Connecticut Leaders Hoping For Influx of Transportation Funding From Biden Administration
Hugh McQuaid Gov. Ned Lamont’s unsuccessful push to toll state highways was an unpopular answer to a persistent problem: Connecticut’s transportation fund is drying up. And with no political appetite to revisit tolls, hopes rest on a federal Band-Aid.
As Connecticut’s roads, bridges, and highways continue to age and demand repair and replacement, the state faces a dilemma. Its Special Transportation Fund, which pays for infrastructure projects and the operation of the Transportation Department, is supported by fuel taxes, which diminish as vehicles become more efficient.
“We have a funding mechanism that is failing,” said Norman Garrick, a professor at the University of Connecticut’s School of Engineering. “As more people switch to electric cars, as inflation eats away at the rate at which we tax gas, we’re going to have to start to make hard decisions about what we’re going to do because that pile of money is going to be worth less and less.”
Garrick pointed to tolls as a possible solution. But the professor also acknowledged that Connecticut residents find this solution extremely controversial.
It was controversial in the legislature as well. The Lamont administration lobbied hard to pass some form of a tolls bill during the last two legislative sessions, but the issue proved deeply unpopular. Ultimately, neither Democrat-controlled chamber of the legislature even called the issue for a vote.
Immediately after this month’s election, the governor was asked whether he had given up on tolls. He indicated he had no plans to pursue them again when the legislature comes back into session in January. Lamont said he would put “other alternatives” on the table for lawmakers to consider.
“What I haven’t given up on is the fact that we have a transportation fund that’s slowly going bankrupt, the fact that California and others are calling for 100% electric cars over the next 10-15 years. We know we’re going to have to change the way we fund transportation,” Lamont said. “Let’s face it, my solution wasn’t very popular with Republicans or Democrats but nor did they have a solution of their own.”
Some transportation advocates have called on Connecticut to participate in an initiative that raises gas prices to fund investments in cleaner transportation. In January, Lamont declined to endorse the proposal, which is called the Transportation and Climate Initiative, but this week the Governor’s Council on Climate Change again raised the issue in a report on strategies for mitigating climate change.
Asked about it Thursday, the governor hedged, saying the legislature should be thinking about the proposal, but he did not endorse it.
“It’s something a lot of the regional governors are thinking about and one of the ideas I think the legislature ought to be thinking about,” he said. “Look, I’m sympathetic to realistic ways that we can fix our transportation system because it’s key to our economic future. That’s one of several options the legislature’s got to consider.”
Without a systemic solution, Lamont said that the state would likely look to borrow money to cover some of the cost of supporting the fund. The governor said he does not “love the idea” but with interest rates at historic lows, it makes sense.
“This is the time to be making long-term investments, so borrowing will be part of our strategy,” he said.
The administration is also hoping for aid from President-elect Joe Biden, of whom Lamont was an early supporter. Earlier this month, Lt. Gov. Susan Bysiewicz said she expected to see an influx of federal funding from the Biden administration to support transportation upkeep, similar to money the state received from the Recovery Act following President Barack Obama’s election.
On Thursday, Lamont said he believed Biden would be able to get legislation passed.
“My strong feeling is, when it comes to infrastructure, there’ll be some bipartisan support. President-elect Biden has a way of being able to work across the aisle and hopefully get something done. Nobody can just say ‘No,’” the governor said.
One of Connecticut’s most visible infrastructure problems is the raised section of Interstate 84 that runs through downtown Hartford. Advocates have long eyed the viaduct for total replacement. Many say the aging stretch of highway, built in 1965, has had a negative impact on the Hartford community and economy.
“That was one of the many projects that helped to spiral down the economy of the city because it divided the city,” Garrick said. “It’s changed the relationship of the downtown to its neighborhoods. It’s encouraged people to drive through and into the city rather than walking.”
The issue is under consideration at the Department of Transportation. Late last year, the department backed away from its leading plan to lower the highway, which was expected to cost between $4.3 and $5.3 billion. It is now conducting a more wide-ranging study of the viaduct and how it relates broadly to highway congestion in the Hartford and East Hartford area.
In June, the department concluded $60 million in repairs to the viaduct. These temporary fixes are expected to help extend its lifetime through 2040. The repairs reduce the urgency of replacing the aging infrastructure while the agency conducts its study, which is expected to be completed in late 2022.
“The department is looking at a broader, more holistic view at mobility in the region, not just limited to the viaduct – in a new study we are referring to as the Greater Hartford Mobility Study,” DOT spokesman Kevin Nursick said in an email.
Some residents are pushing for dramatic changes. U.S. Rep. John Larson has long been an advocate of an ambitious project to reroute the highway through a proposed tunnel. But regardless of whether the project ultimately includes a tunnel, Larson said it must position Hartford as an easily accessible hub between New York and Boston.
