Budget choices, fiscal maneuvers undermine transportation funding

Budget choices, fiscal maneuvers undermine transportation funding

Billions in financing approved in name only

by Keith M. Phaneuf

Demolition of the bridge that carried I-95 Southbound to Route 34. (Photo courtesty of the State Department of Transportation)
“You can’t have a world-class economy without a world-class transportation system”
—Don Klepper-Smith, New Haven economist

The second of three in a series. Read Part One here.

A decade of questionable budget decisions and fiscal maneuvers has taken the steam out of Connecticut’s transportation improvement program.

A growing list of long-desired projects is deemed unaffordable by transportation officials. In addition, billions of dollars in transportation financing has been approved in name only — and not converted into actual dollars spent on highways, bridges and railroads.

You can’t have a world-class economy without a world-class transportation system,” said New Haven economist Don Klepper-Smith. “The two go hand-in-hand.”

Klepper-Smith, who was chief economic advisor in the late 2000s to Gov. M. Jodi Rell, said Connecticut has not kept pace as age and traffic wear down a highway system built 60 years ago – and a rail system much older than that.

“Connecticut’s next governor has two choices: provide safe and efficient transportation, or allow our infrastructure to crumble,” said Don Shubert, transportation advocate and president of the Connecticut Construction Industries Association. “Maintaining the aging system of roads, bridges and rail lines in a state of good repair is critical for the safety and reliability of the system that the vast majority of the traveling public are using every day.”

“Connecticut’s next governor has two choices: provide safe and efficient transportation, or allow our infrastructure to crumble.”
— Don Shubert
President of the Connecticut Construction Industries Association
Major, long-term unfundable initiatives’

Four years ago the state Department of Transportation’s capital program reported almost $8.6 billion in “major long-term unfundable initiatives.”

These highway, bridge and rail projects are too important to take off the books, but officials can’t project any way to pay for them. Examples include replacing the elevated section of Interstate 84 in Hartford, extending Route 11 to the southeastern shoreline, and adding new lanes to clogged highways.

In the 2014 capital plan, the maximum price tag for these and other “unfundables” tops $11.7 billion.

One major transportation initiative Gov. Dannel P. Malloy’s administration has developed is CTfastrak, commonly known as the New Britain-to-Hartford busway, which is scheduled to begin operations early in 2015. Roughly 80 percent of this project’s $560 million cost, though, is covered by federal funds.

Given the hefty fuel-tax hikes the state has imposed over the last decade, transportation advocates say, the busway is not enough.

Between 2005 and 2014, state government’s receipts from Connecticut’s retail and wholesale gasoline taxes climbed by 40 percent, due largely to four increases in the latter tax over that period.

But Malloy, who inherited a historic budget deficit when he took office in 2011, has said this shortfall, coupled with the state’s slow recovery from the last recession, has hindered his ability to accelerate transportation projects as much as he had hoped.

Did Malloy reverse transportation’s slide?

The Democratic governor argues he nonetheless outspent his predecessors of the last few decades. But some critics argue that point is debatable. Others argue it is moot and simply places Malloy among a list of governors who didn’t do enough.

For example, the administration touts an analysis showing state transportation “funding” has averaged $1.94 billion a year under Malloy, compared with $1.74 billion under Rell.

But in this analysis, “funding” does not equal actual dollars spent. Most of the amounts cited refer to the value of transportation borrowing given preliminary approval by the legislature.

Billions of dollars in stalled borrowing

Since 2010, Connecticut has amassed a huge backlog of potential borrowing that has not become a reality, translating into billions of dollars targeted for transportation that haven’t actually been spent.

The state borrows for its transportation program by selling bonds to investors on Wall Street. This first must be approved by the legislature and then by the State Bond Commission.

But the funds aren’t borrowed until the administration is ready to launch projects. And if governors and legislatures don’t budget enough money for DOT staff — and to cover the debt service on the bonds — the borrowing backs up fast.

In December 2010, just before Rell left office, the legislature began receiving reports on approved-yet-unissued bonding. At that point almost $1.7 billion had yet to be borrowed and spent. Over the last three-and-a-half years that backlog has more than doubled.

By the end of the 2014 fiscal year it was nearly $3 billion, and as of the the treasurer’s Sept. 1 monthly report on cash and bonding, the backlog approached $3.5 billion early this fiscal year. The DOT announced this week that the state was about to issue $730 million in new transportation bonds to help fund highway resurfacing and ongoing improvements to the Pearl Harbor Memorial Bridge, known as the Q bridge, in New Haven.

