Home Banking & Finance Lack of state budget could put CT municipalities in financial bind, Moody’s...

Lack of state budget could put CT municipalities in financial bind, Moody’s says

Moody’s Investors Service announced plans to review the ratings of 26 Connecticut cities and towns and three Connecticut regional school districts for downgrade, impacting approximately $3.5 billion in outstanding debt.

Moody’s has also assigned negative outlooks to ratings of an additional 25 Connecticut cities and towns plus three regional school districts, affecting approximately $3.45 billion in additional outstanding debt.

Moody's financial squeeze budget connecticutThree Fairfield County municipalities – Bridgeport, Shelton and Stratford – were among the targets of Moody’s review, which the ratings agency attributed to the absence of a state budget and Gov. Dannel Malloy’s executive order that gives his office control of state spending until a budget is passed.

“Under the executive order currently in effect, state funding of local governments is lower than it was in the last fiscal year by a total of $928 million,” Moody’s said in a statement. “Historically, the state of Connecticut has provided significant funding to its local governments, largely in the form of education cost-sharing grants, but also in the form of payments in lieu of taxes and other smaller governmental grants. The current budget impasse highlights the ongoing vulnerability of funding that the state of Connecticut provides to its local governments.”

Moody’s also noted that Connecticut’s local governments “have unlimited property tax flexibility giving them legal authority to make up for lost state funding with supplemental tax levies to be collected over the balance of the fiscal year,” as well as the ability to save money through personnel and services reductions.
“The reviews for downgrade and ongoing consideration of negative outlooks announced herein will focus on concrete steps taken to replace lost state funding with new revenues and to reduce costs to bring them in line with reduced revenues,” Moody’s said.

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Phil Hall's writing for Westfair Communications has earned multiple awards from the Connecticut Press Club and the Connecticut Society of Professional Journalists. He is a former United Nations-based reporter for Fairchild Broadcast News and the author of 10 books (including the 2020 release "Moby Dick: The Radio Play" and the upcoming "Jesus Christ Movie Star," both published by BearManor Media). He is also the host of the SoundCloud podcast "The Online Movie Show," co-host of the WAPJ-FM talk show "Nutmeg Chatter" and a writer with credits in The New York Times, New York Daily News, Hartford Courant, Wired, The Hill's Congress Blog, Profit Confidential, The MReport and StockNews.com. Outside of journalism, he is also a horror movie actor - usually playing the creepy villain who gets badly killed at the end of each film.

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