While the coronavirus dominated summer headlines, Connecticut’s five-year effort to accelerate the transportation rebuilding program slowed to a stroll on July 1.
A risky initiative to force tolls — by borrowing and spending billions of extra dollars on new projects between 2016 and 2020 — concluded July 1, without those controversial fees or any other plan to pay for all of it.
Now Connecticut is left with a $2.8 billion bill, a cash-starved Special Transportation Fund headed toward insolvency, and a construction industry poised to shrink even as the state struggles with unprecedented unemployment.
Unless Gov. Ned Lamont and the legislature order more revenue for transportation — a risky proposition as they near a new state election cycle — construction and labor leaders say Connecticut’s aging and congested highways, bridges and rail lines are at risk of further deterioration.
And the administration already has begun to delay transfers of funds to the transportation building program, something advocates say will only postpone projects.
“Once we get out to the next several years, nothing is [fully] funded,” said Nate Brown, vice president of the Connecticut State Building Trades Council. “It’s a construction industry issue statewide, and the men and women who rely on that as a living could have some really severe consequences going forward.”
“It’s going to significantly hamper the state’s ability to make any progress at all,” Don Shubert, president of the Connecticut Construction Industry Association, warning that construction contractors and workers could soon migrate to other states to find employment. “The construction industry pulls back as soon as it recognizes uncertainty. Drastic cuts like this cause deep adjustments in the industry.”
Now, faced with the overlapping problems of more debt to pay off, more infrastructure needs, the lack of a new revenue source and less of an appetite to borrow, the state’s transportation funding situation is dire. There are not many ways out of the jam.
State funding for highway, bridge repairs plummets
These “drastic cuts” center around slightly more than $900 million Connecticut is expected to borrow this year for transportation work.
That’s down a whopping $711 million, or 44%, from last year, the final stage of the five-year “ramp-up” launched in 2015 under then-Gov. Dannel P. Malloy.
Transportation borrowing, which enables Connecticut to qualify for federal construction grants, is paid for by the Special Transportation Fund — which is supported largely with two fuel taxes and a share of sales tax receipts.
Last year, Connecticut funneled nearly $2.5 billion into its capital program, chiefly through state borrowing and federal grants. This year, the projected total is $1.64 billion.
Further complicating matters, the state saved $74 million this fiscal year by waiting longer to borrow funds for infrastructure work.
Making the DOT wait longer for less money helps keep borrowing costs down as the bill for the “ramp-up” comes due. But it also will slow infrastructure repairs, Shubert and Brown noted — an odd prospect given that Malloy, Lamont and other leaders have warned constantly that the rebuilding was proceeding too slowly and barely maintaining a state of good repair.
“The key to an efficient transportation program is long-term, dedicated, dependable funding,” Shubert said. “As soon as you break from that, it affects the DOT’s ability to plan and deliver projects immensely.”
Bonding backlog explodes over the past decade, costing tens of thousands of jobs
Delays in transportation funding are nothing new in Connecticut.
When Malloy took office in 2011, the state had $1.7 billion in approved financing for transportation, but it hadn’t actually borrowed the money — partly because it couldn’t afford to make the debt payments on it.
By the time Lamont succeeded Malloy in 2019, the amount approved but not borrowed was up to $3.8 billion.
The bonding backlog now stands just shy of $4.4 billion.
Every $1 billion in stalled bonding translates into 10,000 construction and related jobs that could have been created, said Fred V. Carstensen, who heads the University of Connecticut’s economic think-tank.
“Clearly one of the things that is hamstringing the state’s economy is that we have bad infrastructure,” he said. “Now you’re putting austerity on top of that?”
But things weren’t supposed to be like this. Malloy’s “ramp up” was never supposed to ramp down.
To cover part of the ramp-up’s debt costs, Malloy and legislators dedicated more sales tax revenues to transportation — just not enough to cover the whole bill.
