Finance panel backs bill to shrink CT transportation debt
The legislature’s Finance, Revenue and Bonding Committee
approved bills Tuesday that would reduce Connecticut transportation
construction debt and would gradually phase out property taxes on motor
vehicles — in the 2030s.
But even with that long-range strategy, the property tax
phase-out faces an uphill struggle, having sparked objections from Gov. Ned
Lamont’s administration and from the Connecticut Conference of Municipalities.
The Democratic-controlled finance panel, which must complete
action on all its bills by the close of business Thursday, is expected to take
up several revenue proposals Wednesday, including a new measure to create a
state income tax credit for low- and middle-income families with children.
Those revenue bills, along with a spending plan adopted
Tuesday by the Appropriations Committee, will form a blueprint to guide final
negotiations with legislative leaders and Lamont on a new state budget for the
next two fiscal years.
Capping transportation reserves and paying down debt
One bill, enacted with bipartisan support Tuesday, would cap
reserves in the budget’s Special Transportation Fund at 18% of the STF. Any
other unspent dollars would be used to pay down transportation debt.
Based on a proposal from state Treasurer Erick Russell, the
measure stems from large surpluses in recent years in the transportation
fund, which represents about 9% of the $26 billion overall state budget. Besides covering
operating expenses for transit programs and for the Departments of
Transportation and Motor Vehicles, the fund also pays the debt service —
principal and interest — on the hundreds of millions of dollars Connecticut
borrows annually for highway, bridge and rail construction projects.
Bottom of Form
The STF, which gets most of its funding from sales and fuel
tax receipts, finished with surpluses approaching or surpassing 10% in each of
the past three fiscal years, and the Lamont administration projects
a $159 million or 7% surplus this fiscal year.
The STF reserve, which holds these annual surpluses, swelled
beyond $970 million last June, according to the state comptroller’s annual
reports, a cushion larger than 45% of last year’s entire transportation fund.
Gasoline station owners and fuel distributors began to press
state officials to cut gasoline taxes or provide some other relief, given
the huge
unused revenues.
Legislators agreed to last spring to use $534 million of the
reserve to pay down transportation borrowing early — a move Russell projects
will save Connecticut $680 million in interest costs over the next decade.
Tax phase-out faces strong objections
The bill approved by the finance committee would maintain
the 18% cap permanently and continue to use excess reserves to pay down
construction debt.
Majority Democrats adopted a second measure Tuesday over
Republican objections that would gradually phase out property taxes on motor
vehicles, a levy that generates nearly $1 billion annually for cities and
towns.
But “there will be no revenue loss to the towns,” said Sen.
John Fonfara, D-Hartford, co-chairman of the finance committee.
That plan to keep towns whole hinges on state government
continuing to rack up the huge budget surpluses it has averaged since new
fiscal caps were established in 2017. The average cushion has been $1.8.
billion or 8% of the General Fund.
Legislators have used those surpluses over the past eight
years to build the rainy day fund and to make more than $8.5 billion in
supplemental pension payments, in addition to the more than $3 billion in
required pension contributions it makes annually.
Extra pension payments generate more earnings and slow the
growth of the mandatory payments. Lamont’s budget office estimates the state
will save $700 million annually on required payments next fiscal year because
of all the surplus dollars its dedicated to the pensions since 2020.
But what if those large surpluses and extra pension payments
continue in the future? The phase-out bill says that, starting in 2028, any
savings on required pension contributions should be redirected toward
eliminating the property tax.
For example, if $100 million in pension savings is achieved,
and towns are still collecting $1 billion in property taxes, then the state
would have communities reduce that burden to $900 million — and send cities and
towns $100 million to offset their revenue loss.
Fonfara conceded this process likely would take many years,
but the state has been successfully building big surpluses since 2017.
That savings system, though, has come under increasing
criticism from majority Democrats in the House and Senate, who say it has left
too few dollars to invest in education, health care, town aid and other core
programs.
Sen. Ryan Fazio of Greenwich, ranking Senate Republican on
the finance committee, said called the municipal levy on motor vehicles “a
burdensome tax, an annoying tax, a stupid tax.”
But Fazio, who joined Republicans in voting against the
bill, said it hinges on making payments to towns that would be outside of the
normal budget process, including the spending cap.
Lamont’s budget director, Jeff Beckham, expressed similar
concerns in testimony before the committee.
And the Connecticut Conference of Municipalities, which has
long argued that the state relies too heavily on property taxes to fund
services at the local level, said any plan to end motor vehicle taxes should be
part of a more comprehensive reform that gives communities other options for
raising revenue.
The municipal lobbying group also has charged, on many
occasions, that state government often reneges on pledges to transfer funds to
cities and towns, leaving local property taxpayers in the lurch.
“This bill does not reduce the current revenue needs of
towns and cities but shifts the burden to the state and makes towns and cities
more dependent,” CCM wrote in its testimony.
Other bills adopted Tuesday by the finance committee would:
Establish a 25% tax credit, capped at $500, for businesses
that contribute to employees’ Connecticut Higher Education Trust account.
Create business and income tax credits for farming
businesses that invest in certain machinery and buildings. The credit is equal
to 20% of the amount farmers spend. The measure also would increase the
exemption from municipal property taxes for farm machinery from $100,000 of
assessed value to $250,000.
