Lamont budget calls for CT to ramp up transportation projects
Gov. Ned Lamont’s new budget proposal would keep Connecticut
on pace to dramatically accelerate the rebuilding of its aging highways,
bridges and rail lines.
But that increase also could leave the transportation
program needing new revenues in three years, and some legislators already have
begun exploring new ways to pay for it — including a potential surcharge on
certain delivered goods.
The $55.2
billion biennial budget that Lamont proposed Feb. 5 includes a nearly
$2.3 billion Special
Transportation Fund for the 2025-26 fiscal year and a $2.4 billion
plan for 2026-27, boosting spending about 4% in each year.
The STF, which represents slightly less than 10% of the
state’s overall budget, funds operating costs for the departments of
Transportation and Motor Vehicles, supports rail and bus transit services, and
covers the principal and interest on the transportation borrowing that, coupled
with federal grants, pays for infrastructure construction projects.
Last week, the governor recommended spending an extra $158
million, a bump of nearly 20%, over the next two years on debt service for
those loans. This would enable Connecticut to issue $1.3 billion in new
transportation bonds in 2025-26 and $1.4 billion in 2026-27. The latter
represents a 40% jump over current levels.
“No schedules have slipped,” DOT Commissioner Garrett
Eucalitto said. “We are currently holding to those estimates.”
The department has been criticized for decades for not
advancing more construction work, a problem many have attributed to
insufficient staffing and other resources.
Lamont had been criticized in recent years for amassing
hefty surpluses in the transportation fund. Some of the windfalls were
attributed to inflation-driven surges in the sales tax receipts that — along
with fuel tax revenues — support the STF. But as construction work slowed, the
state also borrowed less than planned, leaving budgeted dollars unspent in the
debt service line item.
The STF reserve, which holds annual surpluses from the fund,
rose over the past three years from $241 million to almost $972 million,
according to the state
comptroller’s annual reports. That cushion account was slightly larger than
45% of last year’s entire transportation fund.
Gasoline station owners, fuel distributors and others began
to press state officials to either do more construction work or cut gasoline
taxes or provide some other relief given the huge
unused revenues.
In other words: Use it or lose it.
Lamont and the legislature agreed last May to take a huge
chunk of that $972 million reserve, more than $530 million, and pay off some
transportation bonding early. State Treasurer Erick Russell, who developed this
plan, estimates it will save the state about
$63.5 million annually in interest costs.
Eucalitto, who inherited these challenges when he took over
leadership in January 2023, has prioritized retaining and attracting new
engineers and other professional staff.
“We’re at our highest staffing level since 2002 in terms of
full-time employees,” he said, referring to the 3,337 full-timers currently in
the department.
Travis Woodward, president of the union that represents
state transportation engineers and planners, praised the administration for
addressing the vacancy rate but said more staffing issues still need to be
resolved.
“It’s on the legislature to break us free from our cyclical
hiring practices and over-reliance on contracting out to privatized consultants
for design, construction inspection and bridge safety inspections,” Woodward
said. “Year over year, we see hundreds of millions of taxpayers’ dollars wasted
on lower quality work at a higher premium. It’s time we hire enough state
employees to do the full scope of work we need done.”
But Don Shubert, president of the Connecticut Construction
Industry Association, praised the administration and said that if lawmakers
approved the governor’s plan, it quickly would have a positive effect.
“A 40% increase in state bonding is something that the
construction has been looking forward to since 2008” and the start of the last
recession, he said. “Companies will start hiring, companies will start
investing in new equipment, and the economic impact starts right away.”
Administration: Transportation program would need more funds
by 2028
But that could create another challenge.
The administration estimates that doing more construction
work not only would mean an end to big surpluses in the STF, but it also could
trigger a need for more funds. Analysts project that by the 2027-28 fiscal
year, the program would run a $177 million deficit.
Lamont proposed increasing bus and rail transit and parking
fares; the state already subsidizes these services considerably. But the $29
million extra they raise annually already is factored into the $177 million
deficit projection.
Sen. Christine Cohen, D-Guilford, co-chairwoman of the
legislature’s Transportation Committee, also praised the governor Tuesday for
prioritizing construction work. “I am thrilled at the commitment from the
administration and from the Department of Transportation to get these projects
done,” she said.
And Cohen said her panel already is exploring new options to
keep the transportation fund solvent down the road.
Receipts from wholesale and retail taxes on gasoline largely
have remained stagnant for decades, and the sales tax receipts dedicated to the
STF tend to surge during periods of high inflation — something no one hopes
will happen.
Cohen also said she believes many legislators are reluctant
to discourage public transportation use by raising fares, which would further
escalate the need for new revenue.
“I think it’s high time that we have this discussion,” she
added.
Lamont failed to convince lawmakers in 2019 and 2020 to
order electronic tolls on highways, and Cohen said she doesn’t expect that to
be proposed this year either.
But the Guilford lawmaker said one option she expects to be
included in a revenue bill to be raised in the coming weeks would create a new
surcharge on certain delivered goods. She did not disclose details Tuesday but
noted that there are some other states that impose such fees.
According to the
Tax Foundation, a Washington, D.C.-based fiscal policy group, Colorado
first established a 28-cent charge on retail delivery of items subject to sales
tax in 2022, and Minnesota imposed a 50-cent charge two years later.
Both states have “significant exemptions,” the tax
foundation wrote in an analysis. States normally don’t impose charges against
commercial carriers like UPS or FedEx, according to the foundation.
