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Connecticut borrowing to cover expenses

HARTFORD -- State government has borrowed more than $2 billion over the past five years to pay for everyday expenses, including worker's salaries, ongoing programs, and even office furniture, according to a review by The Sunday Republican.

The practice has been frowned upon for years by the state's comptroller, Nancy Wyman, who calls borrowing for normal operating expenses bad fiscal policy.

Borrowing has helped governors, legislatures, and state agencies avoid budget cuts, tax increases, and the state spending cap, the newspaper reported.

A precise accounting of the state's borrowing to pay ongoing expenses and make short-term purchases was not available. No one agency appears to collect the data.

The newspaper's review found that the state:

is borrowing nearly $5 million this year to pay the salaries of 54 Public Works Department employees;

sold about $317 million in five-year state bonds to cover deficits in the state's general fund in 2002 and 2003, including a $98 million bond issue last June;

borrowed tens of millions in the last decade to buy computers, two-way radios, office furniture, motor vehicles, fire-protection suits, and other equipment with relatively short useful lives and small price tags.

Borrowing money to pay yearly and short-term expenses costs more than paying them out of pocket, increases the state debt and yearly payments on the state debt, and may drive up the cost of financing for short- or long-term purposes.

But governors and lawmakers have found borrowing a tempting alternative to cutting spending or raising taxes.

''It is the easy way out," said Lieutenant Governor Kevin B. Sullivan, who was president pro tem of the state Senate from 1997 to 2004.

The state borrows money by selling bonds to private investors. The state government promises to repay the money over time with interest. The payment on the state debt this year tops $1.7 billion -- 12 percent of the state budget.

Borrowing makes fiscal sense for long-term investments -- school construction, highways and bridges, land purchases.

One example is that past administrations and legislatures authorized $181.5 million in short-term borrowing in the last 11 years to shift routine equipment purchases from agency budgets, including $18 million for this year.

Gov. M. Jodi Rell's office said in a statement that Rell opposes the use of state bonds to pay for salaries and other current expenses. Rell also believes such borrowing should be stopped. Rell, however, included the same kind of borrowing this year in her first budget proposal.

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