Connecticut House Bill HB07321

Connecticut 2017 Regular Session

• Introduced: 4/19/17
• Refer: 4/19/17
• Report Pass: 4/27/17
• Refer: 5/8/17
• Report Pass: 5/15/17

Caption

An Act Establishing A Credit Revenue Bond Program.

Impact

The bill is designed to amend existing statutes related to general obligation bonds and introduce credit revenue bonds as a viable funding option. It establishes the terms under which these bonds can be issued, the responsibilities of state officers in managing pledged revenues, and the conditions under which the state will protect bondholders' interests. This adjustment in the financing landscape could enhance the state's ability to address infrastructure and other pressing financial requirements while maintaining fiscal responsibility.

Summary

House Bill 7321 introduces a new framework for establishing a credit revenue bond program in the state, allowing for the issuance of revenue bonds backed by specific pledged revenues. This approach aims to create a more efficient mechanism for financing state obligations through the utilization of withholding taxes. By doing so, the bill seeks to provide the state with a flexible tool to respond to funding needs without over-relying on general obligation bonds, which could strain the state's credit rating or fiscal resources.

Sentiment

Supporters of HB 7321 argue that this bill is a progressive step towards fiscal sustainability for the state by diversifying the funding mechanisms available to lawmaker and promoting greater investment in state projects. They emphasize the potential for saving taxpayer dollars through lower interest rates associated with credit revenue bonds compared to traditional bond methods. However, some critics raise concerns about the potential for increased debt and the long-term implications of relying on revenues that could fluctuate based on economic conditions.

Contention

As the state commits to pledging its right to collectible revenues to secure bond payments, there are potential implications for state financial management. Critics argue that the reliance on certain tax revenues for servicing debt could hinder budget flexibility, particularly in periods of economic downturn. Additionally, debates have surfaced regarding the appropriate thresholds for issuing these bonds and the safeguards necessary to ensure that the program remains solvent and does not disproportionately burden future state budgets.