Lamont keeps CT budget within fiscal guardrails, pays down $500M in debt

Keith M. Phaneuf, CT Mirror

Gov. Ned Lamont stayed well within Connecticut’s fiscal guardrails Wednesday, recommending a $26.1 billion budget that erases $500 million in bonded debt and invests in child care and education while largely holding the line in most other places.

The spending plan for the fiscal year starting July 1 increases base aid for public colleges and universities but reduces overall support despite warnings that it would leave higher education institutions in deficit and forced to trim staff and programs.

The package bolsters K-12 education, though not as quickly as legislators want, scaling back planned increases for magnet, charter and vocational schools and keeping universal school meals afloat through December with temporary funding.

Lamont would create several new posts to monitor health care quality and finances but declined to recommend inflationary increases for nursing homes or for the hundreds of private, nonprofit agencies that deliver the bulk of state-sponsored social services. The administration also wants to tighten Medicaid eligibility on the HUSKY program and require some poor adults to purchase subsidized insurance through the state’s exchange.

And while the plan doesn’t include any major tax cuts — following two years of hefty reductions — the administration is pitching a new plan to try to secure hundreds of millions of disputed tax dollars from Connecticut residents who work remotely for businesses in New York.

The governor’s proposal would boost spending 3.1% over the current spending level and add just $89 million to the preliminary, $26 billion budget he and lawmakers adopted last June for the 2024-25 fiscal year. And much of that spending added onto the preliminary budget involves a nearly $80 million increase in the require state contributions to public-sector pension funds.

But while Lamont repeatedly urged lawmakers recently to embrace Connecticut’s spending cap and other programs that have secured big surpluses, his own plan relies on a commonly used end run around the guardrails.

Lawmakers often carry surplus funds from one fiscal year to the next because these “carryforwards” then can be spent without counting against future cap limits. Lawmakers already planned to carry $95 million from this fiscal year’s $645 million surplus into 2024-25. The governor would boost that to $140 million.

“For the first time in a generation, the state of Connecticut is not lurching from one financial crisis to the next,” the administration wrote in its budget introduction. “The state’s financial position is stable, and, unlike other states, we are not facing deficits that would result in deep cuts in spending or substantial increases in taxes.”

Transportation program debt

The fiscal guardrails have helped state government since 2017 to amass a $3.3 billion rainy day fund and pay down an extra $7.7 billion in pension debt.

But Lamont also has been accused of accumulating too many surplus dollars when it comes to the budget’s $2.1 billion Special Transportation Fund.

This subset of the state budget fund is on pace to close $241 million or 11% in surplus when the fiscal year ends June 30, according to Lamont’s budget office.

And it finished the 2022-23 fiscal year with a 15% surplus, equal to $277 million, according to final numbers from the state comptroller’s office. And that was despite a 13-month gasoline tax holiday that returned about $330 million to motorists. Most of that cost, $240 million, occurred during the 2022-23 fiscal year.

The administration estimates the STF’s reserves — the fund that holds all its annual surpluses — will total $911 million after this fiscal year, a tally that exceeds more than 42% of the entire STF.

The transportation fund is supported by two fuel taxes, a portion of the sales tax and a recently added highway mileage levy on commercial trucks.

Republicans have accused the Democratic governor of hoarding too much revenue and urged him to repeal the highway mileage tax.

Construction industries and trades have urged Lamont and the state Department of Transportation to launch more capital projects. The STF funds DOT operations and pays the debt service on the annual state borrowing that, coupled with federal grants, finances repairs to Connecticut’s highways, bridges and rail lines.

Lamont’s budget does assume annual borrowing for capital work will grow from $875 million this fiscal year to $1 billion in 2024-25.

But he also would take $500 million from the STF reserve and use it to reduce Connecticut’s more than $7.4 billion in outstanding transportation bonding debt.

With more than $80 billion in unfunded pension and retiree health care benefits and bonded debt combined, Connecticut is one of the most indebted states, on a per capita basis, in the nation.

The administration estimates that wiping out this much bonded debt at once will reduce debt service costs by $26 million next fiscal year, and by roughly $60 million in 2025-26.

“This proposal builds on Connecticut’s recent budgetary successes by leveraging our current financial position to pay down transportation debt now and generate years of savings,” said state Treasurer Erick Russell, who crafted the debt reduction plan in cooperation with the Lamont administration. “This plan will strengthen the [transportation] fund and leave the state well-positioned to take on transportation projects essential to our economic growth and the quality of life of our residents.”