Sen. Tony Hwang of Fairfield, ranking Senate Republican on
the Transportation Commiittee, also believes many legislators would oppose
boosting transit fares.
Hwang noted that the financial services sector remains one
of the linchpins of Connecticut’s economy, and that its workers — who already
have absorbed rate hikes in recent years — rely heavily on train service to
make the commute from Fairfield County to Manhattan.
“When do we get to a point where we break the camel’s
back?” he asked.
Hwang added that while he’s pleased to see the
administration focused on getting more construction work going, it also must
carefully assess what levels of federal transportation aid Connecticut can
expect under President Donald Trump’s new administration.
The Trump administration warned
states in late January that it intends, “to the maximum extent
permitted by law,” to link federal transportation funding to local compliance
with policies on masks, vaccines, tolls and immigration enforcement.
Eucalitto, who met last week with Transportation Secretary
Sean Duffy, declined to speculate on how the Trump administration might
interpret the law.
But Eucalitto was hopeful that Washington would continue to
collaborate with all states to prioritize transportation construction.
“We all know he [Trump] is a builder. He wants to build,”
the commissioner added. “That’s just something we need to wait for.”
DOD halts PLAs on construction projects
The Department of Defense has ordered its contracting
officers to halt
the use of project labor agreements on “large-scale construction
projects,” according to a memo obtained by Construction Dive.
The notice, dated Feb. 7, says contracting officers shall
remove PLA requirements created
by former President Joe Biden that apply to projects receiving $35
million or more in federal funds.
As part of the memo — signed by John M. Tenaglia, principal
director of defense pricing, contracting and acquisition policy for the DOD —
contracting officers were ordered to amend solicitations for federal contracts
to remove PLA requirements.
Dive Insight:
AGC CEO Jeffrey Shoaf said in a statement that it had anticipated
a move like the DOD’s and it proved the AGC’s past assertions that the
PLA mandate was not legal.
“We expect all federal agencies involved in procuring
construction services to follow suit and drop what is clearly an unlawful
mandate from their construction solicitations,” Shoaf said.
The Defense Department did not respond to Construction
Dive’s request for more information.
The memo comes a few weeks after a U.S. Federal Claims judge
hamstrung the order by ruling in favor of a group of construction
companies that filed protests against the implementation of the mandate on
specific projects. Judge Ryan Holte said in his Jan. 21 ruling that the
implementation of the mandate on seven contract procedures in 2024 ignored
federal agencies’ own research indicating PLAs would be anti-competitive and
relied on “arbitrary and capricious” policy.
The Associated General Contractors of America helped
facilitate the legal challenge to Biden’s approach of a PLA mandate.
Holte’s decision, however, only directly impacted bid
protests filed in six states over projects solicited by the U.S. Army Corps of
Engineers, General Services Administration and Naval Facilities Engineering
Systems Command. Both USACE and NAVFAC are part of the DOD.
The ruling cut off the mandate at the knees, and opened the
door for other bid protest challenges, Dirk Haire, Washington, D.C.-based
partner at Philadelphia-headquartered law firm Fox Rothschild said at the time.
He represented some of the plaintiffs in the bid protest case.
The DOD contracts out billions of dollars worth of
construction work each year. For example, in November, the agency
awarded roughly $2.3 billion worth of design, engineering and
construction work, according to the Construction Broadsheet.
Naugatuck is first to join CT's new Municipal Redevelopment Authority: 'We're way ahead of the game'
Andreas Yilma
NAUGATUCK — The borough is the first town statewide to join
the Connecticut Municipal Redevelopment Authority, newly established to help
municipalities with transit
oriented development.
At its regular Feb. 4 meeting, the Board of Mayor and
Burgesses unanimously approved, following a hearing, to adopt a resolution to
join the MRDA as a member municipality. The resolution was effective the day of
the vote.
MRDA, a quasi-public state agency created in 2024 by state law, is responsible for helping municipalities with transit-oriented development, mainly focusing on the growth of new housing, as defined under state statutes.
"MRDA is a vehicle to help municipalities in transit
oriented development downtown projects," Mayor N. Warren "Pete"
Hess said. "It just so happens that Naugatuck is very far along in the
process."
The borough is developing 7.75 acres at the corner of Maple
Street and Old Firehouse Road, known as Parcel B, into a residential and
commercial development.
The state Department of Transportation has
already made plans and allotted funding to relocate the Naugatuck train station
right next to The Station Restaurant at 195 Water St. to the middle of Parcel B
where Water Street will be extended. Construction is expected to begin in the
spring.
This project will connect the existing downtown area to the
Transit Oriented Development project, which adjoins the Waterbury Branch Line
adjacent to the location of the proposed new train platform.
Naugatuck grant writer Danielle Goeway said it's free to
join and besides funding, the MRDA provides technical support as well.
"We're way ahead of the game," Goeway said.
"There's a lot of opportunities here for Parcel B, Parcel A, some of the
parking spots downtown."
Hess said MRDA Executive Director David Kooris has come to
Naugatuck and borough officials have already met with him twice.
"This funding can apply not just to the municipality
but to our development partners as well or for that matter anyone within a
half-a-mile radius of the train station downtown," Hess said. "So
anything in that half-mile radius is in the new district."
Hess said borough officials are preparing to be the first
town statewide to file an application. As workers are beginning phase one of
Parcel B, borough officials will be applying for some additional funding
regarding phase two for Pennrose.
"This one is something that came at exactly the right
moment," Hess said.