Time to fix the funding crisis

Just after 2 p.m. on Thursday, employees and guests gathered at ASML along Route 7 in Wilton as the technology manufacturer broke ground on the first of three expansion rounds. The maker of equipment for the semiconductor industry is one year into a four-year ramp-up adding more than 500 people.

An intersection right in front of the building was slated for a muchneeded redo. But a few months ago, the state Department of Transportation postponed the work, part of a delay in $4.3 billion worth of road and bridge improvements due to lack of money.

So the state’s progress in making upgrades is of more than passing interest to the Netherlands-based company, not least because its employees come from all over Fairfield County and beyond, hardly a paradise of smooth traffic.

At precisely the moment when ASML shovels hit the ground, the office of Gov. Dannel P. Malloy fired off an angry missive attacking Sen. Len Fasano, R-North Haven, the Senate Republican leader, in a spat over how to finance the state’s $60 billion-plus transportation program for the next generation.

Fasano immediately responded in kind.

The issue: Whether Connecticut needs to set aside a dedicated source of new revenue to pay for the needed

improvements. That could mean tolls, higher gasoline taxes, motor vehicle fees, sales taxes or something else. Malloy and most Democrats say yes. No one likes new taxes, but any other answer is dishonest pandering of the sort that got us into this pickle to begin with — under both parties.

Fasano and most Republicans say no, we can find an extra $1 billion a year, more or less, by rebalancing our priorities and cutting out fat, especially in the money Connecticut borrows every year for special projects.

Yet another unproductive row in the granite halls of the state Capitol in Hartford? Of course, and we can forgive Bill Amalfitano, the ASML general manager, for steering clear of it. He and Malloy celebrated the expansion on Feb. 8, hailing a $14 million state package to help ASML’s expansion. “We are deeply invested and committed to Connecticut,” Amalfitano said in an email Friday, showing the equanimity of King Solomon.

Let’s keep ASML in mind as we look at this nasty, personal battle, which will reach a climax in the next several days as Connecticut sets its budget for the fiscal year that starts July 1.

Everyone agrees Connecticut needs to spend the money, though the details differ by a few tens of billions of dollars among friends. And everyone agrees we need the ASMLs of the state to expand. Punctuating the urgency, the U.S. Department of Commerce reported Friday that Connecticut’s economy shrank in 2017 for the second straight year, coming in No. 49 among states, though most of the problem was in the winter of 2017.

No easy answers

We’re talking about a long-term financing plan here, not just a momentary crisis, although the goal for the moment should be to come up with enough money to restart the $4.3 billion list of transportation repairs, and to avoid yet another Metro-North fare increase, set to take effect July 1.

Malloy has proposed various means, including a temporary, 7-cent-per-gallon increase in the gasoline tax; electronic highway tolls to raise as much as $1.2 billion, steeper motor vehicle fees, which we’ve pretty much already done; and the diversion of more tax money from the general fund to the state’s transportation fund, on top of the $320 million a year, or one-half of 1 percentage point of the 6.35 percent sales tax that already goes toward transportation.

The gas taxes and tolls appear politically dead for this year, an election year. Cut spending? Malloy has already pared more than 7,000 state employee jobs. His view — as he prepares to exit the office — is that we can’t come up with the money without identifying at least some new source to pay back the added debt. “There are going to be some years where we’re going to need to borrow $3 billion or $5 billion,” said Ben Barnes, Malloy’s budget and policy chief.

For now, Barnes and many Democrats want to divert as much as $75 million in added revenue coming into the state’s coffers, beyond what the state forecast just a few months ago. “There’s plenty of good things to spend money on, but the transportation system is our future,” Barnes said, as lawmakers from both parties have other plans for the cash.

Both sides agree on accelerating the move of sales taxes on new cars from the general fund to transportation. That will total $250 million a year by 2020, leaving a hole in the regular government budget.

$400 million question

The bigger dispute is whether Malloy has built enough fat into bonded debt that the state could finance the transportation program with it.

Fasano’s Exhibit A? A so-called governor’s contingency portion of state borrowing, totaling $400 million a year — parks, playgrounds, gazebos, open land and the like, in Fasano’s view.

“It’s nice to have parks,” he said, but added, “Three years ago if the Department of Transportation did my plan, he would have had the money to do the infrastructure.”

Absolute nonsense, Malloy and Barnes say. Fasano’s plan simply doesn’t work.

“It’s easy to point to some of the fluffy things, but those don’t take up a lot of money,” Barnes said. Under the Republican plan, “All the big transformational urban development projects would go away, the affordable housing would go away, school construction would be constrained.”

Besides, he said, it’s not safe to assume Connecticut will receive $710 million every year from the federal government for transportation, especially under President Donald Trump, since that authorization expires in two years.

“The governor has got $400 million in a slush fund,” Fasano shoots back. “His inaccuracies are baffling.”

Who’s right?

Here’s what the facts show: The latest Republican plan would eliminate $255 million in yearly bonded outlays for economic development — that aid to ASML, for example. It would increase, not decrease, school borrowing, by $75 million to $575 million a year. It would eliminate the state’s computer upgrades — which allow agencies to do with fewer employees — saving $80 million a year. It would reduce urban aid by $75 million a year.

The upshot: No, we can’t do this without some new revenue sources. The money isn’t there. Tolls make the most sense for the simple reason that out-of-state drivers and interstate truckers would pay half of it, perhaps even more.

But yes, there is fat in the bonding budget, some of which could migrate to transportation funding.

For the moment, we can get by on the $900 million in transportation bonds the state issued in January. Eventually, Republicans need to live with dedicated revenues for highway and bridge upgrades and Democrats need to borrow less for general capital projects.

ASML, and all of us, are counting on a Solomonic compromise.