Frey: “Bond Rating Downgrade Shows Failure Of State Budget”

HARTFORD- State Representative John H. Frey (R-111th) today said that the recent decision by Moody’s Investor Services to downgrade Connecticut’s bond rating proves that the recently passed state budget is toxic to Connecticut’s economic future:

“Moody’s has just proven to the people of Connecticut what I have been saying all along about the budget passed by the Democrat Majority- that it is bad news for Connecticut’s economy,” said Rep. Frey. “Not only did this year’s budget borrow $1 billion and spent $1.4 billion from a now-depleted rainy day fund to pay for operating expenses of state government without making a single real cut to spending, the budget is relying on a job-killing and highly unstable income tax increase to close the gap. The Democrats’ budget was nothing short of irresponsible, and the largest bond rating agency in America is telling the world that Connecticut is a risky investment because of that budget.”

The downgraded bond rating will force the state of Connecticut to pay higher interest rates in order to borrow money for capital projects, or in the case of the FY 2010-2011 budget, operating expenses. Frey also noted that recent figures released by the State Comptroller’s office show that state revenues have continued to decline despite the passage of massive income tax increases, leaving the budget for the current fiscal year out of balance by $388.5 million.

“And yet today, Democratic state Treasurer Denise Nappier issued a statement minimizing the downgrade by saying that being given a “negative outlook” does not necessarily mean that Connecticut’s actual bond rating will be downgraded and cost taxpayers more for borrowing,”

Frey said.

“The irony of the situation is that the budget passed this year, which relies so heavily on borrowing to pay for expenses, has now made it even more expensive for the state to borrow money,” continued Frey.  “This is a vicious cycle that must stop if we are ever going to put our state’s economy back on track. In order to do so, we must be willing to say ‘no’ to an oversized and unaffordable government, make real cuts to spending even if it is painful, and reduce the tax burden that is chasing jobs and people away from Connecticut. We must make a change because the tax and spend budgets passed by the Democrat Majority are, simply put, not working.”