Traffic congestion on I-95 westbound. CT DOT

They have been hailed as natural, implacable enemies.

Mongoose and cobra. Hatfields and McCoys. Red Sox and Yankees fans.

Now add to this list the folks who support Democratic Gov. Ned Lamont’s tolls plan, and those who favor the Republican legislators’ alternative, the tolls-free “Prioritize Progress.”

Ever since Lamont reversed himself and endorsed tolls for all vehicles three months ago, the two sides have been at odds.

Each proposal has its advantages and its weaknesses, both of which have been subjected to a withering storm of public debate.

Now, with just seven weeks left in the legislative session, lawmakers must choose one, or subject Connecticut to another year of the status quo — an inadequate capital transportation program eventually headed for a congestion nightmare, or worse.

So first, here’s a short primer on how Connecticut pays for road, bridge and rail upgrades, followed by a breakdown of the competing plans.

How CT pays for transportation

The Department of Transportation’s capital program is a separate entity outside of the state budget — but they are related and affect one another.

Connecticut pumps hundreds of millions of dollars into the capital program each year by borrowing — selling bonds on Wall Street.

Gov. Ned Lamont by the I-84 viaduct in Hartford two weeks ago, flanked by budget chief Melissa McCaw and Transportation Commissioner Joseph Giulietti. mark pazniokas / ctmirror.org

Recently that borrowing has hovered between $700 million and $800 million per year.

The federal government adds another $750 million to that in matching grants, giving the state between $1.4 billion and $1.5 billion in new capital resources each year.

The problem is Connecticut short-changed its transportation capital program for decades prior to now, and $1.5 billion in new money each year isn’t anywhere near enough to do the job.

DOT Commissioner Joe Giulietti recently told lawmakers he needs at least $2 billion to make a difference — and then that annual number would need to grow throughout the 2020s and 30s.

Lastly, that money Connecticut borrows has to be paid back, and that’s where the state budget comes in.

Every year the state makes payments —principal and interest — on billions of dollars of accumulated transportation bond issuances from years past.

That debt service line item eats up about $650 million of the budget’s $1.6 billion Special Transportation Fund. The rest goes to pay for DOT operations, winter snow removal, rail subsidies, and bus and other transit programs.

So if the state wants to borrow more money to rebuild roads, bridges and rail lines, then it needs more dollars to pay off the debt.

Which brings us to …

Lamont’s tolling plan

Proposed tolling corridors in Connecticut

The governor would order electronic tolls on interstates 84, 91 and 95 and on the Merritt Parkway with a base charge of 4.4 cents per mile — before discounts are offered to Connecticut motorists.

This would raise $800 million per year for the budget by 2024 or 2025, the administration says, with 30 to 40 percent coming from out-of-state motorists.

This would easily cover the debt payments on more annual borrowing.

But it would also give Connecticut the option of shifting toll receipts directly into the capital program and paying in cash — not borrowed dollars — for hundreds of millions of dollars in work, according to Lamont budget director Melissa McCaw.

Over the next two decades Connecticut could save billions of dollars in interest costs with this debt-avoidance approach.

Giulietti said he also believes a reliable, long-term revenue source like tolls could help Connecticut control its debt costs down the road.

“If we can lock in what the future revenue streams can be, then it really allows for some creativity,” he added.

“This is not just about getting a fund to balance. This is about positioning Connecticut for economic growth. … This is about making the case for families to be here in Connecticut.”

Melissa McCaw
Budget Director

More importantly, McCaw said, it would finally allow Connecticut to rebuild an aging, overcrowded transportation system that’s an impediment to a healthy future.

“The bottom line here is that Connecticut needs to make a decision about the path forward for transportation,” she said. “This is not just about getting a fund to balance. This is about positioning Connecticut for economic growth. … This is about making the case for families to be here in Connecticut.”

“Speeding up our rail service from Hartford to New Haven, to Stamford and New York City, with more frequent service to Waterbury and New London, with easier access to Bradley Airport and an upgraded Tweed Airport,” Lamont told legislators in his Feb. 20 budget address. “These transportation upgrades are the building blocks of our economic future.”

