Bond proposal ‘raises serious legal issues’
HARTFORD — Democratic lawmakers on the Finance, Revenue, and Bonding Committee released more than a dozen bills this week, including some that would radically change Connecticut’s tax structure.
Many lawmakers were still trying to digest the proposals Wednesday, and at least one of the bills was panned as unconstitutional by both Democratic and Republican lawmakers.
Senate Bill 1134, backed by Sen. John Fonfara, D-Hartford, would take the power of the state Bond Commission away from the executive branch and give it to the legislative branch.
If the bill passes it would put the Senate president and House speaker in charge of the Bond Commission, which oversees all the borrowing for infrastructure projects. Under the legislation, leaders from both parties would replace members of the executive branch on the 10-member board, which is chaired by Gov. Ned Lamont.
The governor now controls what infrastructure projects get funded. Earlier this year, Lamont announced the state would go on a “debt diet” and borrow about $500 million less per year than in previous years.
Lamont brags about how favorably Wall Street viewed that decision, but on the other hand he may have underestimated how much some of those projects mean to local legislators and the impact of postponing them on his ability to accomplish the rest of his legislative agenda.
Fonfara said deciding what gets put on the state credit card “should not be reduced to a catchy slogan. This is too important to our state.” He accused the administration of backing into the number it’s using to reduce Connecticut’s borrowing. He said it’s not a responsible way of governing and makes it seem as if the governor doesn’t want to oversee the state’s capital investments.
“Senator Fonfara’s proposal to remove executive branch representation from the Bond Commission raises serious legal issues,” Maribel La Luz, Lamont’s communications director, said. “It violates the separation of powers doctrine of our state constitution. If passed, the actions of the Bond Commission would be susceptible to legal challenges, casting significant doubt in the capital markets about the validity of authorizations by our Bond Commission going forward. We reject this proposal in this entirety.”
Fonfara said the Legislature authorizes billions in bonding and has “zero say” in what projects get funded and has to resort to “begging” to get anything done.
Fonfara said that if Lamont doesn’t want the responsibility then the legislature is ready to take over. He said most states don’t have a Bond Commission. In those states, projects are approved through the legislative process, he added.
Fonfara’s fight with the administration comes at a crucial time in the budget process. Next week the Legislature will put forward their budgets, and negotiations over a final package will begin with the governor’s office.
Senate Republican Leader Len Fasano, R-North Haven, said handing over the Bond Commission to the legislature would turn it into a “political nightmare.”
He said it would take the idea of political leverage to an extreme and give way too much power to the party in control.
House Speaker Joe Aresimowicz, D-Berlin, said he doesn’t want to change the balance of power