Money wasn’t always so tight in Connecticut.
Before the 2008 financial crisis, former Republican Gov. M. Jodi Rell and Democratic leaders in the legislature set up a slush fund that allowed them to spend $26 million on grants to any recipient they chose.
The grants ranged from $2 million for the Connecticut Farm Bureau Association, the largest recipient over the four-year period, to $750 for the Derby Historical Society.
The loose structure of the fund did not require grant recipients to spend the money on its intended purpose, according to state auditors.
In one case, auditors found funds for a first-time homebuyer program instead went toward the organization’s property tax bill.
By the time Connecticut’s most powerful politicians stopped spending from the fund, the financial crisis had struck and a $3.5 billion deficit was looming.
Such profligacy led newly-elected Gov. Dannel Malloy to implement the largest tax increase in Connecticut history.
Even when the fund was created in 2005, Connecticut bore the immense weight of long-term debts, including more than $50 billion in pension and retiree healthcare obligations. Now Connecticut leads the nation with more than $40,000 in debts per taxpayer, according to the Institute for Truth in Accounting.
The state also needs more than $1 billion just to undo all the accounting gimmicks it has implemented over the years to maintain the appearance of a balanced budget.
Yet the state’s top three politicians created a slush fund to pay for pet projects.
Nearly $1 million was paid to advertising firm Lang Durham and Company, the second largest recipient from the fund. State agencies, towns and libraries got money as did sports leagues and animal shelters.
Rell created the so-called “Contingency Needs account” when she signed Public Act 05-251 into law seven years ago.
Senate President Pro Tempore Don Williams, D-Brooklyn, and Rell oversaw their shares of the fund for all four fiscal years, 2006 through 2009.
House Speaker James Amann, D-Milford, presided at the creation of the fund and for three and half years of its operation.
House Speaker Chris Donovan, D-Meriden, took over in January 2009, halfway through the last fiscal year of the fund’s operation. A spokesman for Donovan did not respond to a request seeking to clarify whether Donovan directed any grants from the fund.
Rell is now quietly retired in Florida. Amann, after leaving the House, competed with Malloy early on to be the Democratic nominee for governor.
Williams still presides over the Senate, while Donovan, still Speaker, is making a run for Congress in the 5th District.
The leaders doled out an average of $60,000 to a total of 419 recipients over four years, with some receiving multiple grants or funding in more than one year.
Rell, Williams and Amann spent $8.1 million in 2006, $5.9 million in 2007 and $8.9 million in 2008. During the last year, amid the financial crisis, $3.1 million came out of the fund.
State auditors criticized the now-closed fund for poor oversight, giving three examples in their report.
- “Four grantees receiving grants totaling $400,000 did not provide the agency with a final report of how their funds were actually spent.”
- “Two grantees did not use the Contingency Needs funds for the intended purpose. A grant award was made to an athletic entity to renovate a baseball field. The payment for the award, totaling $5,000, was actually for a new roof. In the other case, $45,000 was provided for a grantee to rehabilitate housing and provide homeownership opportunities to first time buyers. The money was actually used to pay the grantee’s property taxes and interest.”
- “A grant for $45,000 was given to a non-profit which indicated its project goals and methodology was to increase program enrollment but lacked any details as to how this would be accomplished.”
Initially, legislators put $18 million into the fund, but they expanded it to over $30 million. According to the auditors, about $5 million budgeted for the fund was not spent.
The auditors also noted the Office of Policy and Management, although charged with administering the grant program, “lacked any authority to question the nature of the expenditures.”