Understanding toll debate

They have been hailed as natural, implacable enemies.

Mongoose and cobra. Hatfields and McCoys. Red Sox and Yankees fans.

Now add to this list the folks who support Democratic Gov. Ned Lamont’s tolls plan, and those who favor the Republican legislators’ alternative, the tolls-free “Prioritize Progress.”

Ever since Lamont reversed himself and endorsed tolls for all vehicles three months ago, the two sides have been at odds.

Each proposal has its advantages and its weaknesses, both of which have been subjected to a withering storm of public debate.

Now, with just seven weeks left in the legislative session, lawmakers must choose one, or subject Connecticut to another year of the status quo — an inadequate capital transportation program eventually headed for a congestion nightmare, or worse.

So first, here’s a short primer on how Connecticut pays for road, bridge and rail upgrades, followed by a breakdown of the competing plans.

How state pays for transportation

The Department of Transportation’s capital program is a separate entity outside of the state budget — but they are related and affect one another.

Connecticut pumps hundreds of millions of dollars into the capital program each year by borrowing — selling bonds on Wall Street.

Recently that borrowing has hovered between $700 million and $800 million per year.

The federal government adds another $750 million to that in matching grants, giving the state between $1.4 billion and $1.5 billion in new capital resources each year.

The problem is Connecticut shortchanged its transportation capital program for decades prior to now, and $1.5 billion in new money each year isn’t anywhere near enough to do the job.

DOT Commissioner Joe Giulietti recently told lawmakers he needs at least $2 billion to make a difference — and then that annual number would need to grow throughout the 2020s and 30s.

Lastly, that money Connecticut borrows has to be paid back, and that’s where the state budget comes in.

Every year, the state makes payments —principal and interest — on billions of dollars of accumulated transportation bond issuances from years past.

That debt service line item eats up about $650 million of the budget’s $1.6 billion Special Transportation Fund. The rest goes to pay for DOT operations, winter snow removal, rail subsidies, and bus and other transit programs.

So if the state wants to borrow more money to rebuild roads, bridges and rail lines, then it needs more dollars to pay off the debt.

Which brings us to …

Lamont’s tolling plan

The governor would order electronic tolls on Interstates 84, 91 and 95 and on the Merritt Parkway with a base charge of 4.4 cents per mile — before discounts are offered to Connecticut motorists.

This would raise $800 million per year for the budget by 2024 or 2025, the administration says, with 30 to 40 percent coming from out-of-state motorists.

This would easily cover the debt payments on more annual borrowing.

But it would also give Connecticut the option of shifting toll receipts directly into the capital program and paying in cash — not borrowed dollars — for hundreds of millions of dollars in work, according to Lamont budget director Melissa McCaw.

Over the next two decades, Connecticut could save billions of dollars in interest costs with this debt-avoidance approach.

Giulietti said he also believes a reliable, long-term revenue source such as tolls could help Connecticut control its debt costs down the road.

“If we can lock in what the future revenue streams can be, then it really allows for some creativity,” he added.

More importantly, McCaw said, it would finally allow Connecticut to rebuild an aging, overcrowded transportation system that’s an impediment to a healthy future.

“The bottom line here is that Connecticut needs to make a decision about the path forward for transportation,” she said. “This is not just about getting a fund to balance. This is about positioning Connecticut for economic growth. … This is about making the case for families to be here in Connecticut.”

“Speeding up our rail service from Hartford to New Haven, to Stamford and New York City, with more frequent service to Waterbury and New London, with easier access to Bradley Airport and an upgraded Tweed Airport,” Lamont told legislators in his Feb. 20 budget address. “These transportation upgrades are the building blocks of our economic future.”

But tolls aren’t the only idea for financing an infrastructure rebuild. There’s also …

Prioritized Progress

“The Democrats and the governor have some people convinced the only way to do this is with tolls, and that’s simply a fallacy,” said House Minority Leader Themis Klarides, R-Derby.

In 2015, Republican legislators noted Democrats had massively increased borrowing for non-transportation purposes — and not just for schools and economic development.

Rather than simply cut programs out of the state budget, Democratic legislators and Gov. Dannel P. Malloy were putting them on the credit card. Connecticut was borrowing more than $100 million per year to make payments on borrowing. And a steady stream of community-based projects — often in Democratic legislators’ districts — consistently found their way into the bonding program.

Between 2012 and 2015, bonds issued for non-transportation purposes — and repaid out of the budget’s General Fund, not its Special Transportation Fund — grew from $1.1 billion to $2 billion per year.

Republicans asked a logical question: What if Connecticut redirected about $700 million per year of this borrowing away from these other areas and into transportation?

Connecticut would have more than $2.1 billion each year to spend on transportation projects — and no one would have to pay tolls — if the state combined:

$700 million in annual borrowing repaid out of the General Fund.

$700 million to $800 million it’s already borrowing and paying off out of the Special Transportation Fund.

$750 million per year in federal grants. “This is about a reallocation of bonding,” said Senate Minority Leader Len Fasano, R-North Haven. “These simply are choices, but some people don’t want to make them.”

These are the basic advantages of each program. But no plan is without its flaws.