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Industry Battles Cost, Supply, Labor Issues Amid Construction Boom Gains

Lucy Perry

A spring survey of civil contractors found that nearly three quarters of respondents have felt the impact of fluctuations in material costs on their projects in the past six months.

Even more (76 percent) of those contractors expect cost increases in the next half year, according to the survey by Dodge Data in the latest issue of Civil Quarterly.

Dodge chalks up the challenges to the pandemic, the reduction in material backlogs over time and disruptions in material production and distribution.

Of civil contractors who are concerned about cost increases in the next six months, the survey asked which materials they are most concerned about.

"By far, steel is the material most frequently selected by contractors," Civil Quarterly reported. "Nearly half [45 percent] are highly concerned about the possibility of cost increases for steel."

The price of steel was already high after the Trump administration's 25 percent tariff on foreign shipments. Construction rebirth has sent costs soaring.

The survey found there is also concern about the rising cost of pavement, concrete and aggregates as well as lumber and piping.

The National Association of Home Builders (NAHB), tracking lumber prices, noted a jump from $500 per thousand board feet in October to more than $1,100 per in April.

NAHB reported the average price of a new single-family home to increase by more than $24,000 as a result.

Left in the Dust

According to the Associated General Contractors (AGC), at the pandemic's one-year mark, member construction firms were fighting continued project deferrals and cancellations. This in addition to dramatically rising material costs and supply chain headaches, the association reported in March.

AGC pushed for the feds to eliminate materials tariffs, address shipping backups and boost funding for new infrastructure.

"The survey results make it clear that the construction industry faces challenges that threaten to leave many firms and workers behind," said Ken Simonson, chief economist of AGC. "Even as some parts of the economy are recovering or even thriving, the pandemic has left the supply chain for key construction components in tatters and undermined demand for a host of private-sector projects."

He noted that 93 percent of an association survey's respondents report the pandemic has driven up their costs.

Four out of five are spending more on personal protective equipment, sanitizers and other health-related expenses.

More than half say that projects are taking longer than previously.

"Costs and delayed deliveries of materials, parts and supplies are vexing many contractors," said Simonson.

Nearly 85 percent said costs have increased over the past year, and about three-fourths were experiencing project delays and disruptions.

They blame shortages of materials, equipment or parts, and nine out of 10 cite backlogs and shutdowns at domestic producers and fabricators.

The prevalence of those shortages varies by project type.

Approximately six out of 10 building contractors reported shortages of materials, equipment or parts.

Five out of 10 firms doing utility infrastructure or federal and heavy construction and four out of 10 highway contractors saw shortages.

In contrast, approximately one out of three firms reported any cost savings as a result of the pandemic.

Most of those cited reduced travel costs, while only 5 percent cited new or expanded use of jobsite techniques or technologies.

Half of the firms also blame backlogs or shutdowns at foreign producers for backlogs and disruptions.

More than three-fourths report projects canceled or postponed in the past year.

That includes more than one out of five with a 2021 project that has been canceled or postponed.

Only one-fifth of respondents said they have won new projects or add-ons to existing projects as a result of the pandemic.

Approximately a third of firms said business matches or exceeds year-ago levels, while another third said it will take more than six months to reach that mark.

One-fifth of respondents to AGC's survey said they don't know.

Contractors in the northeast are the most pessimistic, followed by firms in the south, reported AGC.

In the midwest, respondents are split along the same lines as the full survey, while respondents in the west are more optimistic, on balance.

"Contractors from all regions, project types and firm sizes are almost equally bullish about their hiring expectations over the next 12 months," reported AGC.

Roughly three out of five expect to add employees over the coming 12 months.

Only 10 to 15 percent of firms in any category expect to reduce their headcount.

"Contractors need Washington officials to cut tariffs and address the shipping and supply chain problems driving costs and contributing to project delays," said Brian Turmail, AGC's vice president of public affairs. "They also expect the President will keep his word and get significant new infrastructure investments enacted as quickly as possible."

Price Check

The AGC is closely tracking material prices and supply chain disruptions to analyze potential threats to construction firms.

The association reported that a major producer notified customers of a further $50/ton jump in structural steel prices in mid-April.

The producer also posted a $100/ton hike for HHS, pipe, mechanical and piling products the next day, according to the April AGC Data Digest.

