Gov. Lowell P. Weicker Jr. has vetoed a $1.1 billion bonding package, saying Connecticut must first devise a budget for the fiscal year already under way.
"We can't put ourselves in the position of authorizing new debt until we've got a budget," said Avice A. Meehan, the governor's press secretary. "He has a pretty unbending view of that."
Rep. Fred Gelsi, D-Enfield, said he was surprised when the governor vetoed the measure last week.
But, he added, "I'm sure he was concerned about having a bond package and no ability to pay for it." Rep. Gelsi serves as chairman of the General Assembly's joint Finance, Revenue, and Bonding Committee's subcommittee on bonding.
From the legislator's point of view, Gov. Weicker's veto was not necessary, because the bond authorizations in the bill still would require the approval of the State Bond Commission. "All of us truly understood that none of this would go to the bond commission until there was a budget."
Mr. Gelsi said he will seek an override of the governor's veto once the state has resolved its fiscal impasse.
That should not prove difficult, said Sen. William H. Nickerson, R-Greenwhich. The borrowing bill -- the smallest passed by the state's lawmakers in recent memory -- was as popular as it was austere.
"Generally, bonding bills have been highly controversial," Mr. Nickerson said. This package, however, passed nearly unanimously in both chambers of the state's General Assembly.
The bill would have authorized the issuance of $419 million of special tax obligation bonds, $200 million of clean water fund revenue bonds, and $183 million of general obligation bonds.
Also contained in the vetoed legislation were provisions to allow the state to enter into interest rate swaps on general obligation bond deals.
While the state has entered into a swap agreement on its Special Tax Obligation bond program for transportation, current state law would not permit an interest rate swap on a GO deal, according to Benson R. Cohn, the state's assistant treasurer for debt management.
Mr. Cohn said the state could involve as much as $200 million of GO bonding in an interest rate swap "if the market conditions are right."
Rep. Gelsi said he and other lawmakers approved of the swap-related provisions. He said officials in the state treasury informed him they would use swaps "on a cost-effective basis, and we're going to hold them to their word."
The bonding bill also would authorize the state to enter into investment agreements with bond proceeds. Mr. Cohn said that without that authority, the state treasury has had "a problem finding simple, yield-restricted investments."