But the linchpin of Malloy’s “Let’s GO CT!” plan was that by 2020, state officials would have embraced tolls — or some other new funding source. With that money, Connecticut not only could have maintained the accelerated pace of repairs but enhanced it further.
The governor formed a study panel to spend a year figuring out how to cover the long-term costs. Meanwhile, the ramp-up went forward while the administration dreamed big.
Under Malloy, the DOT established a “vision level” annual investment in infrastructure of $3.2 billion per year, enough to maintain safety and make various strategic improvements to relieve congestion.
Technically, the study panel offered both tolls and gasoline tax hikes as options to pay for the borrowing but spent the majority of its January 2016 report pitching tolls as the best solution.
But Malloy’s popularity — which was never overwhelming — plummeted after he approved his second major state tax increase in June 2015.
CT spent more on transportation but wouldn’t adopt tolls to pay for it
By January 2016, faced with the prospect of backing tolls and slipping further in the eyes of voters, Malloy said he would support no new funding source until legislators endorsed a state constitutional amendment to create a legal “lockbox” to prevent transportation-related revenues from being spent on other programs.
By the time voters ratified that amendment in November 2018 by an 8-1 margin, Malloy was a lame duck in the final two months of his tenure, and the tolls question would have to wait.
Lamont, who took office the following January, proposed tolling all vehicles in his first year and modified the pitch to involve trucks only in his second. Legislators declined to act on either, fearing a voter backlash.
But Connecticut’s bonded debt doesn’t care about the polls.
Projections from Lamont’s budget office show debt costs in the Special Transportation Fund jumping 23% in the next two-year state budget and by 40% over the next four years.
The STF is running $61 million in deficit this fiscal year, and the administration says, at this pace, it will have exhausted its meager reserves and reached insolvency by late 2024.
But between now and then, two things will happen: Lamont and legislators must adopt a new, two-year state budget this spring — which could fix the transportation fund. And there’s also a statewide election in 2022.
Lamont, who hasn’t ruled out running again, already has said he won’t propose tolls a third time.
When asked whether he would ask legislators to increase gasoline taxes or raise some other form of new revenue for transportation this year, Lamont said he’s hopeful President-elect Joe Biden’s new administration will increase federal aid in this area. But the governor also has acknowledged that won’t solve all of Connecticut’s problems in the long term.
“The legislature didn’t want to make a hard decision,” Lamont added. “My job this year is to give them some other ideas that would make the fund solvent.”
But that could be taken two ways.
It could mean Lamont simply could release updated research, showing how much money various tolling, gasoline tax and other revenue proposals might raise.
Or he could formally endorse one option, such as a gas tax hike, in the two-year budget he will propose to the General Assembly in early February, a move that brings greater political risk.
Patrick Sasser, founder of No Tolls CT, said Lamont and any other state official considering raising gasoline taxes as an alternative to tolls is right to be wary.
“There’s not a doubt in my mind there will be blowback on a gasoline tax hike,” Sasser said, adding motorists haven’t forgotten the more than $1 billion in fuel tax receipts Connecticut spent on non-transportation programs between 2006 and 2014. “Maybe now this is finally the time when the state of Connecticut will truly prioritize” its spending.
Rep. Roland Lemar, D-New Haven, co-chair of the legislature’s Transportation Committee and a supporter of tolls, agreed with Lamont that getting tolls approved this year is unlikely.
But Lemar also said Connecticut cannot afford to simply let its transportation building program slip dramatically, adding that’s a threat not only to highway safety but also to the economy.
According to the Department of Labor, there are more than 180,000 people still collecting weekly unemployment benefits. The state lost about 120,000 jobs during the entire recession that ran from late 2007 through mid-2009.
“I’m open to seeing what the budget proposals are … but I don’t see any way possible that we could cut our way to a positive result,” Lemar added. “We’ve yet to find anyone who’s willing to do the hard thing.”