Lamont’s budget also assumes Connecticut will borrow $1 billion for transportation capital projects next fiscal year, a major jump from the $875 million in financing estimated this year.

But the administration has dangled higher investments before and not delivered.

This fiscal year, for example, it also projected $1 billion in borrowing, but that projection has since gone down by $125 million.

The administration projected $1.2 billion in 2022-23 and borrowed $830 million; and projected $875 million the year before that — and borrowed $500 million.

Connecticut issued an annual average of $725 million in transportation bonds between 2015 and 2018 under Gov. Dannel P. Malloy, according to debt reports from the state treasurer’s office. During Lamont’s first term, the annual average ticked upward just 2.6%, reaching an average of $744 million — even though STF revenues grew 22% over those four years.

But the third year has just begun on a five-year federal program to invest $1.2 trillion in the state’s transportation projects, and construction industries and trades both said Wednesday that Lamont can’t afford to wait any longer to get significantly more projects underway.

“Everyone knows infrastructure investments are the highest return on investments,” said Don Shubert, president of the Connecticut Construction Industry Association, who added the state should be borrowing and investing closer to $1.5 billion annually in transportation projects. “And failing to maximize all available federal funding and failing to invest at this point is a tremendous, missed opportunity for the state.”

Nate Brown, president of International Union of Operating Engineers, Local 478, said hitting the $1 billion borrowing target isn’t sufficient. “We have to exceed the target,” he said. “We have the opportunity of a lifetime. There’s people and contractors who are more than ready to go.”

Battling NY for tax dollars

Lamont’s new budget doesn’t include any major tax cuts — which was expected given the huge reductions he and the legislature approved in each of the past two sessions.

Low- and middle-income households are expected to save about $460 million next fiscal year from the largest income tax cut in state history. The changes, approved last year, include both rate reductions and several enhanced credits.

The governor did recommend about $3.5 million in fee reductions, removing initial application fees in understaffed fields including nurses, teachers, and child care workers.

But the administration hopes to bolster the state’s coffers, by as much as $200 million annually in future years, by challenging controversial “Convenience of the Employer” rules in New York state.

Connecticut officials argue that New York rules unfairly require many Connecticut residents who work remotely from home for New York-based employers to pay taxes to the Empire State.

Lamont is urging residents to challenge the New York rules in court. Those that are successful and receive a refund from New York would then owe taxes to Connecticut.

Lamont proposes to add a 50% income tax credit to those challengers, and to waive any penalties Connecticut could claim against them.

A spokeswoman for N.Y. Gov. Kathy Hochul could not be reached for comment Wednesday morning.

Federal COVID relief

Lamont’s proposal also hinges on repurposing $55.7 million in unspent federal COVID-relief grants, which provide great fiscal flexibility because they can be spent outside of the cap system. But the shifting of these American Rescue Plan Act funds is expected to spark many questions from legislators, specifically: How much money have state agencies that received federal grants left unspent?

All states must designate how these funds will be used by Dec. 31. They still can be spent as late as Dec. 31, 2026, but purposes cannot be reassigned after this calendar year.

Legislators also are expected to press Lamont over how much of this fiscal year’s surplus can be used to support the next state budget. Even though the governor recommended boosting the planned “carryforward” from $95 million to $140 million, his fellow Democrats in the House and Senate majorities have suggested using between $200 million and $300 million to support numerous initiatives in health care, social services, and education.

Lamont also may face criticism for sweeping more than $16 million from a program that shares a portion of state sales tax receipts with cities and towns. The administration says this transfer would not impact municipal grants in the upcoming fiscal year, but it was not clear Wednesday whether that could trigger challenges a few years down the road.

Other changes

Lamont also proposed folding the Connecticut Port Authority into the Connecticut Airport Authority, consolidating the management of the state’s harbors and aviation facilities under one umbrella. 

David Kooris, the current chairman of the Connecticut Port Authority, mentioned the potential merger between the two quasi-public agencies during a meeting last fall, but little has been mentioned publicly about the plan since then.

The Port Authority has been an issue for the Lamont administration for years, largely because of the escalating cost of the redevelopment of the State Pier in New London. That project, which is now reaching completion, is meant to transform the port facility into a launching pad for offshore wind projects in the Atlantic. But the cost of the project ballooned from an estimated $93 million to more than $300 million. 

The Lamont administration also proposed restructuring payments into the pension plan for state judges to save $14.3 million next fiscal year. Connecticut restructured payments into the state employees’ pension in 2017 and 2019, and contributions to the teachers’ pension in 2019.

