Malloy approves $550 mil credit line

HARTFORD, Conn. (WTNH) -- Already facing a ballooning budget deficit, it appears state government is now having monthly cash-flow problems.

In addition to all his other budget woes the Governor has had to authorize the State Treasurer to seek a half billion dollar line of credit in case the state doesn't have enough money to pay its bills in any given month.

"Money comes into state government in all twelve months but it comes in more rapidly in some months than others. We want to maintain a balance to face any eventuality," Gov. Malloy said.

Malloy says if Congress and the President don't come to an agreement and the country falls off the 'fiscal cliff' there could be a cash flow problem.

But the Republican leaders in the General Assembly note that the Treasurer has had to swap state fund accounts around several times in the past year just to meet monthly bills and say the problem is bigger than Malloy is admitting.

"We are in a dire financial straights, the Governor needs to admit that. Stop covering it up so we can get together and work on a solution," Republican Minority Leader Rep. Larry Cafero said.

"We don't have any money to pay our bills so what Governor Malloy is doing is going out and asking to borrow 550 million dollars so we can pay to keep the lights on," Republican Minority Leader Rep. John McKinney said.

Malloy notes that state government doesn't have any reserves anymore because the entire so-called 'Rainy Day' fund was spent by his predecessor so he has no choice but to do this when the state's cash flow gets low.

"This is short-term borrowing just to make sure that we have sufficient amounts of money in the bank at any given time to meet demand," Malloy said.

This all comes as the Governor's budget staff is preparing huge spending cuts that must be acted upon by the General Assembly before the end of the year.