Connecticut transportation fund could run dry by 2030, budget forecasts warn
HARTFORD — The gas pump icon on the dashboard of the Special
Transportation Fund is lit up again, warning it could run out of cash
by 2030, but state leaders are not panicking.
The latest five-year budget projections prepared for the
state legislature indicate operating shortfalls starting in the next one to two
years will lead to the fund's insolvency in four years without alternative
financing, additional revenue or reductions in transportation investments. The
dedicated budget fund was established in 1984 to finance transportation
infrastructure after a
deadly highway bridge collapse in Greenwich.
Donald Shubert, president of the Connecticut Construction
Industries Association, said he is unsure what to make of these budget
projections. The state Department of Transportation generally cannot bid,
contract and construct infrastructure projects fast enough for the construction
industry, but highway construction is booming due to the use of federal
infrastructure funding.
"The situation until this came up was really better
than it has been since 2008," Shubert said. "We've got a
tremendous amount of momentum. We've got some major transportation projects
going in Connecticut. The DOT is firing on all cylinders. We're not at full
capacity yet, but we're hoping to get there, and I'll tell you over last
year and then into this year we finally have some really good momentum going.
I'm hoping that momentum just keeps going. I'm not sure what to make of those
reports yet."
The legislative Office of Fiscal Analysis and the state
Office of Policy and Management prepared five-year budget projections that
included their forecasts for the Special Transportation Fund for the
legislature's two budget committees. The Appropriations and Finance, Revenue
and Bonding committees are scheduled to receive presentations Thursday
afternoon.
Gov. Ned
Lamont doubts there is a substantial risk of the Special
Transportation Fund running short of money in four years despite these new
projections, saying, "2030 is a long way away. A lot can change."
For his part, he said he has no plans to propose increases
to taxes supporting the fund, or new revenue sources such as highway
tolls or a
carbon tax.
"I think we're in pretty good shape, at least for the
next few years," Lamont said.
The Special Transportation Fund has verged on insolvency on
and off going back to the 1990s. Despite
the past warnings of trouble ahead, the spending pool has yet to dry
up.
The fund was created after a
100-foot-long section of the Mianus River bridge on Interstate 95 in the Cos
Cob section of Greenwich collapsed on June 28,1983, killing three
people and seriously injuring three others when two cars and two
tractor-trailers plunged 70 feet to the river below. The horrific disaster
shocked the state into setting aside funds for bridge repair and maintenance.
The Special Transportation Fund is now the second largest
behind the main general fund of the 13 appropriated funds that make up the
state budget.
The current two-year,
$55.8 billion state budget allocates $914.6 million to the
transportation fund for the current 2026 fiscal year and $1 billion for the
2027 fiscal year.
The main financial challenge for the Special Transportation
Fund is growth in costs have outpaced growth in revenue. The Office of Policy
and Management is estimating the imbalance will reach nearly $400 million by
the 2030 fiscal year.
The transportation fund receives 0.5% of the general sales
tax and sales tax revenue from the sale of new and used motor vehicles. It also
receives funding from the 25-cent-a-gallon gasoline tax and the
48.9-cent-a-gallon diesel tax, plus an 8.1% tax on the wholesale price of
heating oil and other petroleum products.
Fuel taxes had been the chief source of funding for decades,
but sales taxes have overtaken them since being added as a revenue source in
the 2016 fiscal year. Sales taxes are expected to remain the largest single
revenue source for the foreseeable future. The two-year budget plan anticipates
$2 billion from sales taxes, while fuel taxes are budgeted to raise more than
$1.5 billion.
OPM and the Office of Fiscal Analysis cited bonded
indebtedness as another drain on the transportation fund. Debt service
represents 40% of the overall costs. Repayments on transportation bonds have
more than doubled in the last 25 years from $386 million to $914.6
million.
OFA and OPM also identified bus and rail operations as big
cost drivers. In 2023, rail operations cost $148.3 million and bus operations
$180.5 million. The two-year budget plan includes $316 million for rail
operations in the first year and $296.6 million for bus operations, plus $318.8
million for rail operations in the second year and $301.4 million for bus
operations.
Originally, the transportation fund covered only direct
costs of the transportation infrastructure program. Starting in 1987, the
legislature started shifting a series of state agency costs to the fund partly
because of growing general fund deficits. Today, the transportation fund
underwrites the operating budgets of DOT and the Department of Motor Vehicles.
