debt to fund a slew of capital purchase and projects.
In a statement today, she called the downgrade “an alarm signal that we clearly cannot afford to ignore.”
“Being forced to pay higher interest rates on our bonds would have serious and lasting financial effects in both the near- and long-term,” Rell said. “Moody’s feels, as I do, that the budget relies far too much on debt and one-shot revenues to prop up continued unaffordable levels of spending. When that is combined with our already high per capita debt load, the state of the economy and other factors, it threatens to make our bonds less attractive to investors.”
