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CT Construction Digest Monday February 24, 2020

With CT tolls debate on ice, fiscal issues loom large

Connecticut’s tolls debate may be over for now, but that lull only means Gov. Ned Lamont and legislators now must resolve a daunting list of fiscal challenges left in its wake.
Absent toll receipts from large trucks, what other measures will be needed to keep the transportation program solvent for the rest of the decade?
Will Lamont, who eased his proposed debt diet to win support for tolls, again try to tighten the purse strings? 
And will lawmakers respond by again attempting to seize control of Connecticut’s credit card?
“I’ve lost patience,” the governor said last week as he announced the tolls bill had fallen into political limbo. “We’re going to fix our transportation plan, and we’re ready to work with anybody who has a constructive alternative.”
Fixing the Special Transportation Fund
What does that mean?
For the short term, the governor said, it involves shifting priorities.
On paper, the budget’s Special Transportation Fund — which repays the borrowing that sustains highway, bridge and rail upgrades —  is in fine shape, projected to run modest surpluses through 2024.But appearances can be deceiving.
Those numbers only hold up if Connecticut keeps fixing infrastructure at its current pace that barely maintains a state of good repair — and leaves very little for strategic projects that enhance traffic flow.
The transportation fund currently supports roughly $800 million per year in state borrowing, which in turns leverages about $750 million in matching federal grants.
But DOT officials say as aging, overcrowded highways and bridges demand more costly repairs, $1.5 billion-to-$1.6 billion won’t get the job done, and something closer to $2 billion per year will be needed.
Based on that assumption, the transportation fund hits insolvency around 2025 or 2026.
As a stop-gap measure, Lamont said he favors taking about $200 million in borrowing supported by the budget’s General Fund — borrowing currently used to support school construction, conservation efforts, state building maintenance and economic development — and shifting that to transportation.
‘I hate to do it this way’
“I hate to do it this way,” Lamont said. “It’s bonding in place of other things that are priorities, but right now there’s no other option on the table.”
But another $200 million per year isn’t a long-term fix. It only postpones insolvency for a few more years, administration officials say.
Truck toll receipts would have added $150 million-to-$200 million per year.
Equally important, they would have helped Connecticut qualify for low-interest federal transportation loans.
This means Connecticut could have borrowed significantly more for infrastructure repairs.
If legislators won’t consider tolls, they could consider raising fuel taxes for the first time in seven years.
But Connecticut has two taxes that impact the price of gasoline — not to mention one of the highest fuel tax burdens in the nation.
When distributors bring fuel to local gas stations, the state applies an 8.1% wholesale tax. [A state-approved surcharge effectively raises the rate to 8.81%.] 
This equates to nearly 15 cents per gallon, based on current wholesale prices, according to the according to the Connecticut Energy Marketers Association. But when oil prices skyrocketed in 2007 and 2008, the tax generated as much as 26 cents per gallon.
Regardless of the amount, gasoline station owners say they build the entire cost into the base price charged motorists, who also face a flat, 25-cents-per-gallon retail tax.The wholesale tax last increased in 2013, following a schedule adopted in 2005. The retail tax last was changed in 2000, when legislators and then-Gov. John G. Rowland lowered it from 32 to 25 cents per gallon.
Neither Lamont nor any legislators have proposed any fuel tax hikes to date this year. The governor often has said tolls and other user fees were more reliable than increasing gasoline taxes, given the increasing fuel efficiency of vehicles.
The two fuel taxes together provide roughly half of the revenue for the $1.73 billion Special Transportation Fund.
Another option to mitigate the absent of toll receipts would be to increase sales tax revenues dedicated to transportation.
The sales tax currently provides about 30% of the STF’s revenues, and legislators passed a bipartisan plan in 2017 to increase that share steadily through the mid-2020s.
Lamont and his fellow Democrats in the legislature voted in June to scale back that increase, and Senate Minority Leader Len Fasano, R-North Haven, said officials should not deviate from that schedule any further.
More importantly, the tolls-centered transportation plan Lamont supports also was counting on sales tax transfers to the STF to ramp up again in 2022, jumping by more than $180 million that year.
In other words, maintaining that transfer plan wouldn’t push off the projected insolvency of the transportation fund. It just would stop it from happening even sooner.
‘Debt diet’ debate is far from overAnd there’s also no guarantee legislators will accept the governor’s proposal to redirect $200 million in bonding away from non-transportation projects and into highways, bridges and rail lines.
Connecticut has one of the highest debt burdens, per capita, of any state, prompting Lamont 13 months ago to propose a “debt diet.”