The DOT budget is $974.9 million for the 2026 fiscal year and more than $1
billion for 2027. The DMV budget is $76.5 million in 2026 and $78.3 million in
2027.
Past governors and legislatures also intercepted the
transportation fund's funding streams to support other state spending in tight
budget times. In 2018, voters approved a so-called "lock box"
amendment to the state Constitution that requires money deposited into the
transportation fund be used only for transportation-related purposes. But that
amendment crucially does not prohibit the diversion of revenue designated for
deposit.
Lamont and supporters of highway tolls and a carbon tax on
fuel wholesalers can attest to the challenges of finding new revenue sources
for the transportation fund. Lamont pursued tolls during his first year in
office as a means of leveraging federal transportation funding, but he gave
up in early 2020 after bipartisan legislative opposition thwarted
every tolling plan that was put forward, including his final proposal for 12
truck-only bridge tolls to raise an estimated $170 million to $200 million a
year. Next, the governor proposed a carbon tax on large fuel suppliers to raise
an estimated $800 million to $1 billion over 10 years, but that also stalled
out.
The outgoing administration of Gov. Dannel P. Malloy in late
2018 had warned the incoming Lamont administration that the transportation fund
was on track to become insolvent by the mid-2020s without corrective
action. Lamont said he believes the fund has been stabilized since then,
so he sees no need to seek additional revenue sources beyond the fuel and sales
taxes now supporting the fund. Its cumulative reserves top $400 million.
"We're in good shape," Lamont said. "Look at
where the Special Transportation Fund was two or three years ago; five or six
years ago, it was zero. We have tens of millions in reserve. So, we're in a
much better place than we have been before."
State Rep. Joe Polletta, R-Watertown, the ranking House
Republican on the Finance, Revenue and Bonding Committee, questioned whether
DOT's ability to get highway projects designed, contracted and started is
part of the problem.
"People, in theory, are paying their tax money into
this fund, and expecting our roads and bridges and everything to get better,
and they're not seeing the byproduct of that," he said. "I think that
is a big concern. Where's the money going?"
The legislature this year required that any year-end
cumulative balance in the Special Transportation Fund above 18% of net
appropriations be used to pay down outstanding transportation bond debt.
Old Lyme WPCA Chair Disputes Selectman’s Cost Calculations on Sewer Project
OLD LYME — A week after Selectman Jim Lampos publicly
warned that all taxpayers could face millions in costs if voters
approve the sewer project in the beach area, the head of the Water Pollution
Control Authority is pushing back on his math.
Steve Cinami, chair of the Water Pollution Control
Authority, took aim Wednesday at the methodology Lampos used to project
potential municipal liability.
“They misled by indicating the assessed value would be
$62,413, when in reality it is almost half that,” Cinami told CTExaminer.
The main critique was that Lampos’ calculations included
financing interest, which Cinami argued should not factor into the betterment
assessment — the amount property owners are charged for infrastructure
improvements.
“When you buy a house, a car or anything else that is
financed, the sale price is the base price, not the cost after financing,” he
said. “And it is the same in this case.”
According to Cinami, the maximum assessment would be $38,711
per EDU,
the theoretical unit calculation used to allocate project costs among
properties.
“But I believe the betterment assessment will be
significantly lower than that figure,” he said. “Each property owner can pay
the complete assessment when initially invoiced. If they choose not to, they
deem that is advantageous for them to finance at 2% over 20 years. That doesn’t
mean the assessment went up due to their choice.”
CTExaminer’s calculations, based on Cinami’s estimates,
suggest that if those costs did transfer to the municipality as a liability,
the town would face nearly $2 million in debt. Spread over 20 years at 2%
annual interest, that would amount to a $120,000 annual burden shared across
all taxpayers.
Based on the 2025 grand list, the impact would translate to
roughly $4.80 per $100,000 of assessed property value — about $24 a year for
the owner of a $500,000 home.
CTExaminer’s calculations following Lampos’ methodology
yield costs approximately twice as high, with a greater number of properties
exceeding the statutory threshold.
Still, Lampos made clear last week that his figures were
theoretical, acknowledging uncertainty about how the real estate market might
respond.
“It could be that, it could be more,” Lampos said after the
meeting. “But the town can’t be comfortable with the notion that they would pay
zero.”
The aforementioned figures are not calculations made by
Cinami, who did not share his estimates but said he would make a detailed cost
presentation in next Tuesday’s town meeting.
