Gov. Dannel P. Malloy isn’t ready to decide how much the state will put on its credit card in 2015.
“We’ll set a soft bond cap around the time that we actually send you all a budget,” Malloy said Monday.
In 2013 and 2014, Malloy set a $1.8 billion soft bonding cap for himself. He stayed under the cap in 2013, but blew through it by about $167 million in 2014.
Sen. L. Scott Frantz, R-Greenwich, said if the Bond Commission holds as many meetings as it did last year and each agenda includes hundreds of millions in borrowing, then it’s going to blow through even last year’s $1.97 billion in borrowing.
“Ultimately interest rates will start going up,” Frantz said. “You’re still going to have to repay the principal and when you do go to replace the bond proceeds that go into the system our debt service level will go from about 11.5 percent, which is higher than it should be — 10 percent is the normal standard — it could go as high as 13 to 14 percent.”
In 2015, debt service accounted for 11.8 percent of all state spending, according to the Office of Fiscal Analysis.
Frantz said he also would like to understand how much money Malloy plans to borrow for his transportation infrastructure improvements.
“We’re all in favor of infrastructure improvements,” Frantz said. “But where’s the money going to come from?”
Malloy, who has promised to make improving the state’s transportation infrastructure a priority this year, delayed his Feb. 4 budget address by two weeks to Feb. 18. Last week, Malloy said the enormity of the transportation package is just one of the reasons he asked to delay the budget address.
On Friday, Malloy said he would support a constitutional amendment to ensure the revenue raised for transportation is spent on transportation improvements.
A constitutional amendment is a mechanism Republican lawmakers have asked Malloy to employ as he moves forward with his proposal.
Malloy said he looked for language Republican lawmakers had previously offered to the legislature, but couldn’t find any so “we had to draft it ourselves.”
Malloy’s office issued a press release Friday saying the governor supports a constitutional amendment as well as a statutory change to protect the Special Transportation Fund. Legislation to protect the Special Transportation Fund statutorily goes into effect July 1, 2015, but Malloy said he wants to move up that date.
“Neither the statutory change or the constitutional amendment will include any ‘escape clause,’ such as an override option for the General Assembly or governor,” according to the press release.
Malloy said there is expected to be a period of “ramp up” and “long-term execution” in his transportation proposal.
The state Bond Commission approved the use of $57 million in special revenue bonds for the 2015 repaving program and another $5.75 million for train stations along the New Haven-Hartford-Springfield Line and the New Haven Line.
The new stations will be in Enfield, West Hartford, Newington, and North Haven. Also, new stations will be added in Orange and Bridgeport along the New Haven Line.
As far as his strategy for tackling the state’s dilapidated transportation infrastructure, Malloy said there will be a period of “ramp up” as the state gets the “mega-projects ready to go.”
One thing the state of Connecticut doesn’t seem to be counting upon is federal funding.
Sean Slone, program manager for transportation policy at The Council of State Governments, said state officials would like to see Congress pass a new long-term transportation bill to provide some stability in funding, something Congress hasn’t done since the previous bill expired in 2009.
“That would allow states to do the kind of long-term planning they have found difficult to do during this period,” he said.
But that appears unlikely. Slone said federal coffers will be about $100 billion short of funding for a six-year bill based on anticipated revenue from the gas tax, which hasn’t been raised in 20 years.
That means states will be focused on addressing their transportation funding needs and likely will consider a variety of funding and financing options. Among them, Slone said, are gas tax increases, mileage-based fees, vehicle registration fees, sales taxes, bonding, and tolling.
Malloy hasn’t ruled out putting tolls back on Connecticut’s highways.