That same day, a supplier of fiberglass equipment stated that crippling shortages of raw materials were forcing major suppliers to declare "force majeure."

"An unprecedented leap in the price of goods and supply-chain disruptions are wreaking hardships on contractors and slowing projects," noted the association.

The AGC lobbied the Biden administration to end tariffs and quotas on imported construction materials to ease the domestic supply chain.

"Today's report documents just some of challenges contractors are experiencing," said Simonson.

Challenges with fast-rising materials costs, lengthening or uncertain delivery times and rationing of key inputs are the issues he cited. "These problems threaten to drive up the cost and completion time for many vital projects and potentially set back the recovery in construction employment."

Simonson noted prices for construction materials and services and contractors' bids dropped at the pandemic's start but diverged in the past year.

A government measure of the selling price for construction goods jumped 3.5 percent from February to March and 12.9 percent since March 2020.

Simonson reported "both the monthly and yearly increases were the highest recorded in the 35-year history of the series." CEG

Lawmakers lobby to bring home big bucks as Congress wrangles over $2 trillion infrastructure plan

Tony Romm

Rep. Donald Payne Jr. has asked the Biden administration to front the cash for a local railway project so many times that one of the president’s top advisers no longer greets him with just a hello.

“I know, Gateway, I know,” Transportation Secretary Pete Buttigieg tells the congressman as soon as they start talking — or so Payne (D-N.J.) joked with reporters recently, stressing that he thinks he has secured the White House’s support for the initiative.

At a time when President Biden is seeking a massive expansion in the role of government — and major boosts in spending to boot — congressional Democrats and Republicans alike have unleashed a torrent of lobbying to try to steer new federal money to their states and districts. They may not agree on the size and scope of some of Biden’s most ambitious proposals, but lawmakers from both parties still share a fervent desire to seize on a rare political opportunity and bring some of the big bucks back home.

The jockeying began earlier this month, after Biden announced a roughly $2 trillion blueprint to upgrade the nation’s roads, bridges, waterways and ports. Days later, he followed his infrastructure plan with a $1.5 trillion budget for fiscal 2022 that included the biggest increases in domestic spending in more than a decade.

Together, the proposed investments reflect the president’s broader economic agenda, as he labors to fulfill his 2020 campaign promises, create new jobs and help the country “build back better.” But they also offer a unique window for members of Congress to secure the sort of aid that might help bolster their communities — and shore up their reelection prospects in the process.

On infrastructure, lofty ideas are colliding with congressional reality

Sen. Amy Klobuchar (D) recently has written to the Biden administration in pursuit of federal funding for Minnesota’s bridges. (She even included a map.) Rep. Marcy Kaptur (D) has urged lawmakers to support federal research funding of the hyperloop, an experimental underground tunnel technology backed by Elon Musk, hoping it might someday serve Toledo and the rest of her Ohio district. And Rep. Pramila Jayapal (D-Wash.) has asked Congress to approve “generous funding for bridges” under an expanded federal grant program, which she said could help repair a cracked crossing in West Seattle.

Even Republicans who have been disinclined to support Biden’s economic agenda have pushed their pet projects at a moment when Democrats are vying to spend big. Rep. Harold Rogers has urged the committee to help improve service at an airport in southeast Kentucky, and Rep. Larry Bucshon has asked lawmakers to complete a section of Interstate 69 that passes through his home state of Indiana. Both have sought to score the political wins as part of transportation policy legislation moving through the House.

The scramble for federal cash may prove to be a blessing and a curse for Biden and his congressional allies. Setting aside earmarks and other sums for specific communities could help the White House round up more votes on infrastructure reform, perhaps even among Republicans who have questioned such spending in the past.

But federal funding isn’t unlimited, and lawmakers risk overestimating the public’s tolerance for this sort of wheeling and dealing. With no guarantees that Congress will adopt major infrastructure and budget legislation, Democrats and Republicans must strike a precarious balance if they hope to secure any aid at all.

“There has been a pent-up desire for infrastructure,” said Rep. John B. Larson (D-Conn.). “I do think, regardless of what your political stripe is, people will hold you accountable for delivering on what you said you would [do].”

