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May 9, 2024

CT $4.4B bond bill includes UConn construction, anti-poverty program

SHAHRZAD RASEKH / CT MIRROR Senate President Pro Tem Martin Looney, Sen. Gary Winfield and Sen. Matt Lesser listen during Wednesday's debate on the new state bond package.
By Keith M. Phaneuf, CT Mirror

The state Senate overwhelmingly gave final approval Wednesday to a measure that would boost planned borrowing for capital projects next fiscal year by $420 million, launch a new seven-year building program for the University of Connecticut and eliminate at least $500 million in transportation-related debt.

The measure, which now heads to Gov. Ned Lamont’s desk, also would begin new programs to mitigate concentrated poverty and homelessness, and it would order an analysis of the more than $10 billion worth of state tax credits, exemptions and other breaks Connecticut provides annually.

The Democratic-controlled Senate voted 35-1 to adopt the measure. The House of Representatives, where Democrats also hold a majority, overwhelmingly approved the bond package late Monday night by a 134-9 tally.

Legislators last June had approved a two-year plan to finance capital projects that included borrowing nearly $4 billion in the 2024-25 fiscal year. Connecticut finances transportation infrastructure upgrades, municipal school construction, capital projects at public colleges and universities, state building renovations and other smaller initiatives by selling bonds to investors on Wall Street.

The measure that received final legislative approval Tuesday would boost overall bonding next fiscal year to $4.4 billion. 

UConn could receive up to $625 million in new financing over the next seven fiscal years — plus another $67 million in previous bond authorizations that haven’t been used to date. Up to $122 million of those authorizations could be tapped next fiscal year.

State government has been launching major multi-year capital programs for the university since 1995, and each one carries the name of the first: “UConn 2000.”

But for the first time, legislators added a new feature: setting specific fundraising goals for the state’s flagship university. And if they aren’t met, bond authorizations would shrink.

To remain eligible for the full $625 million, the university’s fundraising efforts must secure at least $100 million in philanthropic commitments over the next eight years.

UConn President Radenka Maric outlined several pressing capital needs to legislators in late March. Most of the new investments would support science, technology, engineering and mathematics programs, including construction of a new science facility and renovations to the Gant Science complex on the main campus in Storrs.

UConn officials also want to launch a $100 million renovation to Gampel Pavilion. The home to the university’s men’s and women’s basketball teams was constructed in 1990.

Sen. Henri Martin of Bristol, ranking Republican senator on the Finance, Revenue and Bonding Committee, praised the measure for setting fundraising benchmarks to complement the state’s investment in UConn.

Martin also lauded the package for authorizing $15 million in borrowing to support a new grant program for private, nonprofit agencies that own and operate facilities that serve people who are homeless.

“I think it speaks volumes for us as a state where our priorities are,” Martin said.

Paying down CT’s transportation bonding debt

The bond measure also includes a proposal from Lamont and state Treasurer Erick Russell to eliminate a huge chunk of state debt tied to highway, bridge and rail projects.

Connecticut’s $2.15 billion Special Transportation Fund, which represents 8.5% of the current $25.1 billion state budget and covers the operating costs for the departments of transportation and motor vehicles, has been running well in the black in recent years.

The governor’s budget staff, the Office of Policy and Management, estimates the STF will finish the fiscal year on June 30 with a nearly $281 million or 13% surplus. This would boost the STF’s reserve to $960 million, which is equal to almost 45% of the entire fund.

That enormous reserve already has prompted calls from gasoline station owners, anti-tolling advocates and Republican legislators for reductions in fuel taxes or repeal of the highway mileage tax on commercial trucks.

The measure approved Wednesday would use at least $500 million of the $960 million reserve to pay down outstanding transportation debt, which exceeds $7.4 billion. Most of that debt was borrowed at 5%, though some of the notes are marked at 3% to 4%, according to Russell’s office.

The administration estimates the early retirement of this debt would save the state about $60 million annually by 2026 and as much as $75 million by 2028.

The bill also caps the Special Transportation Fund’s reserve, barring it from exceeding 18% of the STF.

Attacking poverty, studying tax breaks – and regulating high school football

The bond package also included several policy measures related to state financing, including a proposal from Sen. John Fonfara, D-Hartford, co-chairman of the Finance,

Revenue and Bonding Committee, to bolster the economies of some of Connecticut’s poorest communities.

It would create a new Office of Neighborhood Investment and Community Engagement in the Department of Economic and Community Development starting in January. The office, working with local officials, would create 10-year plans to address “concentrated poverty,” defined as U.S. Census tracts in which at least 30% of residents have incomes below the Federal Poverty Level. According to the FPL, a family of four earning more than $31,200 per year in 2024 is above the poverty line.

Those 10-year plans must:

  • List possible economic development projects that could eliminate concentrated poverty in those census tracts;
  • Give those projects priority status for various state economic development grant awards;
  • And include tax incentives for businesses hiring individuals in concentrated poverty regions.
  • Economic development officials would have to submit progress reports to the legislature by next June and must begin implementing anti-poverty plans by January 2026.

Fonfara said 64 out of the 883 census tracts in Connecticut meet the concentrated poverty standard. For many children growing in these neighborhoods, underperforming schools, high crime rates and limited economic opportunities are the norm. And youth affected are disproportionately Black and Latino.

Fonfara called it “generationally devastating” and particularly tragic because it is a manageable problem here given Connecticut’s great wealth.

“We are OK with essentially dooming children,” the Hartford lawmaker said. “We have accepted it as a cost of doing business.”

Another element in the bond measure would launch a new analysis of the more than $10 billion worth of state tax credits, exemptions and other breaks Connecticut provides annually.

Given the huge revenues Connecticut forfeits, Fonfara said, legislators have a responsibility to the public to determine if these breaks are growing the state’s economy and providing other benefits that were intended when they were adopted.

“I think it’s helpful if we, as an institution, have a process of evaluating their worth,” Fonfara said.

Rep. Maria Horn, D-Salisbury, co-chairwoman of the Finance, Revenue and Bonding Committee, pushed for the study earlier this spring, noting many of the sales and business tax breaks approved to jump-start one segment of Connecticut’s economy or another rarely are revisited. 

An odd inclusion in the bond package, the measure also included an unrelated provision that seeks to preserve traditional Thanksgiving Day high school football rivalries.

The language specifically bans local and regional boards of education from delegating authority to schedule those games. The Connecticut Interscholastic Athletic Conference or CIAC, a private, nonprofit organization with nearly all public and private high schools in the state has members, currently schedules most high school football games. 

Sen. Tony Hwang, R-Fairfield, teased Fonfara for including the athletics policy provision in an omnibus finance bill but also pledged to support it.

“I don’t want to interrupt that communal, community connection,” Hwang said.

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