In response to an inquiry from a Republican state senator, the state treasurer’s office says it could have saved $554 million over five years if bond premiums were handled differently.
State Sen. Michael McLachlan (R-Danbury) had queried state Treasurer Denise Nappier on the sale of bonds at a premium, which he said increased the state’s borrowing costs. He said Connecticut has had the habit of using the proceeds from these premiums to cover future interest charges on borrowing rather than using it to pay off debt.
Nappier, through an assistant treasurer, responded that she agreed with McLachlan’s concerns and had previously sought the power to fund capital projects already authorized for bonding. She said this would have reduced future debt.
The treasurer’s office said over the last five years, it issued $5.6 billion in bonds in 20 tax-exempt fixed rate bond sales that generated $630.7 million in premiums after the cost of issuing them. Using the premiums to fund projects, instead of paying future interest charges, would have reduced costs by $554 million, according to the treasurer’s office.