The governor relented two weeks ago, proposing $1.77 billion in new general obligation bonding for this fiscal year — borrowing to bevrepaid out of the budget’s General Fund and not the STF.
That was more than $400 million beyond what the governor wanted, much of its focused on economic development priorities of Democratic legislators. And administration officials made it clear this was an olive branch to build support for tolls.
Now that tolls are on hold, sources say the “debt diet” is back in play.
Sen. John Fonfara, D-Hartford, co-chairman of the Finance, Revenue and Bonding Committee, said he hopes the administration’s bonding proposal from two weeks ago is still on the table.
“I take the administration at its word,” the Hartford lawmaker said. “I thought those decisions were based in good [borrowing] policy.”
Fonfara, who says bonding is a key tool for economic development and to help poor communities in lean fiscal times,  introduced a bill last year that would have wrested control of the State Bond Commission from the Executive Branch and given it to the legislature. 
 It sailed through the finance committee, but legislative leaders then tabled it and instead tried to negotiate a middle ground with Lamont.But if the bonding debate gets heated, the Democratic governor may have allies on the other side of the aisle.
Senate and House Republicans have argued for the past decade that state borrowing is too high, and Fasano warned last fall that if Democrats sent a bloated borrowing plan to Lamont — and if the governor vetoed it — Senate Republicans would not support an override.
“I would still hold to that position,” Fasano said. Democrats lack the two-thirds’ majority needed to override a veto by themselves.
“I think the Republicans recognize we have to prioritize and keep borrowing within our limits, keep it as lean as possible,” added Rep. Chris Davis of Ellington, ranking House Republican on the finance committee.
The battle over the state’s credit card also extends to borrowing for school construction. And sources said another dispute between Lamont and legislators — which was put on hold during the tolls debate — is now coming to the forefront.
Who controls borrowing for school construction?
Legislators from both parties balked last November when the administration unilaterally moved the Office of School Construction Grants and Review  — which annually oversees hundreds of millions of dollars in construction grants to school districts — from the Department of Administrative Services and into the Office of Policy and Management. A high-profile agency that houses the governor’s budget staff, OPM is seen as closely involved with implementing the administration’s political agenda.
Critics said the move threatens a process that not only works well, but has traditionally been immune from politics.
“This reeks of politics,” Deputy House Minority Leader Vincent J. Candelora, R-North Branford, said at the time. “There is not a good reason to make this move.”Administration officials said the move only was about increasing efficiency, but conceded it would require legislative approval, and submitted a bill this month to retroactively endorse the switch.
But the legislature’s Education Committee raised a bill this week to block it. Though full language hasn’t been drafted, the bill’s title starts with  “An Act Prohibiting the Transfer of School Construction from DAS to OPM.”
This consternation surrounding the transfer comes at a time when the flow of money funding new school construction projects or major renovations has been significantly scaled back in recent years. The administration has insisted that this is the result of making sure that only projects that are close to being shovel-ready are brought before the legislature for approval, and eventually by the State Bond Commission.
But Kostantinos Diamantis — who heads the school construction unit — told the Education Committee that the downturn is going to continue because of a “self-imposed cap” of about $400 million in grants per year.

Dan Haar: With tolls plan shelved, Lamont frees up delayed town aid
Dan Haar
Another piece of the tolls meltdown story fell into place Friday afternoon as Gov. Ned Lamont publicly instructed his budget chief to draw up a municipal aid bond package worth $625 million, no later than March 6.
That means finally, after waiting for their money since July 1, cities and towns no longer have to watch the train wreck of a tolls debate unfold with their money for local roads, school contruction and other infrastructure projects hanging in the balance.It appears that Friday’s happy news for the towns stemmed from a lunch event in Southington Wednesday — the same afternoon when Lamont angrily pulled the plug on the troubled plan to toll heavy trucks. Without tolls, Lamont has said all along, the state will have to borrow an extra $200 million a year for state bridge and highway work. That left a lot of bonding projects — and town aid — swinging in the wind.
The governor put off the towns’ howls as long as he could, all the while promising they’d be made whole. It now appears that the $150 million in town road aid and local capital improvement grants will be on a State Bond Commission agenda in early March, if the legislature approves the request as expected.
Another $475 million in school construction money — less than the typical annual amount because the needs are less — is also headed for final approval. All of it would come barely in time for the towns to gather bids for the upcoming build-it and pave-it season.
Some have waited patiently with understanding, others with anger and frustration. Many of them gathered at the Aqua Turf in Southington for the annual meeting of the Connecticut Council of Small Towns.
And who came to that annual meeting as the lunch speaker to face those local folks? Yes, it was Lamont.
