The I-95 Gold Star Memorial Bridge, the largest bridge in the state of Connecticut, consists of separate northbound and southbound spans connecting New London and Groton over the Thames River. (Photo by University of Connecticut)
HARTFORD, Conn. — Gov. Ned Lamont’s administration is planning a major increase in borrowing to fuel the rebuild of Connecticut’s aging transportation infrastructure — something it’s dangled and not delivered before.
But Department of Transportation Commissioner Garrett Eucalitto, who took over the agency two years ago, said staffing enhancements and the successful launch of recent major projects leave him optimistic.
The administration projected last week in its annual Fiscal Accountability Report, an omnibus analysis of state budget and fiscal trends, that Connecticut would sell $1.3 billion in bonds to finance transportation projects next fiscal year. And by 2026-27, it would sell $1.4 billion, a 40% increase over the $1 billion in bonds the state is projected to issue this year.
Borrowing through bond sales, coupled with matching federal grants, are the two ways Connecticut pays for the overwhelming bulk of its highway, bridge and rail projects.
“We’re pretty confident with those projections,” Eucalitto said. “It’s like a steam engine that’s taken a while to get the infrastructure program moving.”
The Lamont administration has struggled to hit its self-imposed borrowing targets in recent years.
It anticipated borrowing $875 million in the 2021-22 fiscal year but bonded just $500 million, according to records from Lamont’s budget staff and from the treasurer’s office. A $1.2 billion benchmark for 2022-23 yielded just $830 million in actual financing. And a more modest $1 billion target for 2023-24 also wasn’t met, with just $875 million in borrowing.
Lamont’s predecessor, Gov. Dannel P. Malloy, struggled with a similar problem.
When Malloy first took office in January 2011, more than $1.6 billion in transportation borrowing had been approved over multiple years by the legislature and by the State Bond Commission yet hadn’t been issued, according to the treasurer’s office. In other words, the funds still hadn’t been borrowed and invested in transportation construction projects.
By the time Lamont took office in January 2019, this transportation bonding baclog approached $3.8 billion and currently stands at $6.7 billion, which is more than six-and-a-half times the amount of money Connecticut is borrowing this year for transportation work.
A nonpartisan legislative analysis as far back as 2010 indicated the DOT was struggling to complete projects in timely fashion. And labor unions have complained for years that the agency needs more engineers, planners and other professional staff.
That challenge has been complicated greatly by state employee union concessions deals that governors and legislatures reached in 2009, 2011 and 2017 to help close budget deficits. Those agreements scaled back pension and other retirement benefits, making it hard for some state agencies to compete with higher salaries offered by the private sector.
But Eucalitto, who has made staff retention a priority, said the DOT currently has 3,265 employees and is working to fill about 300 vacancies.
Two years ago, when he began as commissioner, the department employed just 2,900.
“We’ve made a lot of progress there, but we can always do more,” he said, adding it can take anywhere from three-and-a-half to eight months to hire staff under existing state rules.
That, coupled with fierce competition from the private sector, will make staff retention a challenge for years to come, Eucalitto said.
“The era of people joining state service and staying for their entire career — it’s no longer,” he added.
“We are definitely in agreement with the commissioner that we’ve made progress on hiring,” said Travis Woodward, president of CSEA SEIU Local 2001, the union that represents state transportation engineers and planners.
But Woodward said the administration needs not only to fill vacant jobs but to authorize more posts.
The DOT still relies too heavily on privatizing some design and inspection services, Woodward said, adding that it both weakens quality control and is less cost-efficient.
Another factor that has the administration confident it’s ready to invest more in transportation, Eucalitto said, involves successful work already underway in several major initiatives. These include the Walk Bridge replacement project in Norwalk; the $500 million rebuild of the interchange of Interstates 91 and 691 and Route 15; and the $650 million Gold Star Bridge deck replacement over the Thames River between New London and Groton.
“All indications over the last year are showing that ConnDOT is moving in the right direction as far as production, getting work out the door,” said Don Shubert, president of the Connecticut Construction Industry Association, who called the administration’s plans to ramp up borrowing “a positive step.”
But Shubert also said Connecticut still has a long way to go.
The state borrowed $875 million last fiscal year, pairing that with almost $1.4 billion in federal grants. And Shubert said the state’s contribution alone should be approaching $2 billion annually to meet all the needs of a traveling public using an aging, congested transportation infrastructure.
And while federal transportation grants to states grew significantly during the past four years under President Biden, “inflation is devouring the additional [federal] funding,” Shubert said.
But Eucalitto said that while Connecticut has “significant outstanding needs, … we can’t jump up too quickly because it does take a significant amount of time to design the projects.”
Connecticut also must make sure it can pay for all of them.
Lamont, who failed to convince legislators to establish electronic tolling on its highways during his first two years in office, has come under fire in recent years for running up huge surpluses in the Special Transportation Fund.
Equal to about 9% of the overall state budget, the STF, which approaches $2.3 billion this fiscal year, pays for DOT and Department of Motor Vehicles operating expenses, while also covering the principal and interest on all transportation bonding.
With actual transportation borrowing failing to hit projections in recent years, the STF saved funds on debt service. At the same time, inflation dramatically increased state sales tax receipts, including the portion of that revenue stream dedicated to the STF.
The transportation fund finished with surpluses approaching or surpassing 10% in each of the past three fiscal years, including a $277 million, $15% windfall, in 2022-23 that occurred despite a gasoline tax holiday that cost the STF hundreds of millions of dollars in fuel tax receipts.
That pushed the transportation fund’s reserve — the account that holds all annual surpluses — to $968 million, equal to 45% of last year’s STF.
As critics accused the state of hoarding and demanded gasoline tax cuts, Lamont and legislators dedicated $527 million of that reserve to pay down high-interest-rate transportation bonding debt early.
This fiscal year’s transportation fund also is running in the black, but the projected surplus stands at a more modest $149 million, or 6.5%, according to Lamont’s budget office.
And based on the administration’s expanded borrowing goals, analysts say the STF would start running a small deficit next fiscal year.
But that doesn’t mean legislators will start looking to boost sales or gasoline tax rates any time soon.
The STF reserve is large enough to cover any projected shortfall at least through 2028, according to Lamont’s budget office.
And Sen. Christine Cohen, D-Guilford, co-chairwoman of the legislature’s Transportation Committee, said she’s pleased with Eucalitto’s efforts to increase DOT staff as well as with the renewed effort to grow transportation construction work.
She also said lawmakers have plenty of time to watch how the transportation construction program grows.
“We definitely have some challenges in terms of diminishing revenues” down the road, she said. But “We’ve sort of been rolling in the dough, so to speak.”
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