Lamont looking to borrow against future toll revenues
Tolls might not appear on Connecticut highways for years to come, but Gov. Ned Lamont sees an opportunity for the state to obtain some much-needed transportation funding before the first overhead collector is even installed.
The Democrat has suggested borrowing against the roughly $800 million a year the highway tolls are projected to generate. But that tactic has been partly blamed for the financial challenges facing at least one state, Ohio, where drivers now face hefty gas tax increases at the pump.
"Once they know we're going to be able to do our electronic tolling, we can borrow against those anticipated tolling revenues," Lamont told reporters on Wednesday. The former businessman suggested such a move would allow the state's Department of Transportation to jump-start spending on certain key transportation projects as it awaits the necessary federal approvals and the installation of tolls. That has been estimated to take anywhere from two to seven years.
Lamont, who opposes increasing the gas tax, wants to install electronic tolls on Interstates 84, 91, 95 and Route 15 to "speed up our transportation system" and to "get this state moving again economically." Connecticut, which has not had any tolls since the 1980s, faces an estimated $60 billion backlog of unfunded transportation infrastructure projects. Meanwhile, the state's main transportation account is projected to be insolvent by 2024.
It remains unclear whether there will be enough support this year in the Democratic-controlled General Assembly to pass a tolling bill, which is still being negotiated .
Former Ohio Gov. John Kasich, a Republican who also opposed a gas tax increase, agreed in 2013 to sell bonds backed by future toll revenue from the Ohio Turnpike to raise $1.5 billion. It was pitched as an out-of-the-box way to spur funding for key projects. That money paid for 13 major projects within 75 miles of the turnpike, as well as other projects along the corridor. However, the state's drivers are still left with crumbling roads, not enough money to fix them and the prospect of having to pay off that debt until 2048. That's on top of existing transportation-related debt that Ohio owes.
Faced with the prospect of not having the revenue to pay for any new highway improvement projects beginning July 1, Republican Gov. Mike DeWine this month signed a transportation budget that increases Ohio's tax on gas by 10.5 cents a gallon and on diesel fuel by 19 cents. He called it a decision "no one relished."
Jonathan Peters, professor of finance and data analytics at The College of Staten Island School of Business and a tolling expert, said if Connecticut decides to follow Ohio's lead, officials will need to consider the borrowing costs and how the state will fund both short- and long-term transportation projects.
"Borrowing the money up front would allow you to have more flexibility to repair things today, but it would give up future opportunities for other repairs down the road because you've spent the money," he said. "It's not new money. It's not magic money."
Lamont's Chief of Staff Ryan Drajewicz said the administration is still in the very early stages of considering whether to borrow against future tolling revenue. He and other officials are looking at other states, including Ohio.
"I think we have the benefit of hindsight for sure, which is to look at where has this gone really wrong," Drajewicz said.
He maintains Ohio officials "overshot by far" the projected revenues from tolls and "borrowed way too much against that." He said the Lamont administration would be more conservative and only borrow against anticipated toll revenues for specific, priority projects, rather than seek a large block of upfront cash.
"We very much don't want to put the state in jeopardy when it comes to something like this," he said.
Drajewicz, state Treasurer Shawn Wooden and others have also been meeting with experts on public private partnerships to see if there's an opportunity for Connecticut to work with a private entity to develop tolls.
However, there's skepticism at the state Capitol about whether Connecticut should follow the privatization route that some cities and states have taken.
Joe Sculley, a lobbyist and president of the Motor Transport Association of Connecticut, a trucking organization that opposes tolls, said there's been a "pretty bad history" of governments trying to get upfront cash from leasing everything from highways to parking meters to private entities. He sees similarities to Lamont's idea of borrowing money from a private backer against future toll revenues.
"This is just such a complex issue, and I think that people just see money," he said. "People see dollar signs and that's as far as their gaze goes."
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