The General Assembly approved a $7.5 billion two-year bond package late Wednesday that invests nearly $5 billion in transportation, housing, capital projects at public colleges and universities and local school construction.
The Democratic-controlled legislature endorsed the financing in overwhelming bipartisan fashion, with the House of Representatives voting 145-4 and the Senate backing the measure 35-1.
The plan also orders new financing to help local school districts improve air quality, support renovations to the Connecticut Convention and XL centers in Hartford, and to cover added costs involved with dredging New London port to facilitate a wind-to-energy project.
And the new bond package also stands out because of some previously approved bonding that was removed.
Legislators and Gov. Ned Lamont agreed to scrap plans to borrow $50 million annually in each of the new two years for the ‘Baby Bonds’ program — but the initiative itself will go forward, tapping resources other than state financing.
“The bonding projects in this, in many ways, are the lifeline of the state,” said Senate President Pro Tem Martin M. Looney, D-New Haven, who noted the state financing not only supports core programs in state government but also assists municipalities, nonprofit social service agencies and many local civic programs across the state.
The state’s bonding practices have been a source of friction in recent years between the parties — and between Lamont and the legislature. But Rep. Holly Cheeseman of East Lyme, ranking House Republican on the Finance, Revenue and Bonding Committee, said a few things were different this year.
Not only did Democrats work closely with Republicans to develop a bipartisan plan, but bipartisan efforts to build the state’s rainy day fund and make billions in supplemental payments against pension debt have left many feeling better, she said.
“Having the state in the kind of fiscal condition it is,” Cheeseman added, “I think creates a different mindset.”
Rebuilding Connecticut’s aging highways, bridges and rail lines again consumes a major portion of the state’s credit card. Lawmakers authorized nearly $1.6 billion in transportation bonding for the fiscal year that begins July 1 and another $1.5 billion in 2024-25.
And while capital projects consume the bulk of those funds, the package also includes $40 million over the next two fiscal years for various highway improvements to discourage wrong-way driving.
Legislators set aside $250 million in 2024-25 for the state’s municipal school construction program and added $150 million in each of the next two fiscal years to help communities to improve air quality in schools.
More than $300 million in bonding was approved over the coming biennium for the University of Connecticut and more than $310 million for the regional state universities and community colleges.
The UConn bonding includes $30 million for a new nursing program facility and $5 million to develop space in the XL Center in Hartford for instruction to complement the university’s nearby Hartford branch campus.
Another $15 million in the bond package would support renovations to the XL Center, while $34 million over two years would finance upgrades to the Connecticut Convention Center and to Rentschler Field in East Hartford.
Lawmakers endorse Lamont plan to expand housing, encourage ownership
Housing initiatives also dominated the bond package, securing almost $1 billion in financing.
Most of those earmarks, about $810 million over two years, were tied to the governor’s sweeping plan to expand affordable housing, encourage home ownership and boost new residential construction
The largest chunk of the money — $400 million — is for the state’s Housing Trust Fund over the next two years. The fund offers gap financing and loans to create more housing for people with low to moderate incomes as well as preserve and rehabilitate existing housing. The package includes $200 million for a flexible housing program.
Other bonding for housing includes $50 million for the Housing Receivership Fund so the state can take control of and repair large apartment complexes with serious code violations. It also adds $150 million to the Time to Own program, which encourages homeownership.
The bonding package has $125 million over two years for retrofitting multifamily housing in environmental justice communities, a measure that was initially included in the Senate Democrats’ housing priority bill. Such communities are low-income neighborhoods, often composed predominantly of people of color, who face a significant number of environmental hazards.
‘Baby Bonds’ still moving forward — but without the borrowing
The previously authorized financing for the Baby Bonds program was removed as part of a compromise brokered by state Treasurer Erick Russell and endorsed by Lamont and legislative leaders.
The deal, reached in mid-May, still has Connecticut investing $600 million over the next 12 years in the economic futures of children in poverty.
Connecticut will deposit $3,200 into trust for every child born after July 1 and covered by HUSKY, the state’s Medicaid program
Those deposits — expected to be made on behalf of 15,000 or more children annually — would grow over the course of their youth and early adulthood. Recipients still living in Connecticut could tap these resources between the ages of 18 and 30, to buy a home, pay for college or invest in a business.
But rather than borrowing $50 million annually between 2023 and 2034 to support these investments, Connecticut instead will tap a special $393 million reserve fund it set up four years ago as part of a complicated plan to refinance the pension fund for municipal teachers.
The state’s short-term fiscal position has changed drastically since 2019 —with a record-setting $3.3 billion in the rainy day fund, another $2.95 billions surplus projected for the fiscal year that ends June 30, and $5.8 billion in supplemental payments made into all pension funds.
Given that track record, Russell said, the $393 million reserve — set up to guarantee pension contributions would be made on time — can be replaced with a special insurance policy expected to cost about $12 million.
That leaves about $381 million the state then could invest. The projected earnings over the next 12 years, coupled with the principal, would be more than enough to cover $600 million in investments for poor children over the next 12 years, according to the treasurer.