But tolls aren’t the only idea for financing an infrastructure rebuild. There’s also …

Prioritized Progress

“The Democrats and the governor have some people convinced the only way to do this is with tolls, and that’s simply a fallacy,” said House Minority Leader Themis Klarides, R-Derby.

In 2015, Republican legislators noted Democrats had massively increased borrowing for non-transportation purposes — and not just for schools and economic development.

House Minority Leader Themis Klarides and Senate Minority Leader Len Fasano CtMirror.org

Rather than simply cut programs out of the state budget, Democratic legislators and Gov. Dannel P. Malloy were putting them on the credit card. Connecticut was borrowing more than $100 million per year to make payments on borrowing. And a steady stream of community-based projects — often in Democratic legislators’ districts — consistently found their way into the bonding program.

Between 2012 and 2015, bonds issued for non-transportation purposes — and repaid out of the budget’s General Fund, not its Special Transportation Fund — grew from $1.1 billion to $2 billion per year.

Republicans asked a logical question: What if Connecticut redirected about $700 million per year of this borrowing away from these other areas and into transportation?

If Connecticut combined:

  • $700 million in annual borrowing repaid out of the General Fund,
  • With the $700 million-to-$800 million it’s already borrowing and paying off out of the Special Transportation Fund,
  • And $750 million per year in federal grants,

It would have more than $2.1 billion each year to spend on transportation projects — and no one would have to pay tolls.

“This is about a reallocation of bonding,” said Senate Minority Leader Len Fasano, R-North Haven. “These simply are choices, but some people don’t want to make them.”

These are the basic advantages of each program. But no plan is without its flaws …

Can roads and bridges last until toll receipts arrive?

With toll receipts not due for three or four years, Lamont nonetheless has no intention to bolster funding for transportation to cover the interim.

He even wants to cancel additional resources legislators pledged to the Special Transportation Fund over the next few years.

The DOT warned in a February memo that the governor’s plan “would have significant impacts on our capital program, severely constricting the number of new projects that advance in the current, and future years.”

When pressed to elaborate on what he could do under the Lamont plan until toll receipts arrive, Giulietti promised only that he could maintain the average condition or roads, bridges and rail lines using a series of short-term “patches.”

Transportation advocates insist Lamont’s plan would put the capital program on a near-starvation diet in the short-term.

By comparison, Prioritize Progress would elevate spending on projects right away, and by more than $500 million per year. By the time toll receipts arrive in 2024 or 2025, the GOP plan already would have a massive head-start on Lamont’s, having invested $2 billion-to-$2.5 billion more over the next four years.

“The Democrats and the governor have some people convinced the only way to do this is with tolls, and that’s simply a fallacy.”

 House Minority Leader Themis Klarides, R-Derby

Why haven’t more advocates for transportation, both among the legislature and outside of state government, jumped at the Republican minority’s plan given its massive advantage in transportation investment?

“I would hate to think the reason is it’s a Republican plan,” Fasano said, adding he believes more legislators would back the GOP plan if they reviewed it closely. “I really believe many people who criticize it haven’t even read it.”

The administration says that provided tolls are approved now, it could respond if a transportation construction emergency arises in the next four or five years. 

How? By borrowing against future toll receipts.

Lamont already is talking about borrowing against future toll receipts to cover the projected $213 million capital cost to install gantries and other toll infrastructure.

McCaw couldn’t say what interest rates the state would expect to pay under that scenario.

And if public opposition to tolls is strong now, it would only be worse if motorists learn future toll receipts are being pledged to a private investor in exchange for a smaller, lump-sum payment to fix roads or install toll gantries now.

But Prioritize Progress has its own problems with debt and other fiscal issues.

Would GOP plan collapse under debt, fiscal insolvency?

One of the reasons Lamont and others want toll revenues for the Special Transportation Fund is because the rest of the state budget is in even worse shape.

Surging pension costs and payments on non-transportation borrowing consume almost one-third of the General Fund, compared with 10 percent two decades ago. This is siphoning resources away from education, health care, social services and municipal aid.

