By Keith M. Phaneuf
The first review from Wall Street on a new plan to stretch out Connecticut’s spiking state employee pension costs is a positive one.
Moody’s Investors Service, one of the four major credit rating agencies, labeled the proposal negotiated by Gov. Dannel P. Malloy’s administration and state union leaders as a “credit positive” for Connecticut in the agency’s weekly credit outlook statement. The deal also reflects elements of proposals by state Comptroller Kevin P. Lembo and by state Treasurer Denise L. Nappier.
The declaration of a “credit positive” is not — by itself — a rating upgrade that often results in lower borrowing costs. But it is a development deemed to be a positive factor in the agency’s evaluation of the state’s finances.
“Connecticut’s pension burden as a percent of revenues is one of the highest of all 50 states,” Moody’s wrote. “The new agreement sacrifices the goal of amortizing the unfunded pension liabilities over a shorter period, but allows for more affordable pension contributions and a more conservative investment return assumption.”