“We will be reviewing the final numbers and presenting the
correct figures when evaluating how much the betterment assessment is and that
most homes’ betterment assessment will not exceed the increase in value they
receive,” Cinami said. “I cannot provide you my breakdown at this time as some
items still need to be voted upon at the next meeting.”
The debate centers on state statute
7-249, which caps what property owners can be charged at no more than
the increase in their property values from sewer installation.
That interpretation and its implications are largely at odds
with how most believed the costs would be shared — or not — between property
owners in Sound View and Area B, the three private beach associations involved,
and the rest of the town.
The calculations were based on the two appraisers hired
by the town in 2020 — Nadeau Associates and Kerin & Fazio — who estimated
that residential property values could increase between 7% and 10% with sewers,
while commercial properties would see a jump between 10% and 15%.
Questions over referendum figures
Cinami questioned the referendum amount itself, noting that
the Board of Selectmen rounded up rather than using precise figures.
He pointed out that the bid for internal infrastructure was
$8,551,950, which appeared in the referendum documents as $8,700,000. The board
also increased the contingency allocation to 6%, exceeding what had been
included in the original project estimate.
The referendum total also includes costs for connecting to
the East Lyme and New London wastewater systems — expenses that won’t require
additional borrowing because they will be financed directly by those towns.
That explains why a referendum initially
priced at $19.3 million grew to $20.5 million when the Board of
Selectmen voted to expand the budget. The difference also reflected 20 years of
projected interest payments, not just the capital amount.
The sewer project, intended to resolve the high density of
houses and septic systems along the shoreline, has been pushed by the state
Department of Energy and Environmental Protection but is opposed by
many residents who say it is neither affordable nor necessary.
DEEP has offered to cover part of the cost through the Clean
Water Fund. The latest offer includes a 25% grant toward the total project
and an additional $15 million in forgivable loans for shared infrastructure.
The project would install sewers in Sound View and Area B —
two neighborhoods that are directly part of the town and where there are about
210 properties — and the three private beach associations: Old Lyme Shores, Old
Colony and Miami Beach.
On Dec. 16, voters will decide whether to approve expanding
a $9.5 million budget authorized for 2019 to more than double that amount. All
property owners in Old Lyme — beach residents and not — will be eligible to
vote.
Groton City Council Puts Another $1.25 Million Toward Shore Avenue Seawall
GROTON — The newly elected City Council approved another
$1.25 million toward finishing construction on the Shore Avenue seawall, a
project expected to have cost overruns of close to $10 million.
On Monday, the council unanimously voted to approve a
purchase order with Arborio Construction and transfer $1.25 million from its
capital fund balance for the completion of the seawall replacement
project.
But the decision came with some reluctance.
“What if something goes wrong? Who is going to foot the bill
if something comes up after the alleged completion date?” Deputy Mayor Stephen
Sheffield asked at the meeting.
During a prior meeting of the council, public works
coordinator Heidi Comeau, along with representatives from GZA GeoEnvironmental,
a Trumbull-based engineering firm hired by the city to complete the
reconstruction of the seawall, told the council that the project would cost
another $1.25 million to complete.
Comeau said while construction on the seawall itself is
complete, the $1.25 million is needed to finish sidewalks and carry
construction over to the spring.
Barring any unforeseen circumstances, Comeau said, “We
believe that is the final number.”
The seawall replacement project, which went out to bid in
2014, has faced numerous obstacles and growing concerns about cost
overruns.
The project, which was originally expected to cost $2.7
million, now is expected to cost $12 million to complete, according to
Comeau.
Construction on the project began in May 2024 and was
initially expected to be completed in December of that year.
But during construction, workers found that the designers of
the replacement wall mislocated the area of the force sewer main, and that
bedrock — a crucial component for the replacement wall — was far deeper
than what designers had planned for. A test conducted prior to construction
showed that one of three soil samples taken did not show bedrock.
About $2.7 million for the project came from a state grant,
and the city used an additional $1.4 million of American Rescue Plan Act money.
The previous City Council had also transferred $6.7
million from the capital fund balance to fund the project.
After a bill proposed by Republican State Sen. Heather
Somers and Democratic State Rep. Aundré Bumgardner authorizing $9.7 million of
state bonding to pay for seawall repairs died in the 2025 legislative session,
the city applied for a $9.8 million state grant from the Community Investment
Fund. But again, the seawall was not chosen for funding.
There were no studies to determine the seawall’s viability
before the city decided instead to replace it, according to former City Mayor
Keith Hedrick.
