>> One of the richest states in the US is feeling the pinch after decades of nonstop borrowing. Connecticut pay $2.85 billion on it's bonds in 2017. According to information from the treasurer's office which is yet to be published. It's the highest in six years and comes at a time when lawmakers still can't agree on a 2018 budget.
How did a state known for being home to wealthy hedge funds find itself struggling to pay its bills, reporter Hilary Russ explains.>> They borrowed for example, in 2008 to help their underfunded pension system out. And then the next year,or that year, the recession hit and then they borrowed to get out of the recession.
And in some cases it's a more structural problem, the state has borrowed to build school buildings. Now in most states, that's handled by the local school district. So that is going on to the states debt tab.>> Connecticut's debt is the highest in the nation, in 2017 it was 9% of it's GDP according to Moody's.
And after two recent state tax increases, the democratic governor isn't about to suggest another hike. In fact, residents are leaving the state and overall revenues are dropping. Lawmakers in Connecticut have floated ideas to slow the borrowing binge by capping the debt the state can issue each year. But unless the state can figure out a way to cover its rising pension costs, the road ahead isn't pretty.
>> I think you're seeing a number of different states after the recession, even though it's been many years. Some of those states are really still grappling with financial problems. You've got Puerto Rico, you've got Illinois. I don't think that most people in the municipal bond market consider Connecticut to be quite that bad, but the comparisons have started coming up.
So, it is one of several states that are really grappling with revenues that aren't coming in as much as they hope. With this big, huge pension liabilities that are really hanging over all of the other spending that the states need to do.