Developer withdraws controversial quarry proposal for Ledyard historic site

Lee Howard

Ledyard ― Gales Ferry Intermodal LLC has withdrawn its application to create a quarry operation at Mount Decatur, and a Thursday public hearing on the proposal that drew a phalanx of criticism over the past few months has been canceled.

An attorney for Cashman Dredging & Marine Contracting Co. of Quincy, Mass., the parent company of Gales Ferry Intermodal, filed a notice Tuesday with the town informing the Planning & Zoning Commission of its decision. No explanation was offered, nor was there any indication whether the application might be amended and resubmitted.

Harry B. Heller, lead attorney on the application, simply wrote in a letter dated Tuesday, Feb. 6, that he was withdrawing from consideration “the Special Permit, Site Plan and Coastal Site Plan Applications currently pending before the Town of Ledyard Planning and Zoning Commission for the extraction and processing of earth product and stone” at the former Dow Chemical property off Route 12.

Town Planner Juliet Hodge said Wednesday morning that she is unsure whether Gales Ferry Intermodal would be refiling another application for the site or what that would look like. She added, however, that if the company does refile the whole public hearing process would have to start over.

David Tranchida, a spokesman for Gales Ferry Intermodal, said the group decided to pull its application to look at various concerns expressed by nearby residents as well as recent questions from the town planner to try to determine what the company’s next steps might be. He said he couldn’t give more specifics until a final decision has been made, and calls to a GFI principal went unreturned.

Virginia Beall, who lives nearby and opposes the project, said Wednesday that she believes the applicant rescinded the project because it was becoming clear it would be denied. She is hoping that if Gales Ferry Intermodal submits a new plan, it will involve the site’s use as a transportation hub or a light industrial area.

“I’m opposed to the idea economic development takes precedence in this town over quality of life,” Beall said.

Over the course of three public hearings during the past several weeks, the quarry proposal has been criticized for its possible effect on the neighborhood, including worries over the health effects of silica dust being released to the atmosphere, as well as concerns about blasting, increased truck traffic, loss of bird habitat and the degradation of Mount Decatur, which is the site of a historic War of 1812-era fort.

Dozens of residents and local groups have opposed the application, while only one person, who lives in another town, expressed support.

Gales Ferry Intermodal had pointed to another quarry operation in town that received approval in recent months as proof that the proposed project could live comfortably within a neighborhood setting. The company also had promised to leave intact the portion of Mount Decatur that contains historic significance.

Beall, who is on a citizens group called the Dow Community Advisory Panel, said she would like Gales Ferry Intermodal to take neighborhood concerns seriously, as Dow Chemical did in the past when its officials met regularly with locals. But she says the panel has been much less active recently after Dow sold the property, initially leaving Americas Styrenics as the main operation on site.

Beall said she is concerned that another proposal for the site might not be much better than the last without citizen input.

“We’ll have to see what happens,” she said.

Developer Abruptly Withdraws, as Zoning Seeks Mix of Affordable Units in Downtown Stamford

Angela Carella

STAMFORD – Zoning Board members were nearing the end of a discussion about a proposal to build 471 luxury apartments in a prime downtown location when something unexpected happened.

The developer called off the discussion.

At the time, board members were discussing whether to allow the developer, Carmel Partners of New York, to contribute money to Stamford’s Affordable Housing Trust Fund rather than include reduced-rent apartments in its project on Clinton Avenue along Mill River.

Under the city’s Below Market Rate program, developers must offer at least 10 percent of units in a project at reduced rents. In lieu of that, they may seek approval to contribute the value of those units to the affordable housing fund instead. 

Carmel Partners was asking the board to approve the cash offset which would have added nearly $13 million to the fund.

But this time board members instead wanted a portion of the required 49 reduced-rent units to be included in the Clinton Avenue project, because board members felt it was the ideal location for below market rate apartments and would allow low- and moderate-income residents to live within walking distance of transportation, jobs, shopping and Mill River Park. 

So board members suggested a hybrid arrangement – build some BMR units on site and generate a contribution to the fund, which provides grants to nonprofit agencies that create affordable housing.

“A project like Clinton Avenue provides affordable units, and sooner than the trust fund. Land is getting so expensive in Stamford that it takes nonprofits longer to get projects done,” said the chair, David Stein. “I’m open to splitting it. I think it’s a good way to handle this.”

As other members were agreeing, the city’s principal planner, Vineeta Mathur, interrupted. She’d received an email from the developer, whose team was watching the meeting Monday night on Zoom, Mathur said.

“The email says that if the board is considering a hybrid approach, they would like to withdraw their application,” Mathur said.

Board members were taken aback.

