New bonding would restore capital program to pre-recession level

After tightening its capital projects budget over the last two years, state government will borrow more than $4.6 billion during the next biennium to build schools, roads, clean water projects and a new technology park, based on the bonding package passed in the House and Senate on Saturday.

The bill, which also preserves an expiring 80 percent reimbursement rate for all municipal school construction projects in racially imbalanced schools, was negotiated by leaders of the Democrat-controlled General Assembly and Gov. Dannel P. Malloy’s administration and is expected to be signed into law.

The measure would authorize $2.01 billion in bonding next fiscal year and another $2.12 billion in 2012-13.

“It keeps our railroads and our bridges functioning,” said Sen. Gary LeBeau, D-East Hartford, said during the first debate, which began late Friday night and wrapped just after 1 a.m., Saturday.

Sen. Eileen Daily, co-chairwoman of the Finance, Revenue and Bonding Committee, said she is very confident this bonding will create thousands of new jobs.

Sen. John McKinney: ‘We give UConn whatever they ask for.’

State government also follows a previously-approved bonding schedule for capital programs at the University of Connecticut and the Connecticut State University system. Those institutions are scheduled to receive $252 million in bonding in the first year of the new biennial budget and $238 million in the second year.

The higher education funding brings the total bond authorizations for fiscal 2012 and 2013 to $2.27 billion and $2.36 billion, respectively. Both annual totals are more than double the $917 million capital program approved last May by the legislature and then-Gov. M. Jodi Rell and nearly one-third larger than the $1.76 billion authorized two years ago.

Additional funding in the new package for UConn, more than $172 million to finance construction of a new technology park at the main campus in Storrs did not sit well with the Republican minority in either chamber.

“I rise to a broken record. It’s frustrating to me. …We give [UConn] whatever they ask for,” said Senate Minority Leader John P. McKinney, before the bill was approved along party lines.

House Minority Leader Lawrence F. Cafero, R-Norwalk, tried unsuccessfully to amend the measure to strip out bonding for the technology park.

“This is not as a punishment to UConn,” Cafero said, “but as a way to say, ‘Hey, re-prioritize the money you’ve already got. Times are tough. Borrowing money costs us more money.'”

The House voted 121-11 to approve the package, with Republicans casting all of the dissenting votes.

The total new bond authorization level in the bill is very similar to the $2.13 billion authorized for 2008-09 – just before the economy plunged sharply.

Rell and the legislature did approve nearly $2 billion in borrowing over the past two years to cover shortfalls in the state’s operating budget–a practice Malloy has refused to continue.

The new governor has said repeatedly that state government cannot borrow for day-to-day expenses so it can reserve its borrowing capacity for projects that put people to work.

“We continue to support wise capital investments in necessary infrastructure in order to ensure job creation,” said Malloy’s budget director, Office of Policy and Management Secretary Benjamin Barnes.

The bond package would dedicate $1.1 billion in total over the next two years for municipal school construction work, and a matching amount for road, bridge and other transportation infrastructure projects. Another $658 million would be bonded to provide loans and grants to cities and towns for renovations to sewage treatment plants and other clean water projects and $113 million for various capital projects at state community colleges.

The bond package also includes financing for: economic development incentive programs; grants for municipal public works and road repair projects; renovations to state buildings; pollution abatement; capital equipment purchases; farmland and open space preservation; and improvements to ports in New London, New Haven and Bridgeport.

The bill also would carve out a major exemption in the municipal school construction program — less than one week after legislators voted to significantly reduce the state’s sharing of funding for local school projects.

At least six school districts–Enfield, Fairfield, Middletown, Manchester, Greenwich and Groton–would qualify for the state to cover 80 percent of their construction costs for schools built or renovated with the goal of reducing the racial disparities in their schools.

Under current law, the state pays between 20 and 80 percent of municipal school construction costs, depending on a community’s wealth. But a budget policy bill adopted recently in the House and Senate and expected to be signed by Malloy would reduce the range next fiscal year to between 10 and 70 percent.

State law restricts school districts from having substantial differences in racial makeup among their schools. The Connecticut Supreme Court ruled in the Sheff vs. O’Neill case in 1997 that the state must reduce the racial isolation in Hartford Public Schools. The state also years earlier required districts to report each schools  racial makeup, if state officials determined the disparity to be too significant then a corrective plan would need to be launched.

These increased construction reimbursements aim at helping districts have one more option to close that gap. But the legislature’s non-partisan budget office estimates the costs could be significant.