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For First Tme in 18 years, Standard & Poor’s Ugrades CT's Bond Outlook

For First Tme in 18 years, Standard & Poor’s Ugrades CT's Bond Outlook

Hartford Courant, March 22, 2019

By Neil Vigdor

It’s not all doom and gloom coming out of Hartford.

For the first time in 18 years, Connecticut’s general obligation bond outlook is being upgraded by one of the Big Three credit ratings agencies, State Treasurer Shawn Wooden announced Tuesday.

Standard & Poor’s is elevating its outlook from “stable” to “positive” and affirmed the state’s bond rating at “A,” Wooden said.

It’s a sunny development for the nascent administration of Gov. Ned Lamont and for Wooden, the former Hartford city council president, who, with Lamont’s budget director, Melissa McCaw, met with representatives of the Big Three last week at the Capitol.

“This positive change in Connecticut’s credit outlook is another significant step in the right direction that is drawing notice on a national level,” Wooden said. “The next step is to follow through on plans to address our current economic challenges and continue building a stable foundation for future growth and financial sustainability.”

Not everyone is ready to pat Lamont on the back, however.

Senate Minority Leader Len Fasano, R-North Haven, attributed the positive development to legislative leaders working across the aisle on the current budget.

“This good news is proof positive that the state’s historic bipartisan budget continues to put Connecticut on the right track," Fasano said. “The bipartisan budgets of the last two years put a stop to the one-party Democrat rule that hurt our state. We put strong limits on what the state could put on its credit card and we passed policies that promoted stability. As a result of these bipartisan efforts, we are continuing to make progress.”

Fasano said Lamont’s budget proposal could undermine the progress.

“It’s extremely concerning that Gov. Lamont wants to undo the very bipartisan policies and approach that resulted in the positive news we received today,” Fasano said. "He wants to go backwards, impose crushing tax increases, cancel tax breaks that encouraged people and jobs to stay in our state, and destabilize transportation funding. Those actions would put a chilling effect on the renewed confidence in our state.”

Others said Tuesday that Lamont’s predecessor, Democrat Dannel P. Malloy, deserves a measure of credit for the upgrade.

“Also a feather in the cap for the Malloy administration,” tweeted Michael Cacace, a former Democratic National Committee member from Stamford.

Bond sales back to top

The state is expected to sell $850 million of general obligation bonds during the last week of March, according to Wooden’s office, which said the improved outlook is an indication of a potential credit rating upgrade over the medium term.

“The credit rating agencies have directly affirmed that Connecticut is moving in the right direction under the structural reforms in Gov. Lamont’s budget, specifically new recurring revenues, structural changes to the pension plans, the avoidance of one-time revenues and budgetary gimmicks and the new ‘Debt Diet,’ ” McCaw said Tuesday in a statement. "While today’s news is welcomed, it carries with it a caution, as well.

“We are not out of the woods yet. ... It is also critically necessary that we further demonstrate to credit rating agencies, bond holders, and future investors that Connecticut can adopt a budget for this biennium that enacts reforms and takes steps to move toward structural balance, strengthens our Budget Reserve Fund, reduces borrowing, fosters a pro-growth environment, and mitigates growth in our fixed costs.”