For years Connecticut’s cities have been relying on a morphine drip of state aid to get their books balanced. But now the state itself can’t afford to hand out all that aid and the drip is coming to an end. The state’s capital city Hartford, as I have written, is on the verge of bankruptcy.
Connecticut has borrowed and spent, and raised taxes and spent, with no thought to fiscal restraint. The assumption might have been that Connecticut’s vast hedge fund wealth would always be available to bail the state out, but that reality is fading as more hedge funds leave the state for greener (and more profitable) places.
Now Reuters reports that Connecticut’s debt levels are the worst in the country, despite its wealthy population. Hilary Russ writes:
Connecticut has piled on debt to bolster its public pensions, selling $2.3 billion of bonds in April 2008.
And again in December 2009, the state sold $916 million of economic recovery notes to close a budget deficit after depleting its rainy day fund during the Great Recession.
By many measures, Connecticut’s debt levels are the worst of the 50 U.S. states.
It has the most net tax-supported state debt per capita in the nation at $6,505, versus a median of $1,006, according to Moody’s Investors Service.
It has the highest debt service costs as a portion of state revenues, as well as debt relative to gross domestic product, Moody’s said.
Connecticut was downgraded by all three major Wall Street credit rating agencies in May.
Read more here.