The governor wasn’t crushed by an angry mob, Betsy Gara, executive director of the council, told me Friday.
“They just pointed out that these were the projects that were being held up and how important it was for these projects to move forward,” she said. “It does seem as though he heard us.”
Loudly. By no coincidence, less than two hours after he returned to the Capitol, Lamont summoned reporters to his office to announce enough was enough.
At least one key senator needed for the 18-vote total was wavering that afternoon. And the House and Senate continued to bicker about who would have to vote first, and whether they could split the tolls bill in two, like King Solomon’s baby.
Friday’s announcement freeing up the town money was Lamont’s way of telling the towns he’s on their side even as the lawmakers they sent to Hartford put their money in harm’s way. He could have done this earlier, but it was part of his leverage to prod a vote on tolls. “We are now eight months into the fiscal year without solutions to our transportation needs and a bond package. No longer can our cities and towns wait,” Lamont said in a letter Friday afternoon to Melissa McCaw, his budget chief.
Later Friday, McCaw, secretary of the Office of Policy and Management, released a proposed bill and letters to legislators saying she hopes to schedule a bond commission meeting by March 18.
The fight now is over whether Lamont will keep non-transportation bonding at $1.7 billion, or lop off $200 million to feed transportation in the absence of tolls, as he indicated he would do Wednesday. Even the $1.7 billion was a compromise, more than Lamont wanted to commit but less than former Gov. Dannel P. Malloy’s average of just over $2 billion.
Democrats and some Republicans have pressured Lamont to ease up on his so-called debt diet, and free up more money for the projects they want to tout in their re-election campaigns.
You know, a park here, a refurbished train station there, a job training program over yonder, maybe some strategically placed housing money for a city. It’s the grease of politics in more ways than one as we the people spend, and maybe benefit.
Those battles will have to wait for another day. For now, the town aid that was tied to tolls for the better part of a year is seemingly in the clear — probably due to Lamont’s midday trip to Southington.
“This is huge for towns. It’s a wonderful way to usher in the spring,” said Gara, who didn’t speculate on Lamont’s motives in the tolls issue.
In a press release minutes later, she added, “Towns are now breathing a huge sigh of relief because funding will be available soon so that towns can go out to bid.”
That’s the operations part of the story — they could wait no more. The political part is that a governor who has failed to see his signature policy enacted is learning that in fractured, little Connecticut, a direct hand to towns is almost as important as a strong arm over lawmakers.

DEEP: No plans for new boat launch at Haddam state park
Cassandra Day
HADDAM — Boaters nurturing hopes for a second launch at Eagle Landing State Park on the banks of the Connecticut River near the East Haddam Swing Bridge may be disappointed to learn the state says it’s not happening any time soon.
There’s also increasing concern among boaters who put their crafts in at Haddam Meadows, on Route 154 / Saybrook Road that the ramp leading to the water is filling in, as the extensive sandbar pushes south toward the shoreline.
“While some routine maintenance to address the issues associated with the expanding sandbar area may be considered over the next year or so, there is no plan for major rehabilitation of the launch at Haddam Meadows or a second boat launch at that site,” according to state Department of Energy and Environmental Protection Communications Director Kristina Rozek.

“Every once in a while, this rumor pops up, and people call and they talk about it, but I don’t where it’s coming from,” said Capt. Mark Yuknat, who co-owns Haddam-based Connecticut River Expeditions with his wife Mindy. He pilots the eco-tour vessel RiverQuest.
“Sometimes it comes up to the forefront a little bit, then it gets knocked down again,” he said.
Yukmat said the area gets crowded once boating season gets underway.
Many walk out on the sandbar to dip their toes into the water, enjoy refreshments, and take in the view with family and friends under the warm sun from summer to fall. The shoal is growing mostly toward Haddam Island State Park, he said.
Years ago, the DEEP purchased Eagle Landing “with an eye toward potentially using part of it as a boat launching facility, but, at this time, there have been no plans to conduct any improvements that would include a boat launch,” Rozek said.
Eagle Landing is named for America’s national bird, which gather in the area during the winter. It features 16 acres of Connecticut River frontage, and a dock that hosts scenic and bird watching tours, according to the DEEP.
Yuknak is very familiar with the area.
“My big concern about Eagle Landing is the traffic issue: trying to get good-sized boats and trailers out of there with the bridge traffic that stops a lot when the bridge opens up. Then you have a train crossing right there and a busy store (Goodspeed’s Station Country Store) right across the street,” the captain said. “In my opinion, it would be a whole lot cheaper just to occasionally dredge that out right near the launch area than it would be to build an entirely new one in a different park,” Yukmat added.
