This story is part of CT Mirror Explains, an ongoing effort to distill our wide-ranging reporting into a "what you need to know" format and provide practical information to our readers.
Editor’s Note: This article is part of CT Mirror’s Spanish-language news coverage developed in partnership with Identidad Latina Multimedia.
For nearly four decades, Connecticut has designated a portion of its annual budget specifically to finance upgrades to its aging transportation infrastructure.
The Special Transportation Fund has evolved over this period, and while it continues to support capital projects it also pays for operating costs for the Departments of Transportation and Motor Vehicles, transit services, and part of the annual contribution to the state employees’ pension fund.
And while fuel taxes were the principal source of revenue for the STF throughout most of its history, sales tax receipts recently have supplanted them — albeit just barely.
Since 2022, the fund has generated large surpluses — even though legislators rejected Gov. Ned Lamont’s proposals in 2019 and 2020 to install electronic tolling on highways, which would have generated hundreds of millions of dollars annually. These surpluses have left some critics calling for cuts to fuel taxes, while others argue the DOT needs to increase production and launch significantly more construction projects than it currently oversees.
Here’s what to know.
What is the Special Transportation Fund?
The Special Transportation Fund, which is projected to spend $2.3 billion this fiscal year, represents nearly 9% of the state’s $26 billion budget.
Lawmakers created it in 1983 following the partial collapse of the Mianus River Bridge on I-95 in Greenwich earlier that year, which killed three people. The fund was designed to intensify the state’s focus on repairing aging transportation infrastructure.
Where does the money in the Special Transportation Fund come from?
Historically, the STF got most of its funds from two fuel taxes.
Motorists are familiar with the 25-cents-per-gallon, retail gasoline tax, which hasn’t changed since the mid-2000s.
Less known is the Petroleum Products Gross Receipts Tax, which charges 8.1% on wholesale transactions involving gasoline and other fuels. Another surcharge effectively raises that tax to 8.81%. But gas station owners have long conceded that they build this expense into the retail price, meaning consumers pay that as well.
This fiscal year, revenue from those taxes is projected to make up almost $864 million, or nearly 37% of the STF’s resources.
But in 2015, the legislature passed a law requiring that a portion of all sales tax receipts go to the STF. Those receipts have surged in recent years, particularly in 2022 when the national inflation rate hit a 40-year high. The sales tax is projected to provide 42% of the revenue for the transportation fund this fiscal year.
The rest of the STF’s revenue comes from a highway mileage tax on most commercial trucks, a DMV license and other fees, and other miscellaneous sources.
What is the money in the Special Transportation Fund used for?
Initially, the fund was used to pay debt service — principal and interest — on the bonds Connecticut sells on Wall Street to finance repairs, improvements and upgrades to highways, bridges and rail lines.
Currently, nearly $1 billion — over 40% — of the STF is used for that purpose.
The fund is now used to finance the operations of Connecticut’s Department of Transportation and Department of Motor Vehicles as well.
Almost $965 million of it covers the day-to-day operations of the DOT, including employee salaries and public transit programs involving bus services and rail lines. Another nearly $77.4 million covers the DMV’s operations, and $263 million pays for DOT and DMV employees’ pensions and other benefits.
How much of a surplus does the Special Transportation Fund currently have?
Despite the many initiatives it pays for, the Special Transportation Fund has generated large surpluses in recent years.
The fund finished the 2021-22 fiscal year with a $157 million or 9% surplus, according to reports from the comptroller’s office. That’s despite a gasoline tax holiday that put hundreds of millions of dollars back in motorists’ pockets.
In 2022-23 the fund ran up a $284 million surplus, equal to 15.5% of the transportation fund. And the Lamont administration estimates the fund closed the last fiscal year on June 30 up $277 million or 13%.
Final numbers for the 2023-24 fiscal year won’t be available until the comptroller’s office completes its audit in September.
What’s generating those surpluses?
The answer, at least in part, lies with the construction program.
For years, the DOT has anticipated borrowing more funds to fix highways, bridges and rail lines than it is ready to spend.
When the state borrows less for construction, it doesn’t have as much to repay out of the Special Transportation Fund.
Legislators have been tracking this issue for more than a decade.
A nonpartisan study delivered to lawmakers in 2010 found the department, facing staffing limitations, was struggling to finish projects on time and under budget.
And according to records from the state treasurer’s office, the more than $6.1 billion in transportation financing approved by the legislature and by the State Bond Commission has yet to be borrowed — presumably because the state isn’t ready to spend the money yet.
That backlog is seven times the total amount of transportation bonding the state issued last fiscal year.
And it’s more than two-and-a-half times the $2.25 billion transportation bonding backlog reported in the fall of 2010, when the General Assembly first began tracking this issue.
Critics fear the STF surpluses will keep growing and have renewed their call for gasoline and other tax cuts. But the Lamont administration insists big unused resources won’t be a problem again because a long-anticipated surge in the rebuilding of Connecticut’s aging infrastructure will take off this fiscal year.