Lyle Wray, executive director of the Capitol Region Council of Governments

What happens if and when the General Fund has to pay off a significant chunk of transportation borrowing?

Within a decade, McCaw says, annual debt service costs will have grown by $600 million.

That’s one-third of the entire cost of today’s state program to fund local education.

And this burden “is 100 percent born by Connecticut taxpayers” with nothing from out-of-state motorists, she added.

Making matters worse, the Special Transportation Fund still is headed for insolvency. Even if the General Fund is used to pay off some transportation debt, the STF would go belly up — without toll receipts — by 2026.

But transportation advocates say the problems — both with Lamont’s plan and with the Republicans’ — are solvable.

How so? By putting them together.

Could tolls and Prioritize Progress complement each other?

“We see a tremendous amount of opportunity if the two proposals were somehow merged,” said Don Shubert, president of the Connecticut Construction Industry Association.

Shubert has endorsed Lamont’s tolls proposal — but also said the governor’s plan for the next four years likely would mean not treading water but actually falling backward in infrastructure repair.

Lyle Wray, executive director of the Capitol Region Council of Governments and another advocate of tolls, has referred to Prioritize Progress as a potential “bridge to tolls.”

“How do we get from here to there?” Wray said, referring to the potential four- or five-year gap until toll receipts come in. “I would explore a merger, for sure.”

Major projects, such as the widening of I-95 in Fairfield County or repairing the elevated section of I-84 in Hartford, could proceed as planned — or maybe even faster, Shubert said.

Why couldn’t Connecticut redirect some of the bonding earmarked for schools, economic development or community-based projects and shift it to transportation for the next four or five years, advocates ask, and then phase it out as toll revenues become available?

The answer, some say, is principle. Others say it’s politics.

Can you compromise with the ‘toll monster?’

Rep. Laura Devlin, R-Fairfield Keith M. Phaneuf / CTMirror.org

The Lamont administration insists there is middle ground.

As long as there is a sustainable, long-term funding source for transportation involved, McCaw said, the administration would consider an interim plan that temporarily redirects borrowing for transportation purposes.

“We are happy to engage in a discussion on what the short-term opportunities are,” McCaw said, adding the plan must be fiscally sustainable.

But Republicans say it’s the Democratic governor who won’t give ground. Lamont should recognize, Fasano says, that the public simply doesn’t trust the “toll monster.”

“I say no tolls — period,” he said.

Rep. Laura Devlin of Fairfield, ranking House Republican on the Transportation Committee, said tolls are “a flat-out money grab” for a state grasping at straws to solve it fiscal dilemma.

Don Shubert, president of the Connecticut Construction Industries Association (file photo) Keith M. Phaneuf / CTMirror.org file photo

The reason for this hard line in the sand, Republicans say, can be found within state government’s track record. 

Connecticut spent $1.3 billion in fuel tax receipts on non-transportation programs between the 2006 and 2014 fiscal years — even as the wholesale gasoline tax rose four times during that period.

And residents still are reeling from major state tax hikes in 2011 and 2015.

What isn’t in doubt, transportation advocates add, is that time is running out.

If a long-term transportation rebuild with a new funding source isn’t adopted this year, the odds of it getting done in 2020 — when legislators are up for re-election — are slim, they say.

Similarly, once Connecticut and the nation slide into recession — which some economists warn could happen as soon as next year — the odds of a transportation rebuild also shrink.

By the time the political and economic smoke clears, the state might not be ready to do anything new for four or five more years.

“And no one wants that,” Shubert said. “That’s a catastrophe. You don’t want that.”

