HARTFORD, CT — Senate Republicans believe they’ve come up with a no-toll alternative to Gov. Ned Lamont’s transportation plan that called for 10% of it to be funded with 14 tolls.
The 10-year, $18-billion Senate Republican plan, dubbed FASTR CT, assumes the same number of projects as Lamont’s plan, but it finances it differently.
It uses the money from paying down the equity on special transportation obligation bonds, $100 million in general obligation bonds, and the new car sales tax as revenue streams to access the low-interest loans from the U.S. Department of Transportation’s Build America Bureau.
The plan anticipates 0.8% interest on loans from the federal government.
In a controversial move, the Senate Republicans would also use money from the Rainy Day Fund to pay off some of the state’s unfunded pension liability. This would then allow a portion of the state employee fringe benefit costs currently in the Special Transportation Fund to move to the General Fund.
The Special Transportation Fund currently pays debt service on transportation projects and the operating expenses for the state departments of Transportation and Motor Vehicles. The fringe benefits for both of those agencies account for about 13% of what the Special Transportation Fund spends on an annual basis.
Republicans believe that by moving those costs out of the Special Transportation Fund, it will stabilize the fund.
What happens if there’s a recession and the state is left without a Rainy Day Fund?
“It’s not a raid on the budget reserve fund,” Fasano insisted Thursday at a state Capitol press conference held to unveil the proposal.
The Republican plan would reduce the Rainy Day Fund from $2.5 billion to about $1.2 billion in 2020. The fund would likely rebound to $2.5 billion by 2024.
Fasano admitted that people with knowledge of how Wall Street would view the move have told him it looks “bad you’re taking money out of the Rainy Day Fund.”
“On the other hand you’re paying off what hurts Connecticut the most,” Fasano said. “Which is the unfunded liabilities.”
Fasano said the Rainy Day Fund won’t ever get to zero because the state has enacted several safeguards, like the volatility cap, to prevent depletion of the Rainy Day Fund.
“We are not in 2008,” Fasano said.
He added that “we’re pretty good at protecting against that risk.”
He said the plan stabilizes the Special Transportation Fund over the long term to allow for cash financing to be used for transportation projects. That stable Special Transportation Fund would be the backstop for the federal loans.
The proposal also re-established the Transportation Strategy Board, which is the bipartisan group of business leaders and stakeholders created by former Gov. John G. Rowland and disbanded by Gov. Dannel P. Malloy.
Fasano said the Transportation Strategy Board would be responsible for choosing what projects received funding.
“This plan takes what he wants to do and figures out a way to pay for it,” Fasano said of Lamont’s proposal.
Fasano complimented Lamont for coming up with a “holistic” and “methodical” transportation plan.
Fasano said he sent the plan to legislative leaders and gave it to Lamont’s Chief of Staff Ryan Drajewicz at a face-to-face meeting Wednesday.
“It is just an alternative,” Fasano said. “We think if we’re against tolls we need to put forward an alternative that works and makes sense.”
The governor’s office did not dismiss Fasano’s plan, but it did not endorse it either.
“While I appreciate Senator Fasano’s proposal to partially fund much-needed infrastructure investments, taking money out of the Rainy Day Fund is a risky proposition that requires serious evaluation,” Lamont said in an emailed statement.
Patrick Sasser, founder of No Tolls CT, said they’re glad to see a plan that “doesn’t rely on instituting another tax on the people of Connecticut with tolls and one that removes pension payments from the Special Transportation Fund, something No Tolls CT has advocated for.”
However, it was not an endorsement of the proposal.
“Obviously, there are several aspects of the Senate Republicans’ plan that will have to be hashed out by lawmakers regarding the Rainy Day Fund and federal borrowing, but we see this plan as a good step toward reaching a bipartisan solution that doesn’t levy another tax on the working people of Connecticut,” Sasser added.
Senate President Martin Looney, whose caucus told Lamont they can’t support a plan with tolls, said they appreciate Fasano’s plan.
“We agree that our Rainy Day Fund is currently at a historically high level and that the bipartisan budget passed in 2017 established policies to promote future fiscal stability,” Looney said.
He added that he looks “forward to coming to a bipartisan solution on transportation which accomplishes all the critical projects in the CT 2030 transportation plan presented by Governor Lamont. As with the Fiscal Year 18-19 state budget mentioned by Senator Fasano, Connecticut succeeds best when both parties work together.”
House Speaker Joe Aresimowicz echoed Looney’s remarks.
“I am still reviewing Senator Fasano’s proposal; however, I do have concerns about such a significant raid on the rainy day fund as the cornerstone of the funding plan,” Aresimowicz said in a statement.