As Gov. Dannel Malloy and the state bond commission raced through their votes on $350 billion in new borrowing Friday, Connecticut’s credit rating was downgraded by Fitch Ratings Agency, giving Connecticut the third worst bond rating of the 50 states.

Only New Jersey and Illinois are more likely to default.

The ratings agency cited Connecticut’s “burden of debt and unfunded pension liabilities in relation to resources,” as part of the problems facing the state.

Connecticut’s debt service payments, expected to reach $2.2 billion this year, are one of the fixed costs – along with pensions and retiree healthcare – that are driving the state’s deficits.

Within less than a week, Moody’s decreased Connecticut’s bond rating as well.

But Connecticut’s lagging economy and heavy debt burden did not prevent the bond commission from borrowing nearly $50 million to give loans and grants to companies through the Department of Economic and Community Development.

At the meeting, Rep. Christopher Davis, R-Ellington, informed the governor that he would be voting against every measure and said the committee should not consider borrowing more money in the midst of a budget crisis.

“I don’t think its appropriate for us to be having this meeting here today given the deep fiscal crisis we are in as a state.”

Davis reminded Malloy that the governor said in March there would be no further bonding until the state had a “clear direction,” in terms of its budget issues.

Malloy countered that he believed the state does have a clear direction and pointed to his budget, released in January, and criticized the legislature for taking too long to come to a budget agreement.

“For months I’ve heard about what is unacceptable without real plans for moving forward to an acceptable adjustment in our spending plan.”

The bonding for DECD included $34 million for the Manufacturing Assistance Act, which gives loans and grants to manufacturing companies, and an additional $15 million for the Small Business Express program, which makes loans and grants to businesses with fewer than 100 employees.

Cheshire-based EDAC Technologies, which manufactures machinery for a variety of industries, received $4.5 million. EDAC is set to receive a total of $48 million in state assistance.

Under the terms of the agreement the $4.5 million will be interest free for 15 years and payments will be deferred for the next six years.

The company has already received $28 million since 2012 as part of Malloy’s controversial First Five program. The state will forgive $16 million of the loans if the company reaches its goal of hiring 200 additional employees.

The First Five program has remained largely unpopular with the public due to its large loans and grants to major corporations, including some extremely profitable financial companies.

Some of the companies which received funds through the First Five have had to lay off employees, including Alexion Pharmaceuticals and ESPN.

Although the bond commission approved of $18.5 million in grants and loans to ESPN, due to recent layoffs, that state assistance has been modified to only $10 million in state tax credits, according to the Office of Fiscal Analysis’ notes on the bond allocations.

Altogether there were 11 companies receiving loans and grants through the latest bond commission agenda.

The DECD claims the low-interest loans and grants it distributes helps aid in the growth and expansion of companies in Connecticut, thereby leveraging state funds to fuel growth.

According to its August 2016 annual report, the First Five program has given $256 million in loans and grants to 13 companies with an additional $125 million in tax credits. DECD claims this investment has leveraged $1.2 billion in private investment in the state of Connecticut.

However, critics see these programs as the state giving money to big businesses during a time of fiscal crises, slow economic growth and the potential for state employee layoffs.

Earlier in the year, Comptroller Kevin Lembo announced his support for legislation that would force these programs to undergo yearly reviews by the state auditor. The bill had wide support across the political spectrum, from state union leaders to the Yankee Institute.

Malloy, however, defended the issuance of new bonds during the meeting and, in particular, cited the need for government investing in business.

“On the agenda for instance is money to bring 349 pharmaceutical jobs to this state,” he said. “Should we not compete with the state that company is moving its operations from? Should we not make investments in growing our economy? Should we not compete with Massachusetts or New York for jobs?”

Malloy released his revised budget on Monday.

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