November 8, 2024

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Connecticut plans to sell $840 million of GOs, with social component

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Connecticut plans to sell 0 million of GOs, with social component

Connecticut is set to price $840 million of general obligation bonds next week, the state’s last issuance of a year with landmark fiscal policy decisions.

The state, which renewed fiscal responsibility measures, lowered income taxes and maintained strong economic metrics, kept its .

Connecticut projects that it will end the year with a surplus; Kroll’s ratings report concurs. This will be the sixth surplus in a row for the state.

Connecticut employs, Kroll analyst Peter Scherer said, “a structured, formal mechanism that directs those surplus revenues right towards the pensions, and I think that is, again, just distinguishing and really unique.”

The budget that Connecticut passed earlier this year lowered the income tax for the lower tax brackets, which Scherer said will cost the state around half a billion dollars per year. He said this won’t have much impact on the total revenue. Gov. Ned Lamont said the state could afford to lower taxes thanks to its improved fiscal policy over recent years. 

“They’re not the only state doing that. It’s been a flush time for states in general,” Scherer said. “It’s part of the normal ebb and flow we’d expect to see for a state.”

The state’s economy is very strong and diverse, but has slow growth, like many Northeast states, according to Kroll’s rating report. Connecticut’s unemployment rate was at 3.5% in October, lower than the 3.9% national average, and its per capita income last year was $84,972, 130% of the national average.

This will be Connecticut’s third issuance this fall. The state previously offered $1.1 billion of bonds for transportation initiatives in October, and around $227 million of bonds for the UConn 2000 program. 

“We anticipate being in the market again sometime in Spring 2024 with a GO bond sale,” Russell said. “The size is still to be determined, but the state’s spring bond sales typically include a taxable bond series.”

Connecticut earlier this month received a Bond Buyer Deal of the Year award in the Innovative Financing category for its “CT Baby Bonds” program.