Wall Street warning to Connecticut

Hartford (WTNH) - There is a Wall Street warning to the state of Connecticut. The money people at Moody's Investment Service don't like Connecticut's new state budget and it could result in higher costs for taxpayers.

It's all about money and it's all about risk. The warning means Connecticut doesn't look like a good risk anymore for borrowing money and the state borrows money in your name all the time.

"What that means is investors are going to say, 'Jeez, if Connecticut wants to borrow money, we're going to charge them a higher interest rate,'" Minority leader Larry Cafero said.

The governor is planning to approve hundreds of millions of dollars in borrowing at Friday's Bond Commission Meeting for the new Gateway Community College in New Haven and a number of other projects, but she insists the warning won't affect the cost of those bonds to taxpayers.

"They have not changed the bond rating, so it will not affect the bonds that would be issued at the Bond Commission Meeting," Governor Jodi Rell said.

The budget that was passed by the General Assembly and allowed to become law by the governor borrows nearly a billion dollars to cover last year's deficit and borrows even more to cover the next two years of red ink.

Something the Moody's Investment Service says could place the state in a permanent hole.

"In the long run, for a while, it may mean that we'll have an increased cost of borrowing but again these things happen in cycles," Looney said.

Democrats are hoping that the economy turns around and that their adjustments to the state income tax rate helps to close the gap but everyone admits that there is a multi-billion dollar structural hole in the state's finances and, so far, no real plan to close it up.