For information, visit the DEEP site at ct.gov/deep

Developer eyes second project attempt on fiercely guarded Avon golf course land
Matt Pilon
IMBYism runs rampant in some Connecticut communities, but a well-organized Avon citizen group with deeper-than-average pockets has taken the “not-in-my-backyard” approach to a new level and notched several recent victories.
However, the biggest test yet may be ahead for the activist organization, called Save Nod Road, whose opposition helped block a major single-family housing development and more recently, a senior-living facility along the bucolic two-lane road for which the group is named.
Simsbury developer Anthony Giorgio, whose plans to build 95 upscale single-family homes on a portion of Blue Fox Run golf course were dashed by stiff local opposition and a zone-change denial last September, says he’s plotting a comeback.
Giorgio, managing director of The Keystone Companies LLC, told HBJ he is negotiating the purchase of 52 acres from Blue Fox Run, a deal he hopes to close by April.
He’s keeping his options close to the vest for now. However, he’s not planning another large-scale, single-family home development.
“Obviously we can’t go down that path again,” Giorgio said. “I’m not going to go into that quagmire.”
Another option Giorgio was considering until recently was a retirement community. However, another developer’s plan to build age-restricted, 55-plus condos just down the road from the golf course also faced local resistance.
Nebraska-based developer Cameron General Contractors recently floated the age-restricted housing plan but ultimately abandoned the site, following a cool reception from some planning board members who felt the project would be too dense. A preliminary project meeting last fall was also attended by dozens of Save Nod Road members, signaling a difficult fight ahead for the project, said David Richman, a Save Nod Road board member.
A Cameron official confirmed the firm is pursuing other sites in town for its 55-plus development, but declined to comment on its reasoning for shelving the Nod Road location.
Giorgio is a longtime developer whose resume includes the $40-million Dorset Crossing mixed-use project in Avon, Stonebridge Estate luxury condos in West Hartford, and manufacturing and bioscience facilities in Pennsylvania, Florida and elsewhere.
He said Save Nod Road members are likely to oppose whatever he ultimately pitches, but he also isn’t willing to give up on his hopes for Blue Fox Run.
”We do believe that it’s a very good piece of developable property and we’ve invested a lot of money in it already,” he said. “I think there’s always an opportunity to do something. It’s a question of how it’s packaged and how it’s presented.”
Save Nod Road is a bit more official than loosely organized groups that crop up in many towns to oppose a particular project.
It won nonprofit status in 2018, and since then, Save Nod Road Preservation Inc. has raised approximately $100,000, according to president Chris Carville, who owns the Pickin’ Patch, a 353-year-old farm on Nod Road that’s among the oldest in the state.
It used some of that money to hire attorneys and other experts during the fight against Giorgio’s housing proposal, Richman said.
The nonprofit’s mission is to promote and expand permanent land preservation and responsible land management and protect wildlife in the Farmington Valley.
Another major concern the group has is traffic.
Richman, the Save Nod Road board member, moved to a condo community located just off Nod Road a few years ago.
Since then, he said he has seen traffic backups grow at both ends of the long thoroughfare, which drivers use to cut between Routes 10 and 44.
“The area as a whole cannot absorb any more traffic,” Richman said.
Richman, a commercial real estate investor-landlord and health insurance benefits broker by trade, said he sees no irony in his opposition to development on his street, which many would characterize as NIMBYism.
“I’m pro development,” he insisted. “It’s about smart development and it’s also about where it is.”

