Sen. Cathy Osten of Sprague and Rep. Toni Walker of New Haven, Democratic leaders of the Appropriations Committee. Keith M. Phaneuf / CTMirror.org

The General Assembly’s budget-writing panel is pushing back against Gov. Ned Lamont to assume greater control over contracting policies.

The Appropriations Committee raised legislation Friday that potentially would shield the state’s contracting watchdog board from job freezes, emergency budget cuts and other budget-management techniques at the governor’s disposal.

The panel’s Senate chairwoman announced the group also is developing clarifying language to ensure all policies tied to the state’s massive school construction program are set only by the legislature. 

The Lamont administration has been on the defensive over the past month following reports that the FBI is investigating school construction work and other projects overseen by the governor’s former deputy budget director, Kosta Diamantis.

[The Kosta Diamantis timeline]

“The legislature decides what school construction [grants] cover,” said Sen. Cathy Osten, D-Sprague, co-chairwoman of the budget-writing committee.

Diamantis frustrated municipal leaders last August when he informed Coventry officials that the state wouldn’t help to pay to upgrade aging ventilators in its middle and high schools — an expensive proposition, made more pressing by the continued presence of the coronavirus.

Connecticut currently reimburses communities for between 10% and 71% of new construction and wide-scale renovation projects designed to last 20 years or longer, depending largely upon a community’s wealth.

But if a district wants to perform a smaller project — such as replacing or upgrading a heating/ventilation system exclusive of a major facility renovation — the entire cost is borne locally.

Some legislators have questioned whether this is backed by statute or was simply an administrative decision.

Osten and the other Appropriations Committee co-chairwoman, Rep. Toni E. Walker, D-New Haven, said the goal going forward is to ensure such policy parameters are set by the legislature.

“I think there are more districts that wanted to do HVAC [upgrades] and were told not to,” Walker said, adding she believes most lawmakers from both parties want the state to help pay to fix this problem.

Lamont proposed in early February dedicating $90 million in the next fiscal year to help towns pay for air quality upgrades in schools.

A second component to the bill being developed by the Appropriations Committee would clarify — once and for all — that the school construction would remain in the Department of Administrative Services and not in the governor’s budget office.

Several legislators from both parties raised concerns in the spring of 2019 when Lamont’s then-budget director, Melissa McCaw, unilaterally transferred Diamantis and other staff tied to school construction from DAS into the Office of Policy and Management, despite an existing statute assigning the unit to DAS.

McCaw resigned Friday to take a post as East Hartford’ finance director.

Administrative officials said the matter would be clarified in the 2020 General Assembly session, but that was cut short in early March when the coronavirus struck Connecticut. And no legislation, retroactively blessing or reversing the move, was adopted in 2021.

The Lamont administration moved the school construction program back to DAS last fall, shortly after Diamantis resigned.

“We have no intention of moving the [school construction] office” again, Chris McClure, spokesman for the governor’s budget agency, said Friday.

And in a complementary move, the Appropriations Committee raised a bill Friday designed to insulate the State Contracting Standards Board from normal oversight by the governor’s office.

Osten said the insulation could take one of several forms.

Lawmakers are researching whether the contracting watchdog, created by the legislature in 2007 but never properly funded, could be moved from the Executive Branch to the Legislative Branch — and still maintain its authority to review and potentially suspend procurement and bidding practices of Executive Branch agencies.

Osten said legislative attorneys have raised concerns that empowering a Legislative agency to oversee Executive Branch departments could run afoul of the state Constitution. But if that is the case, there are other options to safeguard the contracting board.

The legislature already exempts other watchdog agencies in the Executive Branch — such as the Freedom of Information Commission and the Office of State Ethics — from certain budgetary restrictions that the governor can impose on other departments. 

Osten said the bill could bar the administration, for example, from imposing any hiring freeze on contracting board staff or imposing emergency midyear budget cuts.

The contracting board and Lamont have bumped heads since the latter took office in 2019. The board — which has only one paid staffer — has been probing contracts involving the development of the State Pier in New London to help support a major offshore wind-to-energy project.

It particularly is concerned with more than $520,000 in “success fees” paid in 2018 to Seabury Capital Group to help with search for a pier operator. This happened three months after Henry Juan III of Greenwich, who was a managing director with Seabury, resigned from the port authority’s governing board.

The two-year budget that legislators and Lamont adopted last June technically included just under $700,000 per year for the contracting standards board — the same level the board was supposed to have when it was launched 14 years ago. That included $450,000 in each year to fund five additional positions.

But shortly after that was passed, legislative leaders, at the request of the Lamont administration, included a provision in a subsequent budget policy bill that barred the board from spending $450,000 of its annual allotment.

Lamont still doesn’t want to fund more positions for the contracting office. He has said he doesn’t believe the board is necessary and performs functions already provided by other state agencies.

Instead, he recommended this February that lawmakers add three new staffers to another watchdog agency, the Auditors of Public Accounts Office, and allow the contracting board to refer matters to that unit.

“We look forward to working with the General Assembly over the course of the session on this issue,” McClure said, adding that “there seems to be some confusion regarding our proposal.”

Appropriations Committee leaders want full funding restored to the contracting board.

“There has got to be more than one watchdog agency out there,” Walker said, adding that the contracting board needs to look at “all of the no-bid contracts going out” of state agencies. “That’s the kind of transparency everybody should be striving for.”

House Republicans called this week for an investigation of all administration contracting practices.

Minority Leader Vincent J. Candelora, R-North Branford, said Friday that while the appropriations panel measures may have merit, they aren’t enough.

The issue isn’t about one state pier project or a handful of school renovations, Candelora said.

Only a detailed investigation, he added, can assess not only how public agencies purchase private services and goods but also the inter-departmental “memorandums of understanding” they sign, such as one that shifted a school construction program handling hundreds of millions of dollars annually without legislative permission.

“Why did they happen?” Candelora said. “How did they happen? … The issue isn’t just school construction.”

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.