by Dave Fidlin
The Connecticut General Assembly is in the early stages of reviewing a bill that has been touted as a mechanism of infusing state resources into underserved and low-income communities.
As written, Senate Bill 481 would require the investment of state funds into community banks, community credit unions and community development financial institutions.
According to a statement of purpose in the bill, the funds would “promote community or economic development in certain underserved communities” and “authorize the establishment of a program to guarantee loans made to borrowers who would not otherwise qualify for such a loan.”
The legislation includes a number of provisions, including a stipulation that $10 million in investment earnings in the state’s operating cash be directed to guarantee small business and consumer loans for financial institutions noted in the bill.
SB 481 was introduced March 25 and was subject to a public hearing at the Joint Finance, Revenue and Bonding Committee, which met March 30.
At the committee meeting, lawmakers received testimony from representatives of three organizations — two for it and one opposed.
Jeffrey Beckham, acting secretary of the Connecticut Office of Policy and Management, said SB 481 would bring a number of changes to an already-in-place community banking program. He said the requirements outlined in the bill would hinder opportunities to maximize yields from investment funds.
“The current community banking program is discretionary on the part of the treasurer, whereas the language contained in the proposed bill would make the program mandatory,” Beckham said.
In his testimony, Beckham said his office “cannot support” the requirements in SB 481.
“The treasurer’s office seeks to maximize the investment earnings on the state’s operating cash to best serve the citizens and taxpayers of the state,” Beckham said. “These changes would serve to reduce those investment earnings while resulting in additional administrative burden for the treasurer’s office.”
But other speakers implored lawmakers to consider the legislation.
Sana Shah, chief of staff with Connecticut Voices for Children, said the organization supports SB 481 at face value, though she did question some of the methodology in her testimony.
“We support policymakers providing increased credit to underserved communities as well as providing loans to the working-class families living in those communities, which would help to promote economic development and lower the high unemployment rate for workers of color,” Shah said.
But, Shah added, “We believe it is important to highlight that this bill requires the treasurer to make those investments rather than act ‘based on cash availability,’ and it does so without providing a new source of funds. We therefore do not know how this may impact the treasurer’s management of the state’s long-term obligations, which includes a high level of debt and unfunded pension liabilities.”
Chloe Slater, a student at Trinity College, also offered up testimony in support of the bill.
“I believe this legislation will help lower the unemployment rate for workers of color and strengthen Connecticut’s economy by investing in the development of underserved communities,” Slater said.
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