“There’s a grand opportunity here to make Hartford about an hour’s trip from New York or Boston by train and to set us up as a hub of commerce,” Larson said. “It’s time to move on to a vision of the future that’s intermodal, links us to the airport, which will only help commerce and business activity as well as making sure that rail is incorporated into this.”
Like the governor, Larson is betting on federal dollars to make these infrastructure goals a reality. At the moment, control of the U.S. Senate remains unresolved pending the results of two January runoff elections in Georgia. Whichever way those elections go, Larson said he is hopeful Congress can pass transportation or major infrastructure legislation.
“We have a very strong case for why this needs federal funding and the urgency attached to it,” he said. “I think it’s going to happen sooner rather than later because I think President [elect] Biden recognizes that in order to put the country back to work and fulfill some of these promises, they have to deliver on an infrastructure bill.”
In the long run, Garrick said Connecticut needs to arrive at a sustainable funding solution for its infrastructure obligations and begin to plan its land-use goals rather than reacting to immediate problems. He said residents and policymakers should try to draw connections between transportation infrastructure and systemic problems like climate change and racial justice.
“That’s what bothers me about the future for us. We just don’t really make connections or think about long term planning,” he said. “The only way is if we start to make those connections and start to make plans for the future.”
EDITOR’S NOTE: Coverage of the 2020 Multimodal and Transit Summit, as well as a follow-up series on related transportation issues, is being partially underwritten by the Transport Hartford Academy at the Center for Latino Progress.
Underwriting is funding for journalism that will be reported and produced independently, without prior review by the funder before publication.
Biden Bump for Infrastructure Imperiled by Trump Election Fight
Keith Laing (Bloomberg) -- Union leaders and transportation advocates have looked to President-elect Joe Biden and his former Senate colleague Mitch McConnell for possible action next year on a major infrastructure package.
Yet, as President Donald Trump and allies including McConnell refuse to recognize Biden as the election winner, hopes are fading for an early bipartisan breakthrough on a significant infusion of funding for bridges, highways and airports.
Trump himself had pressed earlier in his tenure to advance an infrastructure deal, something that had eluded Washington policy makers for years, yet the effort fell short as he and Democratic leaders including House Speaker Nancy Pelosi parted ways over how to pay for it.
Under his $2 trillion Build Back Better proposal for reviving the U.S. economy, Biden envisions investing in schools, water systems, municipal transit and universal broadband. Moving that through Congress, though, would require extensive cooperation with Republicans, especially Majority Leader McConnell -- who since May has spurned a comparably sized pandemic relief package pushed by Pelosi.
“McConnell wasn’t too excited about doing an infrastructure package with Trump, so I am not sure why he would be suddenly excited to work on an infrastructure package with Biden,” said John Feehery, a Republican strategist and partner of the Washington-based EFB Advocacy lobbying firm. “So, I am bit skeptical.”
With a one-year extension of highway funding to expire next year, union leaders and transportation advocates still see reason for hope. They’re looking to the prospect that McConnell and Biden -- who served seven terms in the U.S. Senate -- could rediscover the bipartisan mojo that they used to seal deals during Obama administration.
Biden highlighted infrastructure in an economic summit Nov. 16 with business and union leaders via teleconference.
“We can also modernize infrastructure, roads, bridges, ports. 1.5 million new affordable housing units,” he said. “High-speed broadband, we talked about, for every American household, which is more important than ever for remote learning, remote working, telemedicine in the 21st century. Building a digital infrastructure to help businesses, health-care workers, first responders and students.”
Most Americans favor additional investment in public works. A February 2020 poll conducted by The Pew Charitable Trusts showed that 68% of U.S. residents support an increase in federal infrastructure spending. The poll was conducted before the coronavirus pandemic damaged the U.S. economy, however.
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“Infrastructure is an issue where President-elect Joe Biden and Senator Mitch McConnell can find some common ground,” said Larry Willis, president of the AFL-CIO’s Transportation Trades Department. “They should be able to do that.”
After serving together in the Senate for nearly three decades, Biden was frequently the Obama administration’s emissary to Capitol Hill when the former president needed to cut deals with McConnell, a Kentucky Republican. The question now is whether bipartisanship is still possible, especially if, as expected, Republicans maintain control of the Senate after a pair of runoff elections in Georgia.
The prospect so far doesn’t seem promising. Biden hasn’t even had a congratulatory call from his former Senate colleague, incoming White House Chief of Staff Ron Klain said in an interview with CNN’s “Situation Room” on Thursday. But Klain said Biden has talked to other Republican members of Congress, even as most of them refuse to congratulate him publicly.
“They’ve known each other for 30 years,” Klain said. “When the time is right for them to talk, they will not need an introductory coffee or get-to-know you session, that’s for sure.”
Biden’s transition team and McConnell’s office did not respond to requests for comment on the prospects for cooperation on infrastructure spending.
U.S. Representative Peter DeFazio, an Oregon Democrat who chairs the U.S. House Transportation and Infrastructure Committee, expressed optimism that Biden will push hard to keep his campaign commitment to rebuild the nation’s infrastructure, even if McConnell is initially recalcitrant.
