Governor  Dannel P. Malloy
 

Debt Management

The Year in Review

During Fiscal Year 2018, the Debt Management Division's noteworthy accomplishments included:

  • New Money Bonds - A total of $2.6 billion of new money bonds were issued to continue funding of the State's capital programs for local school construction grants, economic development initiatives, transportation infrastructure improvements, clean water and drinking water grants, improvements at the University of Connecticut, and other capital projects.  These projects help bolster the local economy, improve the lives of Connecticut residents and strengthen the State's fiscal standing.
  • Refunding Bonds - As interest rates continue to remain low, the Division refunded outstanding debt through the issuance of $368.5 million of General Obligation refunding bonds, for an aggregate savings of $39.3 million.  A total of $1.2 billion in debt service savings will be achieved over the life of the bonds from debt refunding and defeasances completed since January 1, 1999.
  • New Tax-Secured Bonding Program - Treasurer Nappier's proposed alternative Connecticut bonding program backed by the withholding portion of the State's personal income tax was approved by the General Assembly.  The Credit Revenue Bonds are expected to achieve higher credit ratings and lower borrowing costs for the State.  As proposed by Treasurer Nappier, the statute contains language requiring that the debt service savings from the new bonding program be dedicated to the State's  Budget Reserve Fund.  The new program is expected to improve the credit ratings on the State's General Obligation bonds over time. 
  • Transportation Bonding Program - The Division Issued $800 million of Special Tax Obligation bonds to fund new and ongoing transportation infrastructure improvements. It continued to work with the Department of Transportation and the Office of Policy and Management on bonding matters related to the funding of the State's transportation infrastructure improvement program.
  • Clean Water Fund - The Division worked closely with the Department of Energy and Environmental Protection and the Department of Public Health to successfully commit low-cost funding for program participants throughout the State and interfaced with federal governing officials.  The program maintains AAA ratings with the three major rating agencies.
  • University of Connecticut - The Division worked in conjunction with the University of Connecticut to issue University of Connecticut General Obligation Debt Service Commitment bonds totaling $276.1 million and $141.7 million of University of Connecticut Special Obligation Student Fee Revenue bonds.  It also consulted on various leasing and credit rating agency matters.
  • New General Obligation Bond Covenant - In June 2018, the Treasury sold $492.1 million of tax-exempt General Obligation ("GO") bonds that included - for the first time - a State commitment to four distinct financial measures adopted by the General Assembly to guarantee fiscal restraint.  Each GO bond issued for the next two years will include a pledge, or covenant, that the State will address its long-term liabilities, rein in spending and borrowing, and rebuild its Budget Reserve Fund.  The covenant, which expires on June 20, 2023, comprises four caps:  the "Volatility Cap," which provides a mechanism for funding the Budget Reserve Fund; the "Revenue Cap," which constrains the percent of revenues that can be allocated to the budget; the statutory "Spending Cap," which limits the growth in spending to the growth of personal income or inflation; and the "Bond Cap," which restricts bond GO issuance to $1.9 billion per year.
  • City of Hartford Support - Treasurer Nappier, co-chair of the Municipal Accountability Review Board, worked with the City of Hartford in its efforts to regain financial sustainability, negotiating a contract assistance agreement that gives the State strong oversight capabilities over City finances, requiring the City to achieve balanced operations and adopt a viable long-term fiscal plan in exchange for the State making the City's general obligation bond debt service payments.