Economist Fred V. Carstensen, who heads the University of Connecticut’s economic think-tank, said every $1 billion in backlogged transportation bonding represents about 10,000 potential construction jobs, or jobs related to that activity.

Private-sector construction trades and state union officials have said this backlog reflects an under-staffed and under-funded DOT.

The department not only has 172 fewer workers, 6 percent less, than it did a decade ago, it is almost 150 below where it stood in 2010, when the legislature’s chief investigative panel concluded it was struggling to complete projects on time and under budget.

This year’s budget includes $477 million for transportation debt service, which is 6 percent less than the 2005 appropriation, once adjusted for inflation. Advocates note that transportation funding often is raided to help close deficits in the overall state budget.

The state Department of Transportation did not provide The Mirror with actual dollars spent in its capital programs over the past decade. Commissioner James P. Redeker said the agency couldn’t break the expenditures down on a year-by-year basis.

“The governor consistently uses parameters and statistics that are skewed, that don’t show the whole picture about the transportation fund.”
— John McKinney
Senate Minority Leader and former GOP candidate for governor

“The governor consistently uses parameters and statistics that are skewed, that don’t show the whole picture about the transportation fund,” said Senate Minority Leader John P. McKinney, R-Fairfield, one of Malloy’s most vocal critics on transportation. McKinney had been a gubernatorial candidate, losing the GOP primary in August to Greenwich businessman Tom Foley.

But perhaps the most pressure to reverse Connecticut’s transportation fortunes has come from Malloy’s own base.

The governor’s fellow Democrats on the legislature’s Finance, Revenue and Bonding Committee sent their own message of frustration last year. The panel recommended blocking a year’s worth of transportation bonding requested by the Malloy administration. Even though the full legislature sided with the governor, the message of protest was sent: Don’t plan new transportation borrowing until already approved bonds are issued.

“It seems like basic maintenance and repair is the entire long-term strategic plan in Connecticut,” Rep. Kim Fawcett, D-Fairfield, who co-chairs the panel’s transportation bonding subcommittee, said at the time.

Are federal dollars bogged down as well?

The state’s private-sector construction trades, whose members directly benefit from transportation funding, have been particularly vocal in recent years about getting more shovels in the ground.

Shubert, of the construction coalition, said he fears the lack of state resources for transportation is taking its toll on Connecticut’s ability to mobilize huge sums of federal money.

“Due to ConnDOT’s inability to develop projects, the department has had no choice than to set aside hundreds of millions of dollars of available state and federal funding, knowing the funding would not be used for years to come,” Shubert wrote Malloy last October.

State officials formally “commit” or “obligate” federal dollars to projects faster than the DOT and its contractors can spend them, Shubert told The Mirror. The result is that huge sums may sit idle from one year to the next. If the state were able to keep more projects going at one time – the funds might be spent more quickly.

In the letter, Shubert charged that, since 2009, between $300 million to $400 million annually has been set aside in this fashion.

Redeker told The Mirror, “We’ve never left a federal dollar on the table.”

Redeker also said federal funds must be carefully apportioned given the unstable situation in Washington. Congress has been trapped in partisan gridlock for much of this year in its efforts to craft a long-term transportation infrastructure bill.

“We are in a high-risk mode,” Redeker said, adding that if Connecticut doesn’t guard against potential delays in federal funding “then I’m putting at risk our entire program.”

The commissioner acknowledged that DOT staffing has been a long-standing concern for some transportation advocates. “Right now,” he said, “we are in a much better position than we were in resources” in many years.

The commissioner added that he understands the concerns of transportation advocates, adding that it is a common complaint throughout the Northeast.

“Is there a backlog? he said. “ Yes. We’ve been clear about that, and we’re trying to address that.”

And when it comes to the question of more funding, “it’s never enough,” Redeker added. “I know that, because I’m an advocate (for transportation) myself. We’d all like to do more.”

Tomorrow: A rough road ahead for transportation improvements

Keith M. Phaneuf is the state budget reporter for the Connecticut Mirror. The former State Capitol bureau chief for The Journal Inquirer of Manchester, Keith has spent most of 24 years as a reporter specializing in state gmovernment finances, analyzing such topics as income tax equity, waste in government and the complex funding systems behind Connecticut’s transportation and social services networks. In 2012, he and Jacqueline Rabe Thomas won first prize in investigative reporting from the Education Writers Association for a series of stories on the Board of Regents for Higher Education. A former contributing writer to The New York Times, Keith is a graduate of and a former journalism instructor at the University of Connecticut.



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