S&P lowers state’s bond rating citing hefty debt

The potential for Connecticut’s hefty debt burden to remain a drain on state finances for years to come prompted one major Wall Street rating agency Friday to downgrade the state’s credit rating.

And while S&P Global Ratings cited the recent state commitment to pay down Hartford’s general obligation debt, it labeled that a “relatively small” burden for Connecticut compared with the state’s resources. But when coupled with several larger factors, including an already high level of bonded state debt and a need for more borrowing to fix an aging transportation system, Connecticut’s overall fiscal indebtedness remains a concern.

A weaker bond rating could lead to higher interest costs as Connecticut seeks to finance capital projects in the future.

“While we view Hartford as a unique situation and the city’s debt as a relatively small in relation to overall state resources, the assumption of debt, combined with other trends, leads us to conclude that Connecticut’s debt burden is not likely to shrink in the near term,” said S&P Global Ratings credit analyst David Hitchcock.

Connecticut ended the last fiscal year with nearly $24 billion in taxpayer-backed bonded debt, and has one of the highest per capita debt ratios in the nation.

The governor’s budget office and the legislature’s nonpartisan Office of Fiscal Analysis say the preliminary budget for the fiscal year beginning July 1 — unless adjusted — would run about $265 million in deficit.

Keith M. Phaneuf is a reporter for The Connecticut Mirror (www. ctmirror.org). Copyright 2018 © The Connecticut Mirror. kphaneuf@ctmirror.org