“The President-elect has made it clear he is ready to work with Congress to deliver results for all Americans with bold investments in infrastructure that help everyone, from large metro areas dealing with unreliable transit and soon to be jam-packed highways, to rural communities that suffer from bridges in poor condition and deteriorating roads,” DeFazio said in a statement.
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Washington has been mostly spinning its wheels on infrastructure spending under President Donald Trump.
A five-year, $305 billion transportation funding law was set to expire in 2020 but was extended until next year. The House passed a five-year, $494 billion surface transportation bill in July, but the measure has not been approved by the Senate.
Early in his term, Trump proposed a $1 trillion replacement -- funded mostly by private investment -- but the plan has been stuck in neutral.
Trump’s proposal called for federal spending of $200 billion over 10 years that administration officials said can be used to “incentivize” as much as $800 billion in private, state and local spending on infrastructure. At the plan’s core was the assumption that private companies would enter into “public-private” partnerships with local and state governments.
Biden, a supporter of rail projects, has been closely associated with Amtrak -- he used to take it back and forth from Washington to his home in Delaware so often he earned the nickname “Amtrak Joe.” He promises on his transition website that his administration will “mobilize American ingenuity to build a modern infrastructure and an equitable, clean energy future.”
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If it comes to pass, it would be a far cry from repeated declarations of “infrastructure week” by the Trump White House that were quickly subsumed by unrelated events.
“We have to get past the point where infrastructure week is a running joke,” Willis said. “It’s one of the backbones of our economy and it employs thousands of our members with good paying jobs.”
A cash infusion would appease state governments that have seen gas tax revenues plummet as Americans cut back on traveling in light of the coronavirus pandemic.
The U.S. Department of Transportation’s Highway Trust Fund’s balance has fallen 56.5% so far this year, according to the Federal Highway Administration. The highway fund, which is used to distribute money to states, is supported by the 18.4-cents-per-gallon federal gasoline tax.
“It’s one of the few areas Republicans and Democrats should still be able to come together and agree on,” Jim Tymon, chief operating officer and director of policy and management for the American Association of State Highway and Transportation Officials, said during a post-election transportation policy forum organized by his group.
Window for Compromise
The federal government usually spends about $50 billion per year on roads nationwide, but the federal gas tax only brings in $34 billion. The gas tax has not been raised since 1993, and there was little appetite in Washington for increasing it even before the pandemic led to an economic slowdown.
Congress has turned to other areas of the federal budget in recent years to close the infrastructure funding gap, most recently transferring $70 billion to help cover five years’ worth of transportation spending that will now run out in 2021.
John Porcari, a former U.S. Deputy Secretary of Transportation in the Obama administration whoadvised the Biden campaign, said during the AASHTO event that he thinks there are “real prospects for a bipartisan, broad infrastructure package” in the early days of Biden’s administration.
But the window for a bipartisan infrastructure compromise “is probably pretty short,” said Adrian Hemond, a Democratic strategist with the bipartisan Grassroots Midwest consulting firm in Michigan.
“The first six months of the Biden administration are the best chance to get any legislation of consequence done,” he said. “There’s an incentive for every incumbent facing a potentially competitive election in 2022 to have an accomplishment or two that they can run on back home.”
Middletown Combines Two Projects Into One With Single Prime Contractor
Phase II work is under way on the Connecticut Department of Transportation (CTDOT) Arrigoni Bridge project. The $46 million undertaking in Middletown/Portland is the result of a 2010 safety report, which found deficiencies in the structure's two main arch spans. Construction is taking place simultaneously with the Saint John's Square/Main Street intersection operational improvement project in Middletown.
"Both project limits abut each other," said James Vincenzo, CTDOT transportation supervising engineer. "Due to the possibility of conflicting traffic patterns and the need for constant project coordination, it was decided to combine both projects into one contract, in order to have one prime contractor coordinating work on both projects. This reduced the probability of contractual and construction conflicts during construction."
The bridge's two center spans were replaced in 2012, as Phase I of the bridge rehabilitation; a Phase II effort was required to complete remaining rehab work, which included the replacement of the approach deck spans.
"The site required minimal clearing to start construction," said Vincenzo. "Prep work involved clearing and grubbing, setting up of staging areas and access roads and coordination with P&W railroad."
Replacement of the Arrigoni approach spans will be completed in three stages. Traffic is reduced from two lanes in each direction to one lane in each direction during all stages. Work zones will be protected with temporary precast concrete barrier curb. The contractor must complete the three stages within 540 days from the time traffic is first impacted.
Vincenzo noted that cold weather paving and concrete plans are necessary to meet the project specification requirements and aggressive project schedule. Heating may be required to provide a proper concrete curing environment.
