Moody's Downgrades Connecticut's Bond Rating

Moody's Investors Service downgraded the State of Connecticut's bond rating Monday. The news comes on the heels of Fitch's announcement last week that it too had downgraded too.

Moody's moved Connecticut's general obligation debt and several other debts from A1 to Aa3. It echoed many statements made in Fitch's assessment last week. (SIGN UP: Get Patch's Daily Newsletter and Real Time News Alerts. Or, if you have an iPhone, download the free Patch app.)

"The downgrades reflect continuing erosion of Connecticut's finances, evidenced by the pending elimination of its rainy day fund, growing budget gaps and rising debt levels," Moody's said in a statement. "The pressures created by growing fixed costs, coupled with weak economic performance, are unlikely to relent and will raise the risk of credit-negative actions such as deficit borrowing or backloaded financings."

Connecticut could improve its rating by maintaining its rainy day fund and establishing structural budget balance. It would also improve if pension and debt leverage were improved relative to the rest of the country.

State Treasurer Denise Nappier said a course correction was necessary for Connecticut's finances, according to the Connecticut Mirror.

Related:

• Drastic State Aid Cuts, Increased Tax Proposals In Malloy’s Latest Budget Plan
• Fitch Downgrades Connecticut's Bond Rating

Last week Gov. Dannel Malloy said that the state would have to essentially empty its reserves in order to help close the current fiscal year in balance. Connecticut got a bad April surprise when income tax receipts came in millions of dollars short of what was expected. The state's ability to slash budgets just a couple of months from the close of the fiscal year is limited.

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