Expand the types of businesses that may earn a state tax
credit for making student loan payments on behalf of their employees starting
in 2026. The state caps this program and does not issue more than $10 million
in credits per year.
Authorize up to $30 million in borrowing in each of the next
two fiscal years to create a new program to help municipal school districts
renovate or repair public school buildings, grounds and other infrastructure.
Establish a $500 state income tax credit for owners of a
licensed family child care home starting in 2026.
Allow cities and towns, starting in October, to expand an
existing property tax abatement program for police, firefighters and emergency
medical technicians killed in the line of duty. The benefit would also become
available to surviving domestic partners of these first responders. The measure
also creates a $2,000 state income tax deduction for certain payments to
volunteer firefighters and emergency medical service providers.
Require telecommunications companies to charge subscribers a
five-cents-per-month fee to support a cancer relief account for Connecticut
firefighters starting in October. Nonpartisan analysts project the fee would
generate between $2.4 million and $3 million annually.
State lawmakers approve Transfer Act replacement, expected to yield billions in economic activity
State officials on Tuesday celebrated the final adoption of
new rules governing environmental cleanups at Connecticut’s industrial and
commercial sites, with the change expected to yield billions in economic
activity and thousands of new jobs.
The General Assembly’s Regulations Review Committee, on
Tuesday, approved regulations outlining a new released-based approach to
environmental cleanup.
“This is a game changer for Connecticut,” Gov. Ned Lamont
said. “This new system truly is a win-win, resulting in faster environmental
clean-ups and unlocking countless blighted properties that will go from being
community hazards to being community assets.”
The new regulations are expected to take effect in spring
2026. DECD economists estimate the new system will unlock $3.78 billion in new
GDP growth in the next five years, bringing $115 million in new revenue to the
state and more than 2,100 new construction jobs.
In a nutshell, the new system relies on pollution releases
being cleaned as they happen or are discovered.
The biggest
complaint against the 40-year-old Transfer Act has been the wide net
it casts, dragging in all properties at which more than 100 kilograms (about
220 pounds) of hazardous waste was processed or generated in any one month from
Nov. 19, 1980 onward.
Under the law, those properties – even ones where there was
never any known discharge or spill – had to undergo costly environmental
testing and review before a sale could be completed.
That “guilty-until-proven-innocent” approach was seen as a
cumbersome and overly costly deal-killer.
Almost 5,000 properties have entered the Transfer Act
program since the 1980s. But less than half have been cleared.
The new regulations are the result of a four-year
consultation between state environmental and economic development staff and
dozens of industry experts including brokers, land-use attorneys and cleanup
experts. They align the state more closely with the approach used by 48 other
states, which, state officials say, will mean faster cleanups initiated by
owners.
“Today’s adoption of the release-base cleanup regulations
and the sunsetting of the outdated Transfer Act will exponentially drive
economic development, as well as improve environmental outcomes in
Connecticut,” said State Senator Joan Hartley (D-Waterbury), co-chair of the
General Assembly’s Commerce Committee and a longtime proponent of overhauling
the Transfer Act.
New Haven schools could get two new pools as part of $25 million renovation plan
NEW HAVEN –– As part of ongoing repair and improvement
efforts, New
Haven Public School officials are proposing six renovation projects,
including roof and swimming pool replacements across the district.
“We know that there are a lot of renovations and repairs
that are desperately needed across the district as it relates to facilities,”
New Haven Superintendent Madeline Negrón said. “Those are going to be things
that eventually we have to get done.”
The proposed projects include swimming pool replacements at
Conte-West Hills School and Wilbur Cross High School; roof replacements
at Truman School, Wilbur
Cross and James Hillhouse High School; and the construction of a new
central office at 424 Chapel St.
The plan is to eventually move the central office from 54
Meadow St. to the second floor of 424 Chapel St.
"They certainly all needed work, especially the roofs
and the pools,” Board of Education Vice President Matthew Wilcox said.
In January, the district conducted a walk-through of Wilbur
Cross and James Hillhouse High Schools in response to a complaint
filed with the Connecticut Department of Labor’s Division of
Occupational Safety and Health by the New Haven Federation of Teachers.
On Feb. 13, there was a leak reported inside an English
classroom at Wilbur Cross, which is an issue that has been difficult to address
because the building’s roof has solar panels.
The complaint cited concerns about mold, leaks, air quality
and HVAC issues at the two high schools.
While the report found no “evident deficiencies,” Justin
Harmon, director of marketing and communications at NHPS, said the district has
plans for projects and upgrades across its schools.
The total cost of these six projects is estimated at $25.1
million.
Negrón said the district plans to apply for the Connecticut
Department of Administrative Services Office of School Construction
non-priority grant, which if approved, would mean the district is only
responsible for 34.14% of that amount—or about $8 million.
Resolutions formally documented by the Board of Education
and the
Board of Alders are needed so the district can apply for the
grant.
The projects align with the district’s long-term facilities
plan and are essential to maintaining safe, functional and equitable learning
environments for students and staff, according to a statement from New Haven
Central Office Business Director Christine Bourne.
“Timely submittal and approval of these resolutions allows
the district to pursue reimbursement opportunities through the state’s
construction grant program," she said.
The projects were presented to the Board of Alders at the
April 7 meeting, with a final vote scheduled for May 5.