“I don’t get that,” Rosanne McManus said. “I don’t get that at all.”

“I don’t, either,” Stein said. 

Board member Gerry Bosak Jr. asked whether a developer is allowed to email a message into a live meeting to withdraw an application under discussion.

“I mean, is this protocol? We’re trying to meet them halfway, and to fulfill the needs of the community,” Bosak said.

“This has been known to happen,” Stein said.

The city’s Land Use Bureau chief, Ralph Blessing, reminded the board that the project is already approved with on-site BMR units, so it can move forward with zero contribution to the Affordable Housing Trust Fund.

“We’re going around and around,” Bosak said. “It really comes down to the applicant.”

“I agree,” Stein said. “Is the application being withdrawn, or is it still filed? Because, if we vote, it will be too late to withdraw it.”

Stein appeared ready to call for a vote; Blessing stepped in to reiterate that, if the board decided to require both on-site BMR units and a contribution to the housing fund, “you might end up with all units on site.”

“OK,” Stein said. “I would regret that if it happens, but I don’t like to be threatened. And I feel like that’s a threat at this point.”

Mathur interrupted again.

“They withdrew,” she said of the developer.

“They did withdraw,” Stein said. “OK.”

He then took up a brief final item on the agenda and ended the meeting.

It was weird, Bosak said Tuesday. Developers usually work with the Zoning Board in such instances, he said. In this instance, he said, the board was seeking a compromise with the developer.

“I was absolutely surprised by the withdrawal,” Bosak said. “I wanted to get some units on site because the city has such a need for affordable housing. I recognize the nonprofits do this type of development very well, but I didn’t want to wait for that.”

Nonprofit agencies that build affordable housing units have to amass funding and find land they can afford, which is becoming increasingly difficult in Stamford. That usually takes more time than it takes a private developer to build a project, and the BMR units that go with it.

The previous owner of the Clinton Avenue parcels brought the boards a plan to build 456 apartments with all 46 reduced-rent units on site. The proposal languished from 2016 until 2022, when Carmel Partners bought the parcels.

The Carmel Partners proposal is 471 apartments and a request for a special permit to build no BMR units on site, putting the $13 million into the housing fund instead.

It’s unclear what will come of the large project, which as proposed would construct two seven-story apartment buildings on 4.4 acres along the river on either side of Clinton Avenue. 

Jason Klein, an attorney with Carmody Torrance Sandak & Hennessey who represents Carmel Partners, did not respond Tuesday to requests for comment. 

Klein told the Planning Board last month that it’s “a challenging time” to get financing for developments, and that obtaining financing for a project that builds some reduced-rate units on site and makes some contribution to the affordable housing fund “may not be feasible.”

But Planning Board members last month voted unanimously to recommend that the Zoning Board do just that.

Bosak said he agreed with the Planning Board recommendation, which was why he made the motion that the Zoning Board follow it. But Carmel Partners dropped out before the Zoning Board could vote.

“I thought my motion was a measured response to the developer taking back the original proposal to put all BMR units on site, proposing instead to put none on site,” Bosak said.

How will West Hartford reconstruct its town center? Some questions remain as new plans are shown

Michael Walsh

WEST HARTFORD — The reconstruction of the bustling West Hartford Center is looming. Sidewalks are narrow and hazardous, trees need to be replaced, and the existing pedestrian infrastructure is outdated and at times unsafe.

The question that remains, though, is just how far the reconstruction of LaSalle Road and Farmington Avenue — two roadways lined with restaurants and stores attracting residents and visitors to the area — will go.

The West Hartford Center Infrastructure Master Plan was first revealed a year ago, with plans to elevate the popular dining and shopping destination to a higher level by replacing and enhancing sidewalks, crosswalks, and other infrastructure.

But in November, at a meeting intended to inform local business owners about the plans, concerns were brought about losing parking spaces, as well as the disruption that construction might bring, taking the town back the drawing board — though the original plans are still very much in consideration.

On Wednesday morning, the town showed off potential design options, ranging from keeping the status quo but still replacing sidewalks and trees while enhancing pedestrians safety, to fuller transformations that include a shift in parking from angled to parallel that would leave more space for wider sidewalks, permanent expanded outdoor dining, and even buffered sidewalk-level bike lanes.

LaSalle Road

Duane Martin, the town's director of community development, confirmed Wednesday that no construction will be taking place in 2024. But next year, it's likely that work will start on LaSalle Road. What that works entails rests on a decision yet to be made by the town manager's office. 