Main materials include structural steel (steel plates, sidewalk struts/brackets, span poles, mast arms, etc.), galvanized deformed steel bars, various concrete classes, low permeability concrete, precast sidewalk panels, luminaires, protective fencing, elastomeric cold applied membrane, various pavements (HMA / PMA), traffic signals and equipment, bearings, precast concrete barrier curb, drainage structures and shear connectors.
Stage 1 demolition of the existing deck and parapets has been carried out. Stage 2 and 3 demo remains to be completed. Class S concrete substructure repairs also have been ongoing, which requires the sounding of substructure elements to determine areas of deterioration that require repair.
The earth excavation quantity was estimated at 3,077 cu. yds. There are additional items on the project that include excavation.
Excavation is required for roadway reconstruction, traffic foundation installation, sidewalk installation, curbing installation, drainage structure installation, temporary access road construction, etc. A majority of the project is bridge rehabilitation work, so earthwork tasks are limited.
Temporary precast concrete barrier curbs are anchored to the existing bridge deck in staged construction. Debris shields are installed prior to demolition, along with all safety appurtenances in accordance with OSHA regulations.
During construction, existing pedestrian rail and light standards are removed, followed by barrier curb, sidewalk and sidewalk struts and brackets. The bridge deck can then be sawcut, removed in sections and hauled off. After deck demolition, structural steel repairs are completed, along with deck forming, shear connector installation, rebar installation and low permeability concrete placement.
After proper curing time, cold applied elastomeric concrete membrane is installed followed by pavement courses. Deck replacement must be coordinated with the replacement of the barrier curb, sidewalk and railing installation.
The substructure must be sounded to determine areas of concrete deterioration. Deteriorated areas are removed to sound concrete, and class S concrete repairs are completed. There also are numerous substructure steel repairs being performed in deteriorated sections of substructure components.
Temporary precast concrete barrier curb allows for staged construction to occur in a safe manner. The TPCBC is anchored to the existing bridge deck and separates traffic from the work zone during deck reconstruction.
According to CTDOT, the bridge exemplifies the long-span bridge engineering of the first half of the 20th century. Because of the growing need to provide uninterrupted highway passage over large bodies of water, engineers were called upon to design large cantilevered trusses, suspension bridges and steel arches. Innovative erection methods, the availability of very large structural components and special metals all contributed to the development of long-span bridge technology.
Almost a third of the bridge used high-strength silicon steel, and the structure was almost entirely erected by building the arches outward from the center pier, letting them balance each other as they were extended over the water. Another interesting feature is the use of chains of huge eyebars under the roadway that tie together the ends of each arch. The tied-arch technique resisted the outward horizontal thrust of the arches and allowed the piers to be much smaller and more economical.
As for the St. John's Square and Main Street construction, it involves carrying out the geometric realignment of the intersection to improve safety and operational efficiency.
"The proposed work included the addition of two turn lanes on St. John's square westbound," said Vincenzo. "Widening occurred on the southbound side, in order to incorporate the two new lanes, as well as a proposed median island. In addition, geometric improvements were made to the intersection by way of median islands on Main Street that will serve to normalize the alignment."
Work on the project, which is funded with a combination of federal and state funds, began in February 2020. The anticipated completion date is early 2022. Construction is currently on schedule and within budget.
Mohawk Northeast Inc. serves as the prime contractor on the project. Equipment owned and used on site by Mohawk includes an Aspen A-62 snooper; Cat 330 and Cat M322D excavators; a Cat 938M loader; a Cat 305E mini-excavator; a Schwing S20 concrete pumper truck; Wirtgen W120 CFi and Wirtgen W35 DC millers; and a National Crane Series NBT 30H truck crane.
According to Mohawk Project Manager Tim O'Connell, the project is an ideal fit for his company.
"With over 50 years of bridge construction experience, Mohawk Northeast is ideally suited to complete the Arrigoni Bridge reconstruction project. Having completed numerous projects with similar features, such as a tight schedule, heavy traffic congestion and limited/restricted site conditions, Mohawk has proven itself to be a leader in the industry."
O'Connell added, "We have a strong working relationship with the DOT, and understand what it takes to complete a project of this nature. Many of our workers live in the area and/or travel across this bridge daily. When working on such an iconic bridge so close to home, there is a sense of pride taken in our workmanship. We have the equipment needed to complete the project, along with the experience to give Connecticut a bridge that will last for years to come." CEG
Some key Bridgeport downtown projects moving slowly
Brian Lockhart BRIDGEPORT — When it comes to economic development, this city has gotten used to waiting to see if plans on paper become real, occupied buildings.
John Guedes, who operates the city-based Primrose Companies architecture and construction, said he has learned to take a believe-it-when-he-sees-it approach to Bridgeport’s economy: “Don’t worry about the ones (plans) that have been approved, worry about the ones that have been started.”
Guedes hoped to be able to open his new 92-unit downtown apartment complex by now. But after an initial groundbreaking at the corner of Congress and Main streets, the site has lain dormant.