Avatar photo

Keith M. PhaneufState Budget Reporter

Keith has spent most of his 31 years as a reporter specializing in state government finances, analyzing such topics as income tax equity, waste in government and the complex funding systems behind Connecticut’s transportation and social services networks. He has been the state finances reporter at CT Mirror since it launched in 2010. Prior to joining CT Mirror Keith was State Capitol bureau chief for The Journal Inquirer of Manchester, a reporter for the Day of New London, and 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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17 Comments

  1. Neither plan should be necessary if we are spending gas taxes on transportation projects as they were intended – our politicians have once again failed us. If we had to pick the “lessor evil” it would be Prioritize Progress because we already borrow that money on other programs that are not as important as infrastructure -which benefits all citizens and our businesses. However we should not be diverting tax revenue for into the general fund in the first place. Stop diverting revenue and the amount we need to bond for will be far less over time.

  2. Tolls are an incredibly inefficient way to collect taxes. The gas tax costs only 1% of revenues to collect.

    According to a study by the CBO it costs between 16.5% and 92.6% of revenues to collect tolls. the study indicates that someday the most efficient electronic tolls might get down to around 10% – but that is after we have to spend probably close to $500 million to lay fiberoptic lines and build all the gantries to hold the transponders. Not to mention the imposed cost of forcing motorists to buy EZ Pass transponders. https://fas.org/sgp/crs/misc/R43575.pdf

    This proposal is pure idiocy – just raise the gas tax and tax electric vehicles based on mileage when they renew their registrations.

    But why should voters expect prudent fiscal decisions from our entrenched legislators?

    1. I am worried about how big a “cut” the private company that manages the toll system, will get. The taxpayers will be paying the total of the tolls, plus the fees of the toll management company.

    2. I am not sure where you get $500 million to implement tolls or those return rates but I doubt they are anywhere close to being accurate. So you know CTDOT already has an extensive optical fiber communications network that runs their incident management system. That network could easily and inexpensively be used for a large part of the proposed toll system.

      Raising the gas tax continues to place the primary financial burden on Connecticut drivers and gives out-or-State drivers a free ride. Other states have tolls Connecticut drivers must pay when they drive there. Most of those states are looking to expand tolling. South Carolina is looking at expanding their tolls further. None that I know of looking to eliminate tolls. Tolls could bring in as much as $300 million from out-of-state drivers. That is a lot of money and $300 million that Connecticut residents won’t have to pay. That alone will go a long way to rebuilding our transportation system.

      Finally the Republican plan is fiscally irresponsible. It has no way to actually pay for the debt it creates. Isn’t debt a big part of the fiscal crisis we face today? How does adding to it make any sense?

      1. I highly doubt the cost would be that much higher given that they were basing their estimate on the recent Mass Pike tolling project. Whether you believe it or not, most projects that cost more than the original estimates are due to changes in the scope of the project. You can’t expect to add things to a project and the cost not to go up. The Q Bridge project came in under its updated estimates.

  3. The legislature has shown there is no need to change its ways. Stealing the gas tax revenue just shows how bad they ate. Restructure pensions, downsize, get rid of administration and stop the overbearing big govt push. Then maybe we can talk. Otherwise why give them more money to wadte.

  4. “If we can lock in what the future revenue streams can be, then it really allows for some creativity,” he added.
    That one statement says all you need to know about Hartford.
    Jim

    1. You win the internet today Jim. Its all about increasing revenue. The expenses can be pulled along to support the revenue requirements.

  5. This intent to “compromise” was so obvious that I mentioned it in a post here awhile ago.
    But there’s still the question: Why didn’t the Governor propose the combined plan himself? Democrats could pass anything they chose.
    I think that Democrats are worried that tolls are enough of an issue that they could lose seats if passed unilaterally. If Republicans can be induced to take some of the blame, then Democrats would be safer.
    If Republicans realize this, they can refuse to accept the “compromise”, saying only that they would stop the tolls before they start if in office.
    Then the Governor would likely have to borrow anyway, and hope that tolls, which would not appear until the 2020’s, will not be too big an issue in the next election or the one after that, when he’s up for re-election. That’s risky, but it’s not an unreasonable hope.

  6. 1.3 billion in gas tax revenue was diverted between 2006 and 2014! Outrageous! I wonder what the dollar amount from 2015 to the present is?
    The very underlying issue with tolls is the total lack of trust a majority of citizens have in Hartford. Tools are correctly viewed as a money grab pure and simple. Toll revenue collected WILL end up in the General Fund for pension relief.

