Connecticut’s municipal leaders are watching closely to see how swiftly —if at all — lawmakers and Gov. Dannel P. Malloy release $30 million in promised-yet-withheld capital improvement funds for cities and towns once the new legislative session gets underway.
For the Connecticut Conference of Municipalities and the Council of Small Towns, the disputed funds are the figurative canary in the coal mine.
If state officials renege — a move that wouldn’t lessen the current state budget deficit by one penny but would disrupt hundreds of local projects this spring — it could be a sign communities are in for an even rougher ride over the next two fiscal years when state finances are in worse shape.
“We cannot get Connecticut straightened out, we cannot spur on our economy, without having predictability in our budgets,” said Joe DeLong, CCM’s executive director.
“This needs to get done almost immediately,” said COST Executive Director Betsy Gara. “They need to work together cooperatively and swiftly to ensure the money is in place to fund these critical projects.”
What is at stake are millions of dollars’ worth of planned improvements to roads, bridges, sidewalks, municipal facilities, and various local economic development projects.
Through the Local Capital Improvement Program (LoCIP), Connecticut reimburses communities for a portion of these projects’ costs, using a pool of borrowed funds established many years ago.
But since 2004, legislatures and governors have been adding annually to the pool of funds, while sometimes drawing larger amounts out to pay for local projects.
But while the current budget was enacted in May, and the fiscal year began July 1, state government notified local officials on Dec. 29 — halfway into the fiscal year and with the busy spring construction season still ahead — that LoCIP funding essentially had dried up. Unless the fund is replenished by issuing more bonds, cities and towns will receive about $30 million less than planned.
“It is really disheartening,” said Coventry Town Manager John Elsesser, president of COST. “Clearly they (state officials) should have known last year when they adopted the budget that they needed this (supplemental) bonding authorization.”
Elsesser said LoCIP funds for his town — if received — would be dedicated for a bridge deck replacement, a new irrigation system and other athletic field work, and various small drainage and culvert repairs.
Coventry officials planned to begin the work in mid-March, he added, meaning design and other preparations already are underway.
Local leaders will be at the Capitol this week urging restoration of the LoCIP funds, Elsesser said, adding that “otherwise they (state officials) were just lying to go us going into the election.”
Chris McClure, spokesman for Gov. Dannel P. Malloy’s budget office, said the administration sent out word “as soon as we were able to accurately predict the full use of the authorized funds for this fiscal year.”
McClure also said past administrations were able to escape problems only because municipalities’ requests for reimbursement traditionally lagged enough “that there was no need to take action.”
None of the four legislative caucuses yet has announced how it would resolve the problem, either by recommending additional borrowing or by canceling the state’s pledge to fund the projects.
The current state budget is modestly in deficit. Malloy pegs the shortfall at $41.6 million while Comptroller Kevin P. Lembo estimates the gap at $56.2 million. Both deficits are less than one-third of 1 percent of this year’s General Fund. But because state bonding is spent outside of the budget, restoring the LoCIP funds would not impact the deficit.
“Those projects that are in the process of being completed, should receive the funding they were allocated,” said Rep. Joe Aresimowicz, D-Berlin, the House Democrats’ choice to become the new speaker. “Unfortunately, the reality is projects that have not started may need to be delayed for the time being. But there is also the potential for some or all of these reductions to be mitigated if this year’s fiscal situation further stabilizes. When the legislative session convenes, as always, we will work closely with our cities and towns to see how we can best meet their needs.”
Leaders of the House and Senate Republican caucuses said state government, even in tough fiscal times, owes communities certainty about the state aid they can expect.
“We’ve got to at least give them a heads up so they can plan,” House Minority Leader Themis Klarides, R-Derby, said. “Cutting in the middle of the (fiscal) year is irresponsible.”
Sen. Len Fasano of North Haven, the top Republican in the Senate, said “there is no excuse” for the governor’s budget office not to have anticipated this problem. “To cut off support after towns have already applied for funding shows a lack of foresight and a mismanagement of the program. Individual towns can’t possibly know what funding other towns are applying for and when they apply. It is the administration’s responsibility to track applicants so if the state nears its limits towns can be told ahead of time before they count on that funding.”
McClure added that legislatures have known for more than a decade that the LoCIP program is volatile and could have proposed reforming the funding system last spring.
“This is yet another example of how short-sighted actions in the past can have consequences today,” he added. “There have been a dozen legislative sessions since LoCIP was short-funded in 2004, yet those who would criticize our timing today never once submitted legislation to fix this problem.”