Connecticut is preparing a contingency plan in case the state has trouble paying its obligations. Treasurer Denise L. Nappier outlined the plan in a letter addressed to Gov. Dannel P. Malloy.
“Given the fiscal challenges facing the State, I believe it is prudent to prepare for the potential – though still not certain – need to borrow funds externally in order to fund cash flow requirements for current operations,” Nappier wrote.
The Connecticut Mirror published the letter.
The state faces a $415 million deficit in the current fiscal year. A number of cuts totaling $170 million enacted by Gov. Malloy brought the actual deficit down to $290 million.
The cuts affected many departments, such as $32.2 million from the Department of Social Services and $14.4 million from state colleges.
It was just announced the state of Connecticut is so low on cash, state Treasurer Denise Nappier is seeking Gov. Dannel P. Malloy’s approval to seek up to $550 million in credit Connecticut has depleted all but $103 million of the $1.4 billion budget reserve as the state’s cash position has steadily fallen. The treasurer had to transfer $366 million from bond fund investment accounts. The common cash pool has a negative balance. The treasurer has requested, and Governor Malloy has approved, the need to borrow funds externally in order to fund cash flow requirements for current operations. This is really bad, as Governor Malloy instituted the largest tax increase in the state’s history and we are now running a huge deficit. In addition, Governor Malloy granted the state employees a no-layoff agreement for the next 4 years. Our unemployment just passed 9%.