Two redesigns
In the $9.8 million Community Investment Fund application,
local officials highlighted the importance of the seawall and what would happen
if it were to fail.
“A seawall failure would undermine the roadway, block an
evacuation route, and could cause a catastrophic release from the force sewer
main, and loss of service to Branford Manor Apartments,” local officials
warned. “If the Shore Avenue Seawall were to fail and the sewer force main were
to rupture, up to 725,000 gallons of raw sewage could be released into the
Thames River.”
According to the application, two redesigns of the seawall
project were “required” after the project faced “unforeseen subsurface
conditions.”
Those changes added 20 months to the project timeline, according to the
application, adding costs for winter work, rentals contracts and labor.
“It is critical that these costs are not passed on to Town
or City residents,” local officials wrote in the application.
In the application, local officials told the state the total
costs for the seawall reconstruction would come to about $14.35 million.
Comeau did not address why the state was given a $14.35
estimate for the seawall project, while the council was told last Monday it
would cost just over $12 million.
City financial records, obtained by CT Examiner through a
Freedom of Information request, show that Groton City has so far spent $9.3
million on the seawall replacement project. About $8.5 million of these funds
have gone to Arborio Construction, nearly $800,000 to GZA GeoEnvironmental and
$45,000 to BL Companies, according to financial records.
Before the Monday vote, the city’s capital fund balance
stood at $4.5 million. It is now expected to dip to around $3.25 million with
the transfer of $1.25 million to complete the project.
Root cause analysis
For the past two meetings, city councilors have raised
questions about the project and its history.
Asked how long the replacement wall is built to last, GZA
engineer Matt Taverna said he expects the wall to last between 30 and 50
years.
Councilors asked about a timeline of events, including why
the project went forward despite one soil sample lacking bedrock.
“Although this has become a costly endeavor, we cannot leave
it undone,” councilor Jean-Claude Ambroise said at a meeting last week. “Cost
overruns do happen. This is excessive.”
Ambroise also called for a “root cause analysis” of
situation as well as a timeline of what prior city mayors and councilors knew
about the seawall reconstruction.
Before Monday’s vote, councilor Paul Norris said residents
were concerned about the money that has gone toward the seawall and worry that
when the seawall is completed, the city won’t take the steps to figure out what
went wrong.
“I will commit to you that I will not stop at the end of
this,” City Mayor Jill Rusk said. “We need to find out what went wrong, why it
went wrong, and ensure that that won’t happen again.”
City resident Michael Boucher spoke at the meeting on
Monday, questioning whether the former council and mayor did an assessment of
the structural integrity of the seawall, or if they only made “weak” and
“casual” observations based on the cracking of the cement veneer.
Boucher said he had filed a series of Freedom of Information
requests with the city about the seawall project that have not yet been
fulfilled.
State funding
The Town of Groton is reapplying for state funding through
the Community Investment Fund with a Dec. 5 deadline, this time requesting $3
million — a significant reduction from the $9 .8 million previously
requested.
“We are reapplying since the earlier grant application was
not successful,” said Town Manager John Burt, adding that the biggest change in
the application is the requested amount.
“The biggest reason is likely the large amount of the
original request. They [the state] also mentioned wanting more detail on
long-term maintenance of the structure,” Burt said.
The state’s Community Investment Board will meet to make
recommendations to Gov. Ned Lamont on March 10, 2026.
The CIF grant is competitive. In the last round there were
32 grants awarded out of 122 applications for a total of $60.7
million.
The state’s Department of Economic Community Development
made several recommendations on the previous application focused on
organization.
In an executive summary shared with the town, the DECD
recommended more documentation on community outreach such as letters of support
and sign-in sheets. The proposal needs formal measures including
benchmarks and post project evaluation and maintenance. The agency also sought
clarification on local hiring strategies or commitments.
The DECD recommends that an organization reapplying
incorporate feedback from a prior application advance the project.
The seawall project is at the forefront of the city’s new
leadership.
During the mayoral race newly elected Groton Mayor Jill Rusk
told CT Examiner the seawall was a priority and within the first 100 days of
her term, she’d lead an analysis of the Shoreline
seawall construction to explore why “the spending was so much higher
than anticipated and where things went awry.”
Of the project completion in the spring Councilor Stephen Sheffield said, “I am keeping my fingers crossed. As for funding” Sheffield said, “I think we are okay. To me as long as we got it right – that’s the main thing and there’s no additional cost to the taxpayer