Feds Woo Connecticut Lawmakers With 2.22% Interest Rate On Transportation Borrowing
CT News Junkie, September 23, 2019
By Christine Stuart
Democratic and Republican lawmakers emerged after a more than hour long meeting with officials from the U.S. Department of Transportation and largely agreed it would be beneficial to seek a low-interest loan for transportation projects.
Officials from the Build America bureau of the U.S. DOT presented lawmakers with an opportunity to apply for a 2.22% loan for transportation projects in Connecticut. The state wouldn’t have to pay off the loan until five years after the completion of the projects and it could use general obligation bonds to do it.
Connecticut has never applied for a loan from the Transportation Infrastructure Finance and Innovation Act, which was established in 1998.
Republican lawmakers blamed Connecticut’s all-Democratic Congressional delegation for the oversight, but Democratic lawmakers contend the program has changed over the years and the opportunity to access $60 billion in funding looked much different a few years ago.
“This here is another idea of how to finance critical transportation projects across the state of Connecticut,” Senate Majority Leader Bob Duff, D-Norwalk, said.
He said there’s a number of different ways to talk about financing, but “this program is an excellent program in the sense that it’s low interest rates, it’s long-term and it allows us to look at holistically the state of Connecticut.”
House Majority Leader Matt Ritter, D-Hartford, said accessing this money flips the conversation on its head because it doesn’t force Connecticut to look at a revenue stream until 15 years from now.
“A general obligation pledge from the state of Connecticut would satisfy that issue,” Ritter said.
The interest rate of 2.22% being offered on Friday is much lower than the interest rate Connecticut could get on its bonds if it went to the market.
Republican lawmakers who said Connecticut should reprioritize bonding to pay for transportation were also in favor of borrowing money at a lower interest rate to pay for these projects.
Senate Republican Leader Len Fasano, R-North Haven, said “this opens the door to a number of ways to finance a project through the federal government.”
He said the interest rate for some of the programs is less than 1%. He said it’s a good deal that Connecticut needs to explore.
House Minority Leader Themis Klarides, R-Derby, said the program is very flexible with the amount of money they loan.
“We could even look at the state of Connecticut as one big project because it’s a smaller state,” Klarides said.
Governor's viewpoint back to top
Gov. Ned Lamont didn’t attend the meeting, but his Chief of Staff Ryan Drajewicz did.
“There are lessons Connecticut can learn from our federal partners and other states. I hope this is the critical first step toward a spirit of bipartisanship in addressing Connecticut’s transportation and infrastructure needs,” Lamont said in a statement. “Having Republicans, Democrats, and CTDOT leaders in the room is essential to ensuring everyone is at the table and prepared to transform our state’s roads, bridges, rails and airports in a way that will make Connecticut an even better place to work and live over the next decade and beyond.”
Asked if tolls, which were supported by Lamont earlier this year, would still be necessary, Duff and Ritter said it wasn’t part of the conversation Friday.
The conversation about how they pay for it will have to happen, but three Democratic leaders said that wasn’t what they were there to talk about.
Sen. Alex Bergstein, D-Greenwich, who is the vice chair of the Transportation Committee, said tolls absolutely still needs to be part of the conversation.
Rep. Roland Lemar, co-chair of the Transportation Committee, said what Connecticut would be asking the federal government is unique because instead of asking for funding for one project it would be asking for dozens of different projects across the state.
Bergstein said the Trump administration is focusing more on rural areas than it is on urban areas where Connecticut needs investment.
However, Ritter said the federal government defines rural as a location with a population under 150,000—that means even Connecticut’s biggest city—Bridgeport—would qualify.
“The transportation solution is best when it’s bipartisan,” Duff said. “Driving on the roads is not a Democratic or Republican issue.”
He said Connecticut needs to solve this issue in a bipartisan way.
Ritter said they have to first look at the “projects they want to do, what is the total cost of those projects and how much would come from the states current borrowing program, how much comes from the revenue generated by the Special Transportation fund and how much would you need to borrow from the federal government. That’s going to be your three pots of money.”
He said then you start figuring out how you pay that back. Democratic lawmakers said the General Assembly would have to vote on a revenue stream to pay back the federal government.
Ritter said the flexible terms of the borrowing give the state longer to think about how they will pay for it.
But Bergstein isn’t convinced they don’t need tolls.
“Those are the choices: more taxes, more debt, which is essentially another tax on everybody or tolls that would be paid for by out-of-staters,” Bergstein said.
Bergstein was critical of the Connecticut DOT for not having a discussion sooner with the Build America Bureau.
“I am not encouraged by the process,” Bergstein said. “It’s very inefficient and we don’t have time to waste.”
Who is at fault?
“Leadership on both sides,” Bergstein said.
She acknowledged that 2020 is an election year so the likelihood it would get addressed is slim.
“Elected leaders on both sides have to have the courage to explain the facts,” Bergstein said.
She thinks that when everything is taken into consideration tolls simply makes sense.
“I don’t know what’s on the table right now, but I am not encouraged by how long it's taken for the administration to come to this point and convene a theoretical meeting with the feds,” Bergstein said. “The feds are not going to bail us out.”
She said it’s fantasy to believe the federal government is going to step up with funding for Connecticut, a blue state in the northeast.