By Keith M. Phaneuf

Connecticut’s status on Wall Street took another hit today when a major credit rating agency downgraded the state’s bond rating — a move that could lead to higher borrowing costs.

The downgrade by Fitch Ratings Inc., from A+ to AA-, comes about one month after Treasurer Denise L. Nappier warned the General Assembly to adopt a new approach to borrowing or risk slipping further in the credit rating.

It marks the fourth time Connecticut has faced a downgrade since May of last year. Fitch and S&P Global Ratings downgraded the state at that time, while Kroll Bond Rating Agency did so just two months later.

The fourth major rating agency, Moody’s Investors Service, hasn’t downgraded the state in recent years, but has given Connecticut a “negative” outlook, meaning its financed are being closely watched. Such outlooks often are a harbinger of a future downgrade.

By Keith M. Phaneuf and Jacqueline Rabe Thomas

Gov. Dannel P. Malloy today unveiled a plan that relies on one-time revenue sweeps, withholding $19 million in municipal aid, dozens of small agency cuts, and draining the state’s reserves to close the roughly $390 million gap in current state finances.

The plan, which was prompted by a huge drop in anticipated state income tax receipts in April, effectively concedes Connecticut will close its third successive fiscal year in deficit.

It also means the state probably will enter the upcoming two-year budget on July 1 with little or nothing in its Rainy Day Fund. [Westport’s state aid would be cut by $8,874, according to the Office of Policy and Management.]

The plan “requires actions we would all prefer to avoid,” Malloy wrote in a letter to legislative leaders, the legislature’s nonpartisan Office of Fiscal Analysis and Comptroller Kevin P. Lembo.

By Keith M. Phaneuf

While insisting they remain very sensitive to the economic risks posed by another state income tax increase, House Speaker Joe Aresimowitz, D-Berlin, said today he would not rule out another hike — including one on wealthy households — given the massive deficits projected for state finances.

House Speaker Joe Aresimowicz of Berlin also urged other lawmakers and Gov. Dannel P. Malloy to focus first on a plan to stabilize state finances over the long term.

“I still refuse to enter the negotiations taking anything off the table,” Aresimowicz said, noting that neither party nor branch of government has offered a plan to date that comes close to solving the budget crisis.

A new forecast released Monday, driven largely by eroding state income tax receipts, warned Connecticut will have nearly $1.5 billion less to spend over the next two fiscal years than originally anticipated.

By Keith M. Phaneuf

Connecticut’s latest budget nightmare became reality today.

Analysts for Gov. Dannel P. Malloy’s administration and the legislature’s nonpartisan Office of Fiscal Analysis downgraded anticipated revenues for the next two fiscal years by $1.46 billion — nearly $600 million next fiscal year and $865 million in 2018-19 — largely because of eroding income tax receipts.

Projected revenues now fall $2.2 billion, or 11.3 percent, short of the funding needed to maintain current services in 2017-18. And with the potential deficit swelling to $2.7 billion, or 13.6 percent, in 2018-19, the biennial shortfall approaches $5 billion.

Further complicating matters, revenues for the current fiscal year are $413 million below anticipated levels. This pushes state finances more than $380 million in the red and threatens to deplete the $236 million in the emergency budget reserve with less than nine weeks remaining before June 30.