He said in an interview this week he expected the foundation will finally be poured this fall, with an opening in late 2021 or in 2022. He blamed the delay on a combination of old construction debris that needed removal and some permitting complications.
“Building in Bridgeport is always a little more difficult,” said Guedes.
This week, staff from the economic development department briefed members of the City Council on the status of several projects, including a few downtown where officials have for years been working to renovate or replace vacant and dilapidated municipally-owned sites on and off Main Street.
The ultimate goal has been to build a larger mix of housing, retail and attractions to bring more life to an area which, particularly now because of the current COVID-19 pandemic, struggles to become and stay a lively and prosperous destination.
Of a trio of pending high-profile proposals Mayor Joe Ganim’s administration has touted over the past few years as key to downtown’s ongoing revival, Guede’s market-rate housing — which will also include 7,000 square feet of ground level retail — is closest to becoming reality.
Guedes did not participate in Tuesday’s council teleconference but economic development staff said at the time that they believed his permitting hold-ups had been concluded as of that very day.
Guedes told The Connecticut Post he expected to be able to “just work right through” the winter: “Unless we get a tremendous amount of snow that holds up everything. ... The quicker we can get the building up and begin occupancy, the better it is from an investment point.”
He noted that there will be even greater demand for the new apartments because the coronavirus health crisis has been driving migration out of New York City into less-densely populated Fairfield County, with Bridgeport offering some of the cheapest rents compared with the southwestern suburbs.
While Guedes’ development is still moving ahead, the news was mixed for two of the Ganim administration's other signature deals that had already been floundering pre-coronavirus.
More than three years after selecting New York-based Exact Capital to renovate the historic but shuttered Majestic and Poli Palace theaters along Main Street and open a hotel and residential towers, that massive undertaking remains stalled.
“It’s pretty much status quo,” William Coleman, deputy director of economic development, told council members Tuesday. “We had meetings with them (Exact) before the (COVID-19) crisis in which they demonstrated they were having progress, not conclusive, but progress. ... He seemed to be talking to the right people about the right sorts of things. He didn’t lock it down and secure the financing before the crisis hit.”
Still, Coleman emphasized, Exact spent money on asbestos removal within the theaters so has made a modest financial commitment.
Exact, which had originally talked of a November 2018 groundbreaking, but missed that December’s initial deadline to come up with $56 million, has repeatedly ignored The Post’s requests for comment, including for this story.
Coleman also advised the council Tuesday that another proposal — a state-of-the-art ice skating facility — was still in the works: “That (development deal) will be coming to you in the first quarter” of 2021.
He offered no further details.
Ganim’s office in September 2018 had announced Guedes’apartment complex simultaneously with the selection of the rinks’ developers, Park City Ice Palace, a new limited liability corporation that involved a professional skater from the Ukraine.
But the skating facility received push-back from some on the council and from the operators of the city-owned, privately managed Wonderland of Ice, who argued more rinks were not needed in Bridgeport and could hurt Wonderland’s business.
“On the skating rinks, I had hope that they would have been able to move forward on it,” Guedes said this week. “For us having another project across the street, moving at the same time, adds value.”
On Thursday Coleman, Economic Development Director Tom Gill and Ganim’s head of communications, Rowena White, through a teleconference, provided more information about the rinks and downtown in general to The Post.
“Those people have hung in,” Gill said of Park City Ice Palace. “We’re working with the same developers. It’s our intent to get a plan to the council early in the spring and see what the council wants to do.”
Park City’s representatives, who met with the City Council in March 2019 to address any concerns and convince critics of their project’s merits, could not be reached for comment.
Gill urged skeptics of downtown’s progress to consider the full picture and how it contrasts to two or three years ago, pointing to completion earlier this year of the long-delayed effort to convert the former Jayson and Newfield buildings into apartments and retail.
“The positive about that is how quickly those apartments are renting up,” Gill said.
And the brewery announced in July 2019 is still moving into those buildings, Coleman added, though under the public health and safety limitations required of the pandemic: “They're looking to open up this spring if not sooner in terms of wholesale. They expect to make the business model work on a delivery basis, even in these challenging times.”
Coleman, Gill and White also cited the several demolitions that occurred in July 2018 and in September and December 2019, resulting in other owners beautifying their now more exposed facades.
“So you can see a very clear and definitive look,” White said. “Before it was old buildings either falling apart or that had graffiti.”
And the vacant land is, temporarily, being spruced up for public use while the city courts other developers.
“While things at times seem like, ‘Oh, Guedes is delayed or this happened,’ when you analyze what’s been done in the two, two-and-a-half years down here, it’s phenomenal,” Gill said.
Jon Lender When you’re outgunned, sometimes you make your last stand on high ground. The site of Steven Farrelly’s last stand is 60 feet high — a gigantic mountain of salt, 85,000 tons piled onto the State Pier in New London, scooped by cranes out of ships that floated it all the watery way from Egypt.