For members of Congress, the jockeying reflects the high stakes they face politically and economically after years of false starts, particularly over infrastructure reform. Lawmakers from both parties generally have agreed about the need to improve roads and bridges, repair power plants and replace old pipes in their political backyards — yet they historically have had little to show for their support.

The same schisms loom over Biden in the weeks after he announced his roughly $2 trillion infrastructure package, which has proposed coupling investments in the country’s aging inner workings with new funding to tackle emerging challenges such as climate change. Republicans have opposed the president’s plan for its size and scope — and the means by which he proposes to pay for it through corporate tax increases — putting the future of the blueprint in political doubt.

Biden has asked GOP lawmakers to offer a counterproposal by mid-May, although Sen. Shelley Moore Capito (R-W.Va.) signaled that party leaders could share their early outline as soon as this week. Meanwhile, congressional Democrats have forged ahead with their own work to translate the president’s ideas into legislation, as lawmakers led by Rep. Peter A. DeFazio (Ore.) continue drafting a bill to reauthorize the country’s transportation programs.

Buttigieg casts proposed transportation budget as down payment on infrastructure

Congress must adopt the measure before an October deadline, positioning DeFazio’s measure as a potential vehicle for broader, economywide infrastructure reform. House Democrats took a similar approach last year, ultimately transforming DeFazio’s legislative work into a robust $1.5 trillion package that cleared the chamber — only to falter later in the Senate.

Still, some lawmakers are scrambling to get their local spending priorities included in the House’s bill. The frenzy was on display last week, when more than 70 lawmakers urged DeFazio and the Transportation and Infrastructure Committee that he chairs to boost federal spending on projects that could benefit their states and districts.

Testifying by video, Larson asked at the hearing for federal aid to help out on a roughly $17 billion project to redesign local highways in Hartford, Conn., telling committee members at one point that it was as though the Biden administration had the local "I-84/91 Interchange in mind when they laid out their bold plan for infrastructure, the American Jobs Act,” earlier this month.

The House’s top appropriator, Rep. Rosa L. DeLauro (D-Conn.), asked lawmakers on the transportation panel for money to help New Haven transform a local expressway into an urban boulevard for pedestrian and bicycle use. And Rep. Tim Ryan (D-Ohio) submitted his request in the hopes of repairing the Brent Spence Bridge, which connects Covington, Ky., to Cincinnati, after years of overuse and strain.

Republicans similarly lined up to seek federal support: Rep. Virginia Foxx (N.C.), for example, asked the committee to confer future interstate designation on a local thoroughfare to help stimulate business in Rutherford County. Rep. Robert Wittman, a Virginia Republican, requested “robust federal investment” in widening channels in the Port of Virginia to help commercial and military ships pass. Foxx’s office said she isn’t seeking a money or earmarks, and Wittman’s office similarly said he isn’t seeking an earmark and doesn’t support such spending.

The wide array of asks corresponds with the sheer vastness of the country’s economic needs, lawmakers say. But there are also political benefits: With a personal stake in the underlying transportation legislation, more House lawmakers may be inclined to vote for its passage. Sen. Thomas R. Carper (D-Del.), the leader of the chamber’s Environment and Public Works Committee, has commenced a similar process to collect funding requests for his panel’s transportation bill this year.

Still, there’s no guarantee that lawmakers who receive extra funding and favor will reward congressional leaders with affirmative votes. And nothing stops members from taking credit later for legislation they didn’t exactly help to pass.

The dynamic was on display earlier this year when a number of Republicans faced criticism after they appeared to take credit for some of the spending included as part of the $1.9 trillion American Rescue Plan, a coronavirus stimulus package they voted against unanimously. In March, for example, Sen. Roger Wicker (Miss.) cheered the inclusion of $29 billion in restaurant relief in the bill — only to be savaged for it later because he didn’t back the final package.

Wicker defended his position at the time by pointing to the fact he had endorsed restaurant aid even before Biden put forward his package. “One good provision in a $1.9 trillion bill doesn’t mean I have to vote for the whole thing," he said at the time.

Congress revives earmarks in hopes of bipartisan deals on infrastructure, budgets

Hoping to improve the prospects for future bipartisan dealmaking, Democratic leaders this year also have sought to revive earmarks, which allow lawmakers to direct federal sums toward pet projects generally back in their home states and districts. The move came in the weeks before Biden sketched out the early contours of a $1.5 trillion budget for fiscal 2022, including massive increases to federal health, science and educating spending.