  7. Please CGA and Governor consider the following before putting this to a vote:

    – How much will it cost to make a tolling system fully operational?
    – So are you going to do a Wimpy, i.e. bond for the cost to get the system ready to collect that first penny?
    – What will the annual cost of the debt service be before the first penny of toll revenue comes in?
    – How will you extract that start-up cost from the poor taxpayers of CT?
    – Once the the toll revenue does start coming in, what will be left after deducting the debt service AND the ongoing operational costs?

    These considerations HAVE to be understood before any bill reaches the floor. It would be downright stupid to vote to move this forward if the touted revenue falls far short of today’s projections.

    Further, what happens if the net revenue falls way short – Will the CGA vote to increase to tolling rate?

    Or are we going to allow a legislature-created untouchable bureaucracy to steadily increase rates until the costs are covered AND the revenue stream is massaged to meet expectations?

  8. “Surging pension costs and payments on non-transportation borrowing consume almost one-third of the General Fund, compared with 10 percent two decades ago”

    Pension Armageddon will be an eventual problem that could someday yield very large-scale societal problems. Not that I personally resent it, but it’s quite clear that public sector pensions have balooned beyond reason in recent times, massively surpassing retirement savings one can expect in comparable private sector jobs. The entire overtime gambit to jack up pension rates near retirement should be outlawed everywhere. Resetting reasonable expectation on what a taxpayer subsidized pension ought to provide will really generate anger and unrest.

  9. It isn’t possible to make a rational argument for any major transportation initiative(s), with a price-tag target, unless and until there is a validated, long-term, comprehensive plan of economic/social development for the state, in place, that speaks to the need for transportation specifics… Connecticut is directionless and rudderless, in regard to our present and future, statewide economic/social development needs/goals. We cannot speak to transportation needs (beyond very basic maintenance/safety considerations) until we have an economic/social development plan in which to incorporate a transportation-needs plan that serves that larger development plan. Blindly upgrading and expanding transportation options to accommodate unknown, or even presently-problematic development trends (and needs guesses) will result in new development mistakes and exacerbation of old mistakes that will lead Connecticut farther down the road of wasteful transportation/development spending and our present, transit-safety/efficiency nightmare, even as it ensures our economic decline…
    And certainly, imposing tolls on an economically-stressed workforce that is forced to commute, per present, wrong-headed, regionally-prejudiced economic/social-development policy that has thus far caused the state economy near-fatal harm, even as its cities teeter on the brink of collapse because of such policy, is something that is definable as adding insult to injury on the people of Connecticut and that needs to be taken off of the table as a revenue option.
    Those that have benefitted by socially-exclusive environs, and low property-tax rates, need to foot the bill for Connecticut’s emergency transportation-maintenance needs while the state awaits the creation of rational economic/social development policy and planning…
    NO TOLLS!!

  10. Many studies have shown that widening arteries like I-95 does not bring less congestion. Add more lanes and more cars will travel on the road. Does CONN DOT have a public plan for infrastructure improvement that has cost-benefit analyses for each component?
    In reading this article it was not clear which programs would be UNFUNDED to free up funds for immediate infrastructure projects. Can we have some facts?????

  11. There has been no detailed illustration of the projects in order of priority which need attending to, nor the individual costs associated with them. In addition, there should be a comparison of anticipated costs for these projects in comparison with other states’ costs for doing substantially the same work.

    All we’ve heard is that “we need more revenue” and that “transportation infrastructure” is critical for Connecticut’s economy. In the meantime, the New Haven – Springfield line (“critical transportation infrastructure”) has cancelled its morning Hartford to Springfield trains due to lack of ridership.

    The only thing critical for Connecticut’s economy is changing its position from the 50th worst economy in the country in which to do business and it has little to with spending more on roads and everything to do with reducing taxes and mandates.

  12. The people who live in tolled road towns will be paying the tolls and having greater flows of traffic on local roads, while the rest of the towns are unaffected. I am still opposed to the tolls.

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