For six years, shiploads of that desert-mined salt have been used to melt ice on Connecticut highways, streets, sidewalks and parking areas — after being sold by Farrelly’s company, DRVN Enterprises, to about 250 customers, including plowing contractors, state and local governments, hospitals and colleges.
DRVN prospered from its leased base at the State Pier — “I went from zero employees to 15 employees in five years,” says Farrelly — but that changed drastically in the past year because of political and corporate forces beyond Farrelly’s control.
Now he faces eviction from the New London pier and the prospect of eating $5 million worth of salt, which can be unhealthy.
The relatively new, quasi-public Connecticut Port Authority (CPA) has been put in charge of the New London pier, replacing the state transportation department, and it quickly agreed to a mega-deal with two big corporations for redevelopment of the port as a hub for pre-assembly of giant, offshore wind turbines. They’re to be floated seaward and planted 12 miles southwest of Martha’s Vineyard.
That $157 million redevelopment deal with Eversource and the Danish wind energy company Ørsted means there won’t be room on the pier for Farrelly and his road-salt mountain — or for any other longtime tenants such as commercial fishermen — for years.
Farrelly has been told he needs vacate the pier, and will forfeit any unsold salt he leaves there. An original March 31 deadline was pushed back to Dec. 31, but that still puts Farrelly in a fix.
He says he needs another 2½ months, until March 15, to sell his last 85,000 tons during the peak winter demand of January, February and early March.
If he doesn’t get an extension, he said on Wednesday, “we’re done.”
That would also be the end for the 11 employees he’s managed to keep on the payroll during the recent tough times in which he said he’s tried, but failed, to find an alternate location.
“I owe $5 million,” the cost of buying the most recent two shiploads of salt, Farrelly said, adding that he’ll have no trouble selling the remaining inventory, and keeping his business afloat, if he’s just granted the extra time.
“We just need this winter,” he said. “All I want to do is break even. Make my creditors whole — that’s my goal.”
On Friday he got a one-month reprieve, to the end of January, in a meeting with the CPA’s new executive director, John Henshaw, who was hired in August after having served as an official of the Maine Port Authority
Nothing is guaranteed beyond that, Farrelly said he was told. But the situation will be reviewed on a month-by-month basis as to his progress in selling the remaining salt, as well as the question of whether the wind turbine project has enough leeway in its timetable for environmental remediation to give him more time.
“That gives us hope,” said Farrelly’s wife, Michelle Farrelly, who also attended Friday’s meeting with Henshaw at the CPA’s Old Saybrook office. “There could be five ice days” in December or January, she said, in which case “Steve could be done.”
“What we offered was basically a month-to-month extension, beginning with one month,” Henshaw said Friday. “The reason for that is, we’re trying to be cautious” and “make sure that the salt is moving. We don’t want to end up with 85,000 tons of salt at the end of March and be in the same position that we’re in now.”
“He does have the potential for additional months” in February and March, Henshaw said, “but that’s assuming that we’re making progress, and understanding that we are going to have [environmental] remediation activity” going on at the site in preparation for the long-term wind turbine project.
“We’ve demonstrated a continued willingness to work with him,” Henshaw said, adding, “I think it’s all of our goals to see him successful in selling that salt.”
“We’re going to give him as much runway as possible to do so, working within the project’s logistics,” said David Kooris, the CPA’s governing board chairman.
He said that to partly compensate Farrelly for having to move the salt mountain a few hundred yards across the pier site last year (to make room for the redevelopment), he hasn’t been charged his $12,000 monthly rent since August. Moving the salt took two weeks and cost hundreds of thousands of dollars, Farrelly said.
Although things looked better for the Farrellys Friday than midweek, it’s all still been been a stressful experience — which has been played out against a backdrop of a scandal that has plagued the port authority agency in recent years, and of controversy surrounding the Eversource-Ørsted wind deal and the selection of a new port operator.
Scandal attended the abrupt resignation in July 2019 of Bonnie Reemsnyder, then-chairwoman of the CPA’s board, after Gov. Ned Lamont said controversy over publicly financed photos taken by her daughter was a “sideshow and distraction” and demanded she quit.
In addition, State Auditor John Geragosian said a review of travel and meals at the port authority found “no documentation, no process, no policies and procedures in place to determine whether those expenses were appropriate.”
Meanwhile, the $157 million project redeveloping the New London pier into a wind energy hub is the port authority’s centerpiece. Eversource and the Danish company have committed $77.5 million, and the other $79.5 million is to be financed by the state and CPA in bond funding.
However, although the so-called Revolution Wind project is supposed to create a lot of jobs and leave the state with a much-improved New London port in 20 years or so, it still has bred a lot of controversy.
For one thing, the New London pier will be closed to cargo shipping during the years of the wind-energy product — which was a departure from the CPA’s originally stated intention to continue it, although with interruptions resulting from the ongoing redevelopment.
