HARTFORD, CT — Democratic Gov. Dannel P. Malloy said Thursday that the state is at a fork in the road when it comes to funding transportation projects and it will have to decide soon what projects it wants to fund, what fares it wants to raise, and what services it wants to provide.
“The state’s Special Transportation Fund can no longer support normal operation or planned levels of capital investment,” Malloy said. “We are at a fork in the road. We can either raise fares, cut services, cancel important projects in towns and cities across Connecticut or we can embark on a serious conversation about how we plan to support and grow the Special Transportation Fund in the years to come.”
The Special Transportation Fund was expected to be insolvent by 2021, but that process has sped up and it will start running a $38.1 million deficit in 2019, according to the latest estimates.
A new report from Malloy’s budget office paints a grim picture.
If the state does nothing to resolve the situation, it would have to reduce highway, rail and bus services for the public, and reduce the capital program by over $4 billion over the next five years.
In addition to raising bus and rail fare or increasing the gas tax, Malloy said the legislature could authorize general obligation bonds to offset reduced bonding capacity in the fund.
If they do nothing there’s a long laundry list of projects that impact almost every legislative district in the state that will need to be scrapped. From road and bridge improvements to work on railroad stations in New Haven and Stamford, almost every transportation project in the state would come to a halt.
“The delay of yesteryear has caught up with us,” Malloy said.
He said Wall Street has told the state it won’t finance bond sales on a “STF that’s not in balance for a five year period of time.”
Senate Republican President Len Fasano questioned the urgency and the sincerity of Malloy’s alarm.
“This issue didn’t just creep up on us today; this is a result of bad policies that have been enacted by Governor Malloy and his Democrat colleagues – policies that have run the transportation fund into the ground,” Fasano said.
He said the problems were further exacerbated by Malloy’s 30 year, $100 billion transportation plan that was “enacted without a way to pay for it.”
“Now we near the governor’s final year in office and he is advocating that we need to charge our hard-working taxpayers more in order to squeeze more revenue? That is not the answer. Smart, forward thinking policies that are adequately funded is the answer, policies that my caucus has proposed for many years.”
How did we get here?
The reduction of the gas tax in 1997 results in a $4 billion loss and then the General Assembly capped the gross receipts tax in 2012. The price of oil fell at a much faster rate than anticipated in 2015 and the total number of vehicle miles being driven declined as the market continued to switch to electric vehicles.
Also as part of the budget $37.5 million was diverted from the Special Transportation Fund, which resulted in a reduction in the cumulative balance.
Voters won’t have a chance to weigh in on whether to establish a lockbox on that money until 2018. The legislature was unable to pass the legislation with the necessary supermajority in 2015 so it needed to do it again this year and that delayed the question getting to the ballot for the 2016 election.
Rep. Tony Guerrera, D-Rocky Hill, who chairs the legislature’s Transportation Committee, said he’s been trying to tell lawmakers about this problem for years.
It’s why he’s a proponent of electronic highway tolling.
Malloy praised Guerrera for his support of tolls.
Asked whether he should have expended more political capital on the issue, Malloy said he didn’t believe the legislature would approve tolls without a lockbox in place.
“It was literally impossible to assume tolls would be passed without a lockbox,” Malloy said.
In the interim, Malloy did get the legislature to dedicate half a percent of the sales tax to the transportation fund.
“I don’t think Connecticut has been competing well against our major competition — New Jersey, New York, and Massachusetts — in part because of our failure to invest in our transportation,” Malloy said.
He said he hopes the legislature will act on these issues.
Guerrera said he thinks the legislature will act on it before the end of the next legislative session in May 2018. However, most of the bonding for transportation happens in the first few months of the year so they may be forced to make a decision sooner rather than later, if they decide to use general obligation bonds to cover some of the deficit.
“I believe we need to put more money into the fund,” Malloy said.
House Speaker Joe Aresimowicz, D-Berlin, said he still believes tolls are the fairest way to raise revenue for these transportation improvements.
“I still believe a modern electronic toll system and less reliance on the gas tax has to be part of the equation to help get us back on track in the long term, and intend to have a vote on tolls this upcoming session,” Aresimowicz said. “It makes no sense, and isn’t fair to Connecticut taxpayers, that we provide a freeway to the large amount of out of state traffic that passes through, while all of us pay every time we cross the border into surrounding states.”