“It’s particularly important now because there are so many people in communities in dire straits,” DeLauro, the chairman of the House Appropriations Committee, said this week.

Congress had banned earmarks for a decade, after years of complaints about the ethics of the practice and the effects on the government’s ever-growing deficit. But lawmakers have come to embrace this spending once again, now known as “community project funding,” as a way to induce compromise in a political environment where Democrats possess only a narrow majority.

House Democrats approved a regimented process for reviewing and approving earmarks in February, and Republicans in the chamber followed suit a month later. In a sign of early interest, lawmakers already have flooded the House’s budget keepers with “hundreds” of fresh inquiries about potential earmark requests, said Rep. David E. Price (D-N.C.), the chairman of a House panel that oversees transportation spending.

“I think that reflects the overwhelming local demand for investment in infrastructure and is even greater proof that America not only needs robust annual appropriations, but the American Jobs Plan,” he said in a statement.

Senate Democrats also have expressed openness to earmarks, yet some of the chamber’s Republicans have been more recalcitrant about reviving the practice. They opted after a meeting Wednesday to leave in place a ban against the practice of seeking special set-asides for pet projects. But GOP rules are not binding, and some party lawmakers said they would seek earmarks soon anyway.

Some Democrats, however, say the future of earmarks as a bargaining tool hinges on their counterparts’ next steps.

“We need to do it together,” Sen. Jon Tester (D-Mont.) insisted Tuesday.

In the meantime, other lawmakers have continued to pound the pavement in search of infrastructure funding.

Joining Biden at an event in the Oval Office last week, Payne specifically asked administration officials to help finance some of the roughly $2.7 trillion Gateway Project. The initiative aims to improve tunnels and railways between Newark and New York City, in a bid to quicken transit times and repair damage caused by Hurricane Sandy nearly a decade ago.

Other Democrats in the two states’ delegations similarly have pleaded with Congress for more aid in the past few weeks, taking their requests to congressional lawmakers who oversee transportation policy and spending. But Payne tried to make a more personal case, at one point telling the president during their meeting that they used to ride the same Amtrak trains home.

“I just went a little further than he did on the Northeast Corridor,” Payne later told reporters at a news conference, adding he thought the Biden administration had “gotten the message from me.”

Buttigieg defends climate elements of American Jobs plan

Kim Slowey

• Transportation Secretary Pete Buttigieg told the U.S. Senate Appropriations Committee at a hearing Tuesday that measures to prevent climate change were integral to the success of the infrastructure projects in President Joe Biden's $2.3 trillion American Jobs Plan. 
• In his opening statement to the committee, Buttigieg noted that some critics of the climate elements of the plan said the spending proposal should address only assets like roads and bridges but pushed back against that opinion by comparing it to "drawing up plans for a new restaurant with no consideration for health, safety or cleanliness. The truth is that every infrastructure decision is already, inevitably a climate decision as well."
• Buttigieg also told the committee that the plan is the biggest jobs investment since World War II and that 40% of the plan's climate investments would go to "overburdened and underserved communities, who often bear a disproportionate burden of transportation pollution."

Other points Buttigieg highlighted for the committee about the American Jobs Plan were that:

• More than 20,000 miles of roads and 10,000 bridges would be improved.
• Passenger rail would see an expansion.
• The country would achieve net zero carbon emissions by 2050.
• There would be an "electric vehicle revolution" supported by a network of 500,000 electric car chargers installed across the country and by rebates on electric vehicle purchases.
• There would be a doubling of investment in public transit.
• Investment in resiliency would "reinforce, upgrade or realign existing transportation infrastructure to better withstand extreme weather events and other effects of climate change."

Several other senior administration officials spoke at the hearing, including Commerce Secretary Gina Raimondo, Secretary of Housing and Urban Development Marcia Fudge and Michael Regan, administrator of the Environmental Protection Agency.

The Biden administration has faced opposition from congressional Republicans on how it plans to pay for the bill. The president has suggested raising the corporate tax rate from 21% to 28%.