And, for another, the CPA has recently awarded the contract for operation of the New London pier to Gateway Terminal, which operates the competing port of New Haven. Gateway teamed up with Eversource-Ørsted in responding to the port authority’s request for proposals, and has replaced the former New London pier operator, Logistec.
Some critics see Gateway as gaining a dual advantage of more shipping at its New Haven port while eliminating competition from New London.
The Day of New London’s columnist, David Collins, has covered the port authority closely and authored numerous disclosures of improprieties leading to the 2019 management shakeup. Collins’ column recently has mentioned Gateway’s ties with companies that import and distribute salt through its New Haven terminal — and which compete with Farrelly’s soon-to-be-shut-down business on the New London pier, now under Gateway’s control.
Collins’ latest column on the subject, last Tuesday, asked in the headline: “Will Lamont finish destroying New London’s road salt business?” It reported on a plea for help that Farrelly emailed to Lamont on Nov. 14, and had not received an answer to.
Farrelly wrote: “Although we have been granted extensions in the past that were greatly appreciated, they were only temporary solutions. With the current December 31st deadline looming and a forfeiture of the salt to the CT. Port Authority at stake we are asking you to step in and allow us extra time to sell and move the remaining salt. ... This will allow us to stay in business, pay our creditors and alleviate the loss of jobs and any further damage to DRVN and many of its CT. based subcontractors and vendors who depend on the income we provide them throughout these winter months.”
Asked Thursday about the email, and what the harm would be in giving Farrelly until March 15, Lamont’s communications director, Max Reiss, said he’d check into it. Friday morning, Farrelly was told by Henshaw he’d be given the extra month, and possibly more. Later Friday, Reiss came back with a statement that “the administration is supportive of the extension.”
Analysts: Lamont, lawmakers face $4.3 billion gap in next two-year Connecticut budget
Keith M. Phaneuf State officials are facing almost $4.3 billion in red ink in the next two-year budget, due largely to the coronavirus-induced recession, according to a new report Friday from nonpartisan analysts.
Those deficits, while daunting, are significantly less imposing than the massive shortfalls Connecticut faced after the last recession in 2011 — gaps that forced a record-setting tax hike of nearly $1.9 billion nine years ago.
The legislature’s Office of Fiscal Analysis also used its annual Fiscal Accountability Report on Friday to warn that Connecticut’s cash-starved transportation program is on pace to run deficits for four consecutive years and to reach insolvency by 2024.
“The pandemic recession will adversely impact the state budget for years to come,” the nonpartisan analysts wrote in their report, adding that debt service, required contributions to pensions and retiree health care, increased payments owed to hospitals and other fixed costs also are driving the deficit forecasts.
According to OFA, state finances for all programs — unless adjusted — would run nearly $2.1 billion in deficit in the fiscal year that begins next July and $2.2 billion in the hole in 2022-23.
But Gov. Ned Lamont, who must propose his next biennial budget to legislators in February, has nearly $3.1 billion in reserve. And while nonpartisan analysts estimate $854 million of that cushion will be gone by July — to close a deficit in the current budget — that still leaves Lamont more than $2.1 billion to mitigate the red ink to come.
Lamont’s budget agency, the Office of Policy and Management, which is required to submit its own Fiscal Accountability Report, issued very similar projections late Friday afternoon — both about the overall budget deficits and the transportation system’s woes.
In past years, when faced with major deficits, state officials have used reserves — if available — to temporarily replace shrinking tax receipts until the economy improves.
By comparison, Gov. Dannel P. Malloy inherited an empty rainy day fund — and about $1 billion in operating debt — when he took office in January 2011. And Malloy was faced with annual deficits 50% larger than those confronting Lamont — about $3.6 billion per year.
Lamont already has said he is optimistic the next two-year budget can be balanced without any major tax hikes, particularly if President-elect Joe Biden’s new administration and Congress send another round of federal relief to states early in 2021 as promised.
The governor has cautiously guarded the rainy day fund since the pandemic began, resisting appeals from some lawmakers to use more state resources to assist nonprofit social service agencies, nursing homes and municipalities.
Due largely to a surging stock market and expanded federal aid to the unemployed, Connecticut has seen its income and sales tax receipts surge — and its rainy day fund grow — since March, despite having more than 200,000 residents collecting weekly unemployment benefits for much of the summer and fall.
Despite the positive effects of the stock market and federal unemployment aid, the Lamont administration noted in its report, income and sales tax receipts for the current fiscal year, which began July 1, still are running below pre-pandemic levels.
Leaders of the Senate’s Republican minority cited the report Friday while chastising majority Democrats in the legislature for not proposing any spending cuts to mitigate the current deficit.
“It’s alarming that so far this year Democrats have called for more borrowing, abandoning the ‘debt diet,’ and not doing anything on the state budget until April,” Senate Republican Leader-elect Kevin Kelly of Stratford and Sen. Paul Formica of East Lyme, ranking member on the Appropriations Committee, wrote in a statement.
