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Rell Eyes Reducing Debt as School Construction Costs Soar

Wed September 07, 2005 - Northeast Edition
CEG



HARTFORD, CT (AP) Connecticut residents bear the heaviest burden of state debt in the nation, which creates a challenge for officials investing in school construction and renovation while holding the line on new borrowing.

The state’s debt increased by 13 percent in the past three years, to $12.7 billion. That averages to approximately $3,600 for each Connecticut resident, ranking the state No. 1 in average debt per person by Moody’s Investor Service. Connecticut also outpaced other states in the rate of rising tax-supported debt, which increased nationwide by 11.5 percent, according to Moody’s.

Gov. M. Jodi Rell, a Republican, hopes to clamp down on overall spending by the state Bond Commission. The commission approves spending for a broad range of capital projects such as renovations to prison housing, repairs of state-owned dams and grants to buy land to protect open space and watersheds.

State Budget Director Robert Genuario warned legislators and municipal officials that state bonding will be “much more limited” this year and next.

“I’m saying ’no’ left and right to people who want projects funded,” he said.

Some of the greatest demand is with school construction and renovation, which increased from $361 million in 2001 to $600 million this year, a rise of approximately two-thirds. “We’re hitting a time when that is skyrocketing,” Genuario said.

New Haven schools, which will receive approximately $1.2 billion in state funding over 14 years, is the biggest recipient of school bond dollars in Connecticut. Local officials found major changes in the district’s public works improved not only buildings, but education, too.

“As they got further into the program, they realized the educational mission was woefully deficient,” said Tom Roger, project director of Gilbane Building Co., which manages the New Haven work.

For example, he said, construction and renovation updated technology in the schools and made buildings accessible to the handicapped.

Capital spending for Connecticut’s schools and other building programs contribute to overall debt interest and principal that account for approximately 12 percent of the state’s annual budget, Genuario said.

“In our view in the executive branch that 12 percent is a very significant portion of the budget dedicated to debt service,” he said. “You have to change the culture.”

Sen. Martin Looney, D-New Haven, and Senate majority leader, said state debt appears more onerous than in other states because state government in Connecticut takes on projects that would be spearheaded locally elsewhere.

Peter Gioia, an economist at the Connecticut Business and Industry Association, is not surprised at the rising level of debt.

“In the whole 15 years I’ve been here we’ve mentioned that they not only must control spending, but the more we rack up in debt service, the more there’s an overall drag on the economy,” he said.

Gioia said Connecticut’s ranking as No. 1 in debt per person is not as big an issue as it might otherwise be because per capita income in the state is high relative to the rest of the nation.

“But it’s still a worrisome trend in Connecticut,” he said.

Genuario said capital spending is popular despite the occasional criticism because “everyone wants their projects funded.”

“Part of this debt service is for economic development projects that are enthusiastically supported by the CBIA and other business groups,” he said. “They’re like everyone else.”