Often in public discourse, the little asides are the most telling.
The grand policy statements are carefully crafted and vetted to say as little as possible. But sometimes humans just can’t resist, well, being human when faced with hard questions. That, of course, is what keeps the media poking and prodding.
And such was the case Aug. 16 when intra-party friction broke out between the lame duck Republican governor who won’t be on duty when the next budget bill comes due and key Republican lawmakers who will. The forum was the meeting of the state Bond Commission at which a $580 million borrowing scheme was up for a vote.
Everybody seemed on board with the various projects being funded — the largest of which is the state’s $260 million share of the development cost of the New Haven-Springfield rail link. The issue was the method and what it said about the state of Connecticut’s finances.
Now every business owner knows cash flow can be a tricky thing. If you’re selling Christmas trees or swim suits, most of the revenue comes in a predictable period. So it is too for a state that relies on tax collections.
States across the country have developed a variety of approaches to managing this cash flow issue with Connecticut among those that chooses to toss all the money in a giant pot and charge the state treasurer with making sure the bills get paid and pot doesn’t run dry.
Denise Nappier is Connecticut’s treasurer and she wrote in an Aug. 9 memo that “without the issuance of those bonds, our cash position would fall to approximately $600 million in December, equivalent to just over one week of overall state expenditures.” That sounds dire.
But, Nappier assured, the process of keeping the state solvent “isn’t rocket science.” Fair enough. But it may be alchemy.
In essence, the state is making long-term bonding commitments on these big ticket projects, then using some of the money to run state government until the money is needed to build a new train station or lay track.
In a perfect world, the idle money would be invested and making money for the state. In this imperfect world, it’s being used to keep the state from having to do more borrowing to keep the lights on.
In speaking with the media, bond commission member Vincent Candelora put it this way: “We’re borrowing from our bond projects for the purposes of operating government…. there really isn’t an open and transparent method of doing it. And so I am concerned that we’re putting Connecticut’s operating accounts upside down.”
Candelora, who represents North Branford in the House, is no novice at this finance game. He is the ranking Republican on the Finance, Revenue and Bonding Committee. And he’s been a critic of the state’s borrowing to bridge a multi-billion-dollar budget deficit.
His concerns were echoed by his Senate counterpart, Andrew Roraback of Goshen, who joined Candelora in voting against the new bonding package.
“I did it to call attention to the impending moment of truth,” Roraback said later. “When we begin the next (fiscal year), we are going to be very cash poor.”
Governor Rell quickly denied any danger of a cash flow crisis.
That denial would be comforting if it weren’t then followed by a glimpse behind the curtain. In talking with Christine Stuart of CTnewsjunkie.com, the governor reflected on the debate and on previous decisions to shift money, saying:
“I truly profess that as I sat there listening to an explanation of this, I’m thinking did we need to do this? Did we not?… The treasurer’s office indicated that we did at the time.”
If the governor isn’t certain, we have a problem. Maybe it’s a transparency issue that can be solved with better communication, as Democrats in the Legislature suggest. Maybe it’s a much bigger problem — the state’s financial structure is a house of cards poised to tumble. And the sleight of hand being performed to mask the problem is a disservice to Connecticut.
Either way, this is no way to run a state.