Kelly and Formica also noted Lamont’s proposal for closing the shortfall this fiscal year relies heavily on tapping the rainy day fund, rather than reducing spending. Democrats have countered that health care providers, schools and municipal governments would be harmed by any deep budget-cutting effort amid the coronavirus pandemic.
Transportation fund in trouble
Nonpartisan analysts also warned Friday in their report that the state budget’s Special Transportation Fund — already reeling from two consecutive years of legislators refusing to enact tolls — is set to run out of cash in 2024.
The STF primarily funds Department of Transportation operations, transit programs, and the debt on borrowing used for highway, bridge and rail upgrades.
That borrowing, in turn, leverages about $700 million per year in federal aid for infrastructure work in Connecticut.
But DOT officials say state bond funds and federal aid combined — which have totaled between $1.7 billion and $1.8 billion in recent years — fall $200 million to $300 million shy of the annual level needed to maintain good repair and make strategic improvements.
Lamont pressed lawmakers in 2019 to impose highway tolls on all vehicles, and in 2020 he asked just for fees on large trucks. The legislature, facing a lot of political pushback, acted on neither proposal.
Nonpartisan analysts say the transportation fund, which is supported with a combination of fuel tax revenues, a share of sales tax receipts and other fees, is expected to run a $46 million deficit this fiscal year and shortfalls ranging from $24 million to $65 million over the next three.
By 2024, absent a new source of revenue, those shortfalls will have wiped out the STF’s $122 million reserve and the program would be $21.5 million in debt, according to OFA.
Lamont has said he doesn’t plan to propose tolls when the 2021 legislative session opens in January but will press legislators for new options to preserve the transportation program.
CT’s unemployment trust fund goes broke; employers on hook for millions in federal borrowing
Greg Bordonaro The state’s unemployment insurance trust fund has gone broke, forcing the state to borrow hundreds of millions of dollars from the federal government to pay jobless claims as the coronavirus pandemic continues to inflict harm on Connecticut’s economy, state officials have confirmed.
That money will eventually have to be repaid by employers, who will face higher unemployment insurance taxes and fees in the years ahead.
The state’s unemployment insurance trust fund, which typically raises $800 million a year via employer taxes, ran out of money in August, forcing the state to borrow $402 million from the federal government to date, said Michael Lucente, the unemployment claims director of accounts within the state Department of Labor.
That loan has helped pay out jobless benefits in recent months, but there’s only enough money left ‒ $4.2 million ‒ to last the rest of this week. That will force the state to borrow even more from the federal government.
Connecticut has asked the feds for an additional $150 million in November and $250 million in December, but will only access the money when the trust fund is fully depleted, Lucente said.
It’s a similar scenario to the one that played out during the Great Recession, when the state borrowed nearly a billion dollars from the federal government to pay jobless benefits. It took seven years to repay that funding.
But the coronavirus pandemic has created even more dislocation from the workforce.
Since March 13, the state labor department has received 1.1 million state, federal and extended unemployment benefits applications; currently about 188,000 residents are filing for unemployment benefits weekly, DOL said.
That’s led to a huge drain on the unemployment insurance fund, which came into the recession with about a $700 million balance. Since March, the state has disbursed $5.5 billion in state, federal and extended unemployment benefits.
The federal government has paid for a majority of those claims, but Connecticut has spent nearly $2 billion, DOL said.
The federally borrowed money will be interest-free through the end of the year. But as of New Year’s Day, any outstanding balance will be subject to an interest rate of about 2.4%, largely because Connecticut failed to have a fully solvent unemployment trust fund in years past.
In fact, according to the federal government’s 2020 Trust Fund Solvency Report, Connecticut has not had a fully solvent unemployment trust fund since 1999, more than 20 years ago.
A ‘killer’ for businesses
The last time Connecticut borrowed money to pay unemployment claims was in 2009, during the Great Recession. The state – or rather Connecticut businesses — did not pay off that $1.2 billion debt until 2016.
Unemployment trust funds are funded through state unemployment taxes paid by employers and remitted to the federal government, which has a separate trust fund account for each state.
State unemployment taxes are assessed on the first $15,000 of each employee’s salary. The rate is determined by a company’s hiring practices.
The higher a company’s turnover, the higher the company’s unemployment tax.
Earlier this year Lamont signed an executive order so that layoffs tied to the pandemic would not impact a company’s rate.
In addition, a 6% federal payroll tax, known as the Federal Unemployment Tax Act (FUTA) tax, is levied on businesses on the first $7,000 of covered workers’ earnings. Employers remit the tax but can claim credits against 5.4 percentage points of FUTA taxes paid in states like Connecticut, effectively shrinking the FUTA tax rate to 0.6%, or a maximum of $42 per worker.
Lamont could also choose to reduce that credit, just as Connecticut’s government did after it borrowed trust fund money during the last recession.
The interest on that loan was repaid from a special assessment billed to employers, and interest on the new trust fund loan would be paid the same way.
A CT Mirror report was included in this story.