Currently, LaSalle Road has two-way traffic and features angled parking on both sides of the street. Its sidewalks are narrow, with only 4 to 6 percent of the streetscape being devoted to pedestrians compared to 70 percent of the streetscape being devoted to parking and travel lanes.

That could be altered substantially by turning the road's angled parking into parallel parking, which would increase pedestrian sidewalk space to 10 percent and reduce vehicle space dramatically to 36 percent of the streetscape. More room would also be made for dedicated outdoor dining, which since the pandemic has been done in parking spaces.

But to do that, the town would need to remove 37 on-street parking spaces, something that concerned business owners whose restaurants and storefronts line the street. Since 2020, the town has been temporarily removing dozens of parking spaces each spring, summer, and fall to accommodate expanded outdoor dining. There also isn't a lack of parking in West Hartford Center, the town's consultant Stantec said, with over 2,500 parking spaces available in the area between surface lots, street parking, and parking garages. Another 2,700 parking spaces are also available in Blue Back Square.

New designs posed on Wednesday showed one option, called a baseline reconstruction, keeping the sidewalk widths as is, but repairing and enhancing other features. Another design, called a hybrid option, would combined keeping angled parking while still expanding sidewalks.

"In this scenario, we slightly widen the sidewalks by reducing the overall curb to curb dimension from 70 feet to 60 feet, so that gives us five feet extra on either side," said Travis Ewen of Stantec, about the hybrid proposal. "That allows for a little bit wider outdoor dining, some more landscaped areas and from the original parking of 107 spaces we go to 88 spaces, and that again accommodates for loading zones and the bumpouts to make safe crosswalks."

Farmington Avenue

A similar decision about whether to give more space to vehicles or to pedestrians and cyclists will also need to be made on Farmington Avenue.

Currently, 57 percent of Farmington Avenue is devoted to vehicle traffic and parking. Another 4 to 8 percent, depending on which side of the road you are on, is dedicated to pedestrians. Initial designs would shift that by making all parking parallel, leaving only 37 percent of the streetscape for vehicles. That would widen sidewalks to 9 percent of the streetscape on each side of the street, but also introduce buffered sidewalk-level bike lanes taking up 14 percent of the street.

"It's something we consider for all of our roadway projects," Martin said about bike facilities. "We are responsible for designing the roads, as best we can, for all users. There are challenges, especially in the Center, where we have a lot of conflicting needs for space with parking, outdoor dining, and bicycle facilities. We don't want to ignore safety for all users."

Like with LaSalle Road, the town has also included a baseline reconstruction that would only widen sidewalks slightly and do away with proposed bike lanes. A proposed hybrid design option would include a shared pathway for low-speed cyclists and pedestrians. A fourth proposal would feature parallel parking with "conventional" bike lanes painted onto the roadway not buffered or protected by anything.

No matter what designs are chosen, attention will be paid to pedestrian safety. The town is planning to shorten lengthy crosswalks with curb changes and new bumpouts, meaning pedestrians crossing both LaSalle Road and Farmington Avenue will walk shorter distances. There are also plans to raise sidewalks, which could be a useful tool for slowing traffic and increasing pedestrian visibility.

"A lot of the materials for the crosswalks are at the end of their useful life," Ewen said. "There's been utility work that's gone on, snowplowing is a constant issue with that, so there's some upgrades that should happen in order to create better surfaces. As part of this project, we analyzed and highlighted traffic and pedestrian safety concerns. That really started to correlate with the street widths and the crossing distances. Once we started to see crossing distances over 50 feet, that's when we saw a spike in the crash locations."

Construction and cost

A lingering concern for business owners who attended the meeting hovered around how exactly construction, and any disruption that comes with it, would be handled.

Martin said the project will utilize night work when possible, which should alleviate some of the disruption businesses might face. 

The plan will also be done in phases, meaning that when work begins on LaSalle Road next year that the entire street and sidewalk won't be disturbed all at once. Instead, work will be done in bits and pieces, continuing down the roadway until complete. But with no plans in place or designs chosen yet, the exact construction process hasn't been finalized.

Cost was also a concern from some who attended the meeting. At the low end, consultants estimated the project could cost $8 million if the town elects to opt for baseline reconstructions that don't alter the streetscape design too much. The more alterations needed, the more the project cost would increase. But Martin said none of it will be footed by taxpayers, with the town prepared to propose using its American Rescue Plan Act funds for the project, which would need to be approved by the Town Council.

The full presentation can be viewed on YouTube and includes interactive polls that will remain open for a few more weeks. Design option will also be posted to the town's website. No decisions have been made yet and Martin said another public meeting would be held within the next two months before decisions are made by the town manager.