OPINION: Another Phony Reason for Tolls in Connecticut?

OPINION: Another Phony Reason for Tolls in Connecticut?

By Len Suzio

The hottest political topic in Connecticut during 2019 has been the debate over whether to install tolls to pay for transportation infrastructure spending. Governor Lamont had stated during the 2018 campaign he supported tolls only for trucks and not for passenger vehicles.  However, within a few weeks of taking the oath of office the Governor announced that he was mistaken and now realized that toll revenues from trucks only would not be adequate to pay for the anticipated infrastructure spending. After that the Administration floated various tolling schemes some with as many as 123 tolls on all interstate highways in Connecticut down to 52 tolls on selected Interstate highways as the 2019 Session wound down in June. However, continued overwhelming public opposition intimidated the Legislature and no proposal was put to a vote. Where are tolls in Connecticut going?

The talk ever since the 2019 Session closed has been what will the Governor propose next. The Democrats have insisted that tolls are an absolute necessity but have been intimidated by continued vociferous public opposition and unanimous Republican objection.  The latest version of a potential tolls proposal now appears to hinge on participating in a federal financing program offered under The Transportation Infrastructure and Innovation Act (“TIFIA”).

TIFIA does not pay for any infrastructure costs, but rather offers “credit assistance” to help finance transportation infrastructure projects. The assistance can be in the form of (1) a low rate direct loan or (2) in the form of loan guarantees or (3) standby letters of credit. The financing assistance for roads and bridges is limited to 33%-49% of project costs depending on which type of assistance the state chooses. The savings on financing costs can be considerable because the interest rates on this type of financing are considerably less than what the state would have to pay without the federal assistance. Therefore, the program is potentially valuable.

However, as I have stated, TIFIA does not pay for any hard or soft infrastructure costs. Its value lies in the savings to the financing costs of infrastructure projects, and that can save millions of dollars over many years. So, it likely will be touted as a partial answer to how Connecticut pays for infrastructure spending.

This is where I want to make 2 very important points. First, no committee in the Legislature has ever vetted the forecasted DOT infrastructure spending. During Transportation Committee hearings on the concept of tolls I testified that this omission was a major mistake. How could the Legislature decide how to finance the largest capital spending projects in Connecticut history without examining what the proposed spending was for, when it would be spent, and what alternatives are available?

The Malloy proposal was to spend $100 billion over 30 years. The Committee Co-chair, Senator Leone, in response to my comments, said the Malloy proposal was an “aspirational” list, in other words it was a “wish list”, or more accurately it was a “pipedream”. But that didn’t stop the Transportation Committee from trying to figure out how it would pay for the pie-in-the-sky spending that has been used as the reason for our “need” for tolls. This is grossly irresponsible.

Now, back to the TIFIA “solution”. One of the requirements for the federal financing is that the financing must be secured with a “dedicated pledged revenue source for repayment of TIFIA credit assistance”. The governor and toll proponents have been implying that this means tolls will be required to qualify for the low rate financing. This will be the next rationale to argue for tolls. The problem is it is not true.

If one reads the information about the TIFIA program it is obvious that tolls are not required to provide a “dedicated pledged revenue source”. The following is directly from the Federal DOT site, “The DOT interprets ‘dedicated revenue sources’ to include such levies as tolls, user fees, special assignments, tax increment financing, and any portion of a tax or fee that produces revenues that are pledged for the purpose of retiring debt on the project.”

I can think of several revenue sources that don’t require tolls to qualify for TIFIA financing. I would start with the sales tax revenue from auto sales that the Governor raided to help balance the General Fund. Not only should that suffice as a dedicated revenue source, pledging the revenue has the added benefit of preventing the Governor and the Legislature from raiding that revenue flow and taking it from the Special Transportation Fund. So, the proposed federal financing will not only lower the cost of financing transportation infrastructure spending in Connecticut, it will be a bullet-proof lockbox that the Legislature won’t be able to raid as it has done so often. That alone makes TIFIA appealing, although it may give the Governor second thoughts.

 Len Suzio is a former state senator.