HARTFORD, Conn., June 5 (UPI) — A Wall Street agency has downgraded Connecticut’s bond rating in response to steps state officials took to close a $1 billion budget deficit, officials said.
Fitch Ratings Friday lowered the state’s general obligation bonds from AA+ with a negative outlook to AA with a stable outlook, the Hartford Courant reported. The decision came after Gov. Jodi Rell and the state legislature decided to borrow funds to cover operating expenses and balance the budget, the newspaper said.
The state has borrowed money for similar expenses in the past but the loan in question was arranged even before the beginning of the 2011 fiscal year July 1, the newspaper said.
The downgrade could result in higher borrowing costs for Connecticut but rating agencies other than Fitch might reach a different conclusion about the state’s creditworthiness, the report said.
The state’s budget deficit for fiscal year 2012 is projected to be more than $3 billion, the Courant reported.
Lt. Gov. Michael Fedele, a Republican who is running for governor, said the state has “failed to take meaningful action to address its growing fiscal crisis.”
“In order to avoid making hard decisions, the Democratically controlled General Assembly has resorted to borrowing and fiscal gimmicks to supposedly close the budget gap,” Fedele said. “In reality, all they have done is to postpone the day of reckoning while the state’s fiscal condition continues to weaken.”
State Treasurer Denise Nappier, a Democrat, issued a statement calling Fitch’s decision disappointing but said “we do not anticipate that it will have much impact, if any, on the state’s cost of debt.”
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