Report: State should tap unissued bonds
A new economic forecast being released today suggests Gov. Dannel P. Malloy's administration could dramatically boost state employment over the next two years by launching capital projects for which bonding has been approved but never issued.
The Connecticut Center for Economic Analysis' latest quarterly report, titled "Growth Arrested? Bonding, Job Creation and the Health of the Connecticut Economy," says such a strategy would generate 16,000 to 28,000 new jobs and double or triple the rate of growth in output.
"On many fronts, the Malloy administration … has been vigorously pursuing initiatives to change the state's pernicious economic state," the report says. "… But in the face of the continuing struggles of the state's economy, with job creation weak and unemployment well above the national pattern, it seems anomalous that the administration has built up a multi-billion dollar stockpile of approved but unissued bonds."
Since January 2010, when the state treasurer had yet to issue $3 billion in bonding approved by the State Bond Commission, the level of unissued bonds has grown to more than $6 billion. Some of the bonded projects would qualify for federal matching funds that could bring the total amount available for capital expenditures to nearly $8 billion, according to the report.
"On the face of it, that possibly translates into thousands of foregone jobs," says the report, authored by Peter Gunther, the CCEA's senior research fellow.
The center finds that while the increase in housing permits issued over the first six months of the year offer signs of economic recovery, "their increase alone is not enough to materially grow the larger economy."
Low lending rates that promote long-term investment by state and federal governments and private enterprises argue for stronger growth, the report concludes.
The state's pool of approved but unissued bonds, together with matching federal monies, would fund approved projects ranging from the purchase of school buses to school building projects to major infrastructure projects. Some of the projects would generate little or no local impact while others "would generate very significant jobs for residents and fiscal benefits (tax revenue) for the state."
It's crucial, then, that projects eligible for funding be ranked according to their short- and long-term impacts on Connecticut competitiveness, the report says.
"Buying school buses or building new schools has little or no long-term benefit; improving highways, where Connecticut is tied for the worst nationally with Illinois, and mass transit, which remains a serious barrier to competitiveness, have long-term impacts," it says. "… In no case should the share of approved bonding have less than 60 percent projected to generate significant long-term competitive benefits and less than 25 percent projected to generate significant short-term economic benefits."
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