Reluctance to vote on controversial issue and mistrust among Democrats sank Gov. Ned Lamont’s toll plan

A reluctance to vote on a controversial issue in an election year and mistrust among Democratic legislators ultimately helped sink Gov. Ned Lamont’s signature issue of electronic highway tolls.The grassroots organization No Tolls CT drummed up opposition around the state as legislators rejected Lamont’s first plan for tolls on all vehicles and then more recently failed take up a revised proposal for truck-only tolls on 12 bridges across the state.No Tolls CT did not provide any detailed alternatives to solving the state’s transportation infrastructure problems and instead simply focused on stopping tolls in an ultimately winning strategy.“All they said was no, no, no," Lamont said Wednesday, when he told reporters he was ending his ending his efforts to push for tolls. "So that plays right into a building that is happy to do nothing.”While Lamont has come to personify the issue, there is plenty of blame going around at the state Capitol as top Democratic leaders were unable to cobble together the votes and deliver on tolls to help fund a 10-year, $19.1 billion plan to fix the state’s aging transportation infrastructure.“I think we all failed,” said House Speaker Joe Aresimowicz, who outside of the Capitol is the Berlin High School football coach. “I’m a grown man. I look at my football kids, and I say, ‘When you mess up, you say what you did wrong. When you fail, you failed.' We all failed, and we’re going to try to get it better the next time. ... We have bridges in failing conditions. We have roads that need repairs, and we have to find a way to pay for it.”Despite public assurances from Democratic leaders, rank-and-file legislators in the House and Senate did not believe that lawmakers in the other chamber had the votes needed to pass Lamont’s truck-only toll bill. As a result, neither chamber would commit to voting on the bill first, fearing it would not pass in the other chamber and they would be on the record, in an election year, for having voting for tolls even though the bill ultimately failed.That lack of trust set off highly unusual scenarios calling for debating the bill simultaneously — like two scared friends holding hands when they jump together into a pool. Democrats also considered splitting Lamont’s proposed 12 overhead toll gantries into two bills — with six gantries in each bill — in a scenario that would force legislators to vote twice. Senate President Pro Tem Martin Looney of New Haven told reporters he had even proposed a coin flip to determine which chamber would debate the issue first. He said House Democrats declined.Lamont, a lifelong business executive who never served in the Capitol before becoming governor, deferred to legislative leaders as they tried to find a way to vote on the bill that was palpable to their members.“I thought it was a little weird, but I didn’t care because they were going to vote,” Lamont said. “You can vote simultaneously. You can vote one after the other. You can vote six here and six there. What do I care? Vote. Make up your mind.”But in the end, the legislature never voted.Both Republicans and Democrats had predicted that the chances for tolls would decrease sharply if the vote was pushed into the 2020 election year. Proponents had been seeking a vote before the regular legislative session started on Feb. 5, but that was delayed once again.Patrick Sasser, the founder and leading spirit behind No Tolls CT, repeated the group’s mantra of “vote for tolls, lose at the polls.” While some lawmakers dismissed that slogan, others took it seriously as they said they did not want to face the political wrath of their constituents.Wheeling and dealing
State Rep. Josh Elliott, D-Hamden, said tolls might have been approved if Lamont had done more horse-trading behind the scenes to sweeten the pot for legislators and close the deal.“One of the things that [former Gov. Dannel P.] Malloy was good at was using the power of the Bond Commission to get votes,” he said. “I think that Ned has taken that tool away from himself by saying the state is on a debt diet" to reduce borrowing.“He changes the whole dynamic if he can cut deals,” Elliott said. “That sort of granular tactic never happened, as far as I can tell. If you want to get these deals done, you have to do everything in your power.”Lamont, however, rejected the idea that more wheeling and dealing by him would have made a difference.“No, we had the numbers,” Lamont said. “We were ready to vote. The House was ready to vote on Thursday. The Senate wanted more time, and I just figured we’d been asking for more time every week for the last 50 weeks. So I thought it was time to take a pause on this.”House Republican leader Themis Klarides, who along with the rest of her caucus opposes tolls, said the issue was doomed because of the ongoing mistrust between House and Senate Democrats.“If they don’t trust each other, how do they expect the people of Connecticut to trust them?” she asked.Senate Democrats repeatedly said they could produce 18 votes in favor of truck-only tolls, resulting in a tie in the 36-member chamber that would be broken by Democratic Lt. Gov. Susan Bysiewicz.“But I think even with those 18, there was one or two that were very squishy on it,” Klarides said. “In the House, that vote was very, very close, and you had more people that were squishy on it and had serious concerns.”Moving forward on transportation
While anti-toll activists were delighted at the bill’s failure, others were concerned about where the state goes next. Sen. Alex Bergstein, a supporter of tolls from Greenwich, criticized her fellow Democratic senators for supporting a watered-down plan with 12 gantries for trucks only, rather than a larger plan that would have included cars and generated far more money for the state.“If Democratic senators were willing to vote on that wimpy toll plan [for trucks only], they should have been willing to vote on a real toll plan,” Bergstein said. “And if they weren’t willing to vote for any toll plan, then the public deserves to know where they stand — with an actual public vote.”Despite the defeat on tolls, Lamont has pledged to move forward with his 10-year transportation plan, relying on increased borrowing ($200 million a year in place of other projects) to make up for the lack of toll revenue.“I was elected to this job to fix problems,” Lamont said. "I’ve got a legislature that doesn’t want to make a choice when it deals with a problem that we’ve had confronting this state for going well over a generation, and that’s our deteriorating roads and bridges and rail.“We’re going to keep going with our transportation plan. We’re not raising the money in the most optimum way. Obviously, out-of-state tractor trailers was much better than bonding on the backs of the taxpayers.”