In addition, the plan includes the controversial PRO Act, which won the approval of the Democratic Congress but still does not have enough votes yet to win the Senate. Proponents of the PRO Act did score a recent victory with West Virginia Democrat Sen. Joe Manchin's co-sponsorship of the legislation. Manchin previously had hedged on offering his support.

The PRO Act would expand unionization rights and amend the National Labor Relations Act to tighten up the definition of an independent contractor by using a stricter test.

Contractors consider reopening offices, vaccine mandates

Kim Slowey

The COVID-19 pandemic has forced many changes in the way contractors do business. They have reevaluated and introduced new safety protocols, reorganized work schedules to accommodate social distancing and sent many administrative employees home to do their jobs.

“Strangely enough, in construction, we never really thought much of remote working because the field really couldn't do it, but COVID made the business case,” said Eric Stenman, president of Balfour Beatty’s U.S. Buildings division. “So we took advantage of the remote working opportunities provided by the pandemic.”

But as vaccinations are being rolled out to most Americans and many offices have been equipped with personal protective equipment and layouts reimagined to promote safety for employees, construction companies are deciding how and when they will reintroduce their staffs to a normal work schedule. Or at least as normal as possible.

Clayco, a design and construction firm headquartered in Chicago, has notified all salaried employees that they will be required to report to the office on May 10 and must be vaccinated, according to Bob Clark, company founder and executive chairman. About 50% of Clayco’s office employees never left the office environment during the pandemic, he said, with 25% rotating in and out and the remaining 25% choosing to work remotely.

Out of its approximately 1,400 salaried employees, Clark said, very few have yet to ask for an exemption from the vaccination requirement. Clayco will grant exemptions for medical reasons or based on religious beliefs. The company has 400 salaried employees in the Chicago office, 600 in St. Louis and the rest at projects around the country. 

There are several reasons Clayco decided to take the position it has. The company was able to complete all its work during the pandemic, Clark said, but Clayco’s leadership felt that the company was not operating as efficiently as it could with so many working remotely.

In addition, Clayco has hired 140 people since January, and it will be harder for them to assimilate working from home, he said.

“It's just very difficult to train people and to get them to understand the culture of the business when half the people may be working remotely,” Clark said.

Clayco is also considering the businesses that surround their offices. In addition to its Chicago headquarters, the company has two offices in the St. Louis area and one in Greenville, South Carolina. Clark said there are local businesses, like restaurants, that are suffering because there have been fewer office workers to support them.

Getting vaccinated and resuming full office operations also sends a message to clients that they too can work safely in their offices again, he said. Clark also anticipates that some customers will require anyone working on their premises to be vaccinated.

The mandatory vaccine policy does not apply to hourly workers or field personnel, but Clark is launching a 46-city tour of Clayco projects to encourage everyone else to get vaccinated as well.

Clark said employees at the headquarters in Chicago need a badge to enter the building and will not be allowed in unless they are vaccinated. The company will consider anyone refusing a vaccine without a legitimate exemption to have resigned.

At Clayco, Clark said the company is carefully following EEOC rules to help guide its return-to-work policies. The EEOC has set forth Centers for Disease Control and Prevention guidelines as solutions for a wide range of COVID-19-related employer issues like what to do if an employee is suspected of having the illness, ways to reduce the spread and recommended testing for antibodies.

It is the general consensus that employers can require their workers to be vaccinated as long as they don’t violate federal laws. These include the Americans with Disabilities Act; the Rehabilitation Act and Title VII of the Civil Rights Act. Employers must also comply with any relevant state and local regulations.

Back to the office?

Other contractors are taking a different approach. Turner Construction, for example, has focused on providing employees with information about the available vaccines but is leaving the decision to get one up to each employee.

“What we’re looking to do is educate people so they can make a personal choice,” said Tom Reilly, executive vice president at Turner.

There is no back-to-work mandate across Turner because, he said, the company must decide what is appropriate for each of its 40-plus offices around the U.S.

“We’re encouraging everybody to come back to the workplace, and there may be some flexibility [about] how many days,” Reilly said.

“We're being guided by actively caring for our employees, ensuring we're meeting the commitments of our clients, understanding the needs of our employees and balancing that with equity across the company so that we find the right balance,” he said.

More than two-thirds (68%) of U.S. workers would prefer a hybrid workplace model after the pandemic ends, according to Prudential’s Pulse of the American Worker survey, conducted by Morning Consult in March. Of those surveyed who have been working remotely, 87% want to continue to work remotely at least one day per week post-pandemic.

Employees indicated a flexible work situation is becoming a must-have, HR Dive reported. Close to half of remote employees (42%) said they would seek a different job if their employer refuses to offer remote work options long term. Among the benefits of working remotely, employees listed saving money, cutting out their commutes, spending more time with their families, getting more sleep, improving their health and reducing their overall stress.

The desire for a hybrid workspace does not mean employees want to work remotely all the time, however. Forty-one percent of respondents said they would not want to work for a company that is entirely remote. Workers listed “feeling disconnected” and pressure to constantly remain online as challenges of the remote work model. More than half (54%) reported taking less time off and 35% said they were working more hours. 

Return to normalcy

Balfour Beatty is also leaving whether or not to get vaccinated up to each employee, but, according to Stenman, company executives are leading by example.

“I’ve been fully vaccinated,” he said.

Looking ahead, Stenman said, Balfour Beatty is fine tuning what will be future flexible work guidelines with the goal of having administrative staff in the office about 60% of the time. The issue, he said, has also come up in the hiring process, with new recruits interested in being able to have remote working as an option.

Black & Veatch is trialing wearables as a means for reducing the amount of people who need to go physically to a location.

"One person can go out to the site, look at something through a wearable and others working remotely can see those same, in-real-time activities happening," said Irvin Bishop Jr., Black & Veatch CIO told CIO Dive. "People with different expertise on the team can suggest, you know what should be done and not have to physically be there all the time."

With sensor and IoT devices placed throughout the facilities, the company is hoping to reduce the need for physical presence on site and help the site directly provide information that can guide decisions.

Nevertheless, field work, by its nature, does not allow for the same flexibility as office work, Stenman said.

“These are the realities of our industry,” he said. “We understand that if you’re a junior project engineer and you’re really hoping to become a project executive someday, you’re not going to learn that at home. “

This does not mean that there will be no opportunities for a flexible schedule for those workers, however.

“We're still studying rotations for superintendents,” Stenman said. “We're including that in our flexible plan. But the criteria and I think the discussion is different in the field than it is in the office.”

Legislature presents its own budget plan, and the stage is set for debate

Keith M. Phaneuf

The legislature’s Appropriations Committee approved a $46 billion, two-year state budget Wednesday evening that, at first glance, largely matches the spending level endorsed by Gov. Ned Lamont in February.

But the package, which makes major new investments in higher education, social services and municipal aid, also taps about $240 million from this year’s projected surplus and moves another $350 million in sales tax receipts to an off-budget account.

The dueling plans now become the foundation for negotiations between the legislative leaders and Lamont as they try to adopt a new, biennial budget before the regular General Assembly session adjourns on June 9.

“Our budget responds to the defining moment in history,” Rep. Toni E. Walker, D-New Haven, House chairwoman of the legislature’s budget-writing panel said during a live-streamed press conference prior to the meeting. “The COVID-19 pandemic demonstrated the vital importance of government investment in our society and our safety net, our health care system, and most importantly, the residents who live in our state.”

“This budget reflects our values and maintains vital services and programs,” added Sen. Cathy Osten, D-Sprague, the committee’s other co-chair, who added it makes key investments in health care, education, justice-related initiatives and workforce development programs while remaining under the statutory spending cap.

Like Lamont’s plan, the proposed budget would boost expenditures by slightly less than 2% next fiscal year — above the spending lawmakers authorized for the current fiscal year. 

But because the administration expects to save much more this fiscal year than lawmakers authorized, the actual spending growth in both plans tops 4%.

That savings has been a point of contention between the administration and the Appropriations Committee’s Democratic majority since the pandemic began in March 2020.

Lamont’s budget office spent $334 million less than was budgeted across all state agencies last fiscal year and projects to save $644 million this fiscal year. Much of that was helped by emergency federal pandemic relief, which covered a large part of state social service costs.

But Walker and Osten have said Lamont’s budget office has provided insufficient details on the savings, and the co-chairwomen worry state spending was peeled back too much amid a crisis, and what was spent may not be enough to meet Connecticut’s needs going forward.

Lamont, a fiscally moderate Democrat, and Republicans on the Appropriations Committee have warned against increasing spending too much before the state’s economy has fully recovered. Progressive Democrats counter that needs never have been greater than during the coronavirus pandemic and that the state can afford to help. Connecticut has $3 billion in its rainy day fund, projects to end this fiscal year with another $800 million left over, and received $2.6 billion in direct aid through the latest federal pandemic relief bill.

Lamont cast himself as occupying a reasonable middle ground on the budget, a Democrat not interesting in raising taxes, yet one who defeated a Republican intent on eliminating the income tax.

“There are two wings in the bird,” Lamont said during a mid-day press conference in Rocky Hill. “I got a group that wants to increase spending a lot and break the spending cap, and I ran against a guy who wanted to eliminate all progressive taxes. I’m trying to find the middle here so that we get this budget done on time and take care of people.”

Lamont was referring to his 2018 Republican gubernatorial opponent, Madison businessman Bob Stefanowski, who made the mathematically dubious claim that he would eliminate the state income tax over a decade, removing the source of nearly half of all revenue for the General Fund.

The governor declined to offer a detailed rebuttal or reaction to the committee budget.

“It’s pretty early,” he said, adding the his budget director, Melissa McCaw, had just given him an initial briefing. “Hopefully, it’s the second inning of a baseball game, but we’re still going to get it done on time. You know, people know my feelings — we don’t need to raise taxes. We’re going to put the federal money to work and take care of the services we need to. We surely don’t have to break the spending cap. I think that’s a promise that was made before I got here. But not that long ago, 2017.”

Lamont seemed especially wary about spending one-time surplus from the current fiscal year on recurring expenses.

“In 2017, they passed a budget that had billion-dollar deficits as far as you can see and resulted in a ratings downgrade and everybody’s leaving the state. We started to turn that around. Let’s keep turning it around.”

“Connecticut is growing more unaffordable by the day and families are struggling,” Senate Minority Leader Kevin Kelly, R-Stratford said. “Now more than ever we need to make sure state government is funding core needs, but also not overspending and adding new burdens onto Connecticut residents when they can least afford it.”

Investing in municipalities and higher education

Walker and Osten also said state officials have ignored longstanding problems for too long, such as racial inequities in health care and education, as well as property tax relief for municipalities and funding for the nonprofit agencies that deliver the bulk of state-sponsored social services. The pandemic, they said, only exacerbated these issues.

Cities and towns would receive more than $400 million in additional aid over the next two fiscal years combined.

The package reverses Lamont’s proposal to suspend slightly more than $90 million in Education Cost Sharing grant increases to local school districts over the biennium, and it would dedicate an extra $14 million to districts with large numbers of students from poor households or for whom English is their second language.

The plan also would dedicate a portion of sales tax receipts to keep the legislature’s pledge to increase non-education aid. Lawmakers could not fit this money into the plan without exceeding the spending cap, though, so the committee proposed effectively moving it off budget.

The process involves a revenue “intercept” —  an accounting tool that targets dollars before they arrive in the budget and assigns them for specific purposes. Because the cap only applies to budgetary appropriations, these dollars then can be used without violating the cap.

The committee plan also focuses heavily on public colleges and universities, which took a huge hit during the pandemic as campuses closed early in the spring of 2020 and millions of dollars in student fees had to be funded.

The state university and community college system was facing a $90 million hole earlier this fiscal year, while the University of Connecticut’s deficit topped $100 million.

Federal relief covered about 80% of those gaps, but higher education systems had to close the rest with pay cuts, layoffs, job freezes and other cost-cutting measures. And both systems project significant built-in deficits for the next two-year budget cycle.

And Walker said higher education was struggling long before the pandemic. Surging state retirement benefit costs — tied to pension debt accumulated over more than seven decades — has eaten away at state support for higher education operating costs.

The committee’s proposed budget sends a total of $75 million extra across the next two fiscal years combined to assist the community colleges, regional state universities and the University of Connecticut to offset this problem.

Social services, health care also top list of budget priorities

Many progressive Democrats also charged Lamont’s budget did too little to address growing healthcare and social service needs, and the committee plan expands funding in several areas.

The package would add $46 million for nursing homes over the next two fiscal years combined.

Industry officials say facilities have lost millions of dollars since the pandemic began due to increased costs and lost revenue. A significant portion of nursing homes’ revenue comes from residents assigned there for a few weeks or months to rehabilitate after surgery. But many patients deferred non-emergency procedures during the pandemic.

SEIU District 1199 New England, the state’s largest healthcare workers’ union, representing about 5,000 nursing home caregivers in the state, warned last week of a potential strike later this spring involving 51 facilities where its members are working under contracts that expired March 15.

The committee budget would make a huge, multi-year investment in the private, nonprofit agencies that deliver the bulk of state-sponsored social services. The investment actually would begin this fiscal year with an extra $50 million for these agencies, many of which have received no major increase in state support for more than a decade.

The CT Community Nonprofit Alliance estimates the nonprofits, collectively, lose $461 million this year due to inflation and stagnant state funding for more than a decade.

Osten said that $50 million is just the first step of a seven-year plan to close more than half of that $461 million gap and assist “the backbone of all social services.” The committee also is proposing funding increases of $30 million in both 2021-22 and 2022-23.

Gian-Carl Casa, president and CEO of the alliance, called the proposal a “remarkable and historic investment,” adding that nonprofits “have struggled for more than a generation for proper funding to provide vital services every day to thousands of people across the state.”

Similarly, municipal and regional health districts were “the little engine that kept us going” through the pandemic, Walker said, and the committee proposal adds $5.4 million across the biennium for this group.

Another $34 million would be added to the budget over the biennium under the committee plan to expand income eligibility for HUSKY A, the state’s Medicaid-funded health insurance program for children and parents from low-income households as well as for pregnant women. The limit would rise from 160% to 175% of the federal poverty level.

GOP: Committee budget relies too much on one-time revenue

The Democrat-controlled committee voted shortly after 7 p.m. to approve the bill. The tally was 32-16 along party lines.

Republicans on the Appropriations Committee said were united in opposing the package, but said it nonetheless contained some good components.

Sen. Craig Miner of Litchfield, ranking GOP senator on the panel, endorsed an increase in the personal needs allowance for nursing home residents.

Nursing home residents receiving care funded by Medicaid must forfeit most of any income they earn to the state, but are allowed to keep $60 per month for clothing or other personal items. The proposed budget would boost that limit to $75.

And Rep. Kathleen McCarty, R-Waterford, backed the decision to continue increasing Education Cost Sharing grants for local school districts.

But they and other Republicans said the overall package was unsupportable because it is too volatile.

By supporting ongoing programs with one-time reserves, and effectively maneuvering around the state spending cap, the committee budget retreats from a number of financial reforms that both parties enacted in 2017, Miner said.

When the reserves and federal coronavirus pandemic relief run out, future state taxpayers will be on the hook, he said.

“We are only setting up the next generation … for a very heavy lift,” Miner said.

Other components of the committee budget include:

A new Office of Pandemic and Public Health Preparedness;

Five new positions for the state Contracting Standards Board, which has been forced to operate with minimal staffing for more than a decade;

And $2.3 million to bolster the consumer contact center for unemployment claims to accelerate processing of benefits and job counseling at the Department of Labor.

State Capitol Bureau Chief Mark Pazniokas contributed to this story.

Cromwell retirement community wraps $48M expansion

Matt Pilon

A senior living community in Cromwell says it has completed construction of 54 new residential apartments.

Covenant Living of Cromwell (formerly Covenant Village of Cromwell) broke ground on the approximately $48 million project at 52 Missionary Road approximately two years ago.

The project includes one and two-bedroom apartments and a new “town center” area with three dining venues, an art studio, wellness center and other shared amenities.

The community is one of 17 across the country operated by Illinois-based not-for-profit Covenant Living Communities and Services, which is a ministry of the Evangelical Covenant Church.

Covenant said in late March that 65% of the new units had been sold as of that time.

The project was financed by tax-exempt bonds issued by the quasi-public Connecticut Health and Educational Facilities Authority.

Covenant’s development team included Middletown-based firms C.E. Floyd Co. and Dowley and Associates, Cheshire-based Milone & Macbroom, and others.