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Rell: Surplus To Save $120 Million in Borrowing Costs

Christopher Keating

September 04, 2010

The state will save more than $120 million in borrowing costs thanks to the recently announced surplus from the budget year that ended June 30, Gov. M. Jodi Rell said Friday.

The surplus will be used to ease the budget crunch in fiscal 2011, which started July 1. The total was nearly $450 million, which means the state will have to borrow $646 million rather than an original projection of $1.3 billion to balance this year's budget. The move allows the state to cut its borrowing costs from an expected $245 million to $121 million.

Rell hailed the development as "tremendous news'' at a time when the state is still facing a budget deficit in the 2012 fiscal year, which will be tackled after the next governor takes office in January. Rell is not seeking re-election.

"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," Rell said in a statement.

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 be saved not only in the short term, but 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."