In a bit of good economic news in a tough year, the recently announced state surplus will allow the state to borrow about half of what was originally planned for the current fiscal year.
Gov. M. Jodi Rell said Friday morning that the state surplus of nearly $450 million will prompt the state to borrow $646 million - rather than $1.3 billion - to balance the budget in the current fiscal year, which started on July 1. As such, the surplus from last year will be used to ease the budget crunch this year.
The move allows the state to cut its borrowing costs from an expected $245 million to $121 million.
"This is tremendous news for Connecticut taxpayers. Not only did we finish with a surplus but we will be able to cut the amount of borrowing nearly in half and save taxpayers more than $120 million interest and other costs," Rell said in a statement. "The budget required that the first $140 million of any surplus go back to the general fund and beyond that I have insisted all along that the rest be used to reduce the amount of borrowing needed to balance the budget."
During budget negotiations, Rell insisted that the money needed to be set aside to help balance the budget. In the past, surpluses have been used to fund various programs or even to provide rebates to taxpayers during the 1990s under then-Gov. John G. Rowland.
Money will not only be saved in the short term, but also over the life of the bonds.
"The savings mean smaller payments for years to come," Rell said. "The hard-pressed taxpayers of Connecticut more than deserve this relief. They have struggled through this recession to make ends meet and now, with some positive signs of recovery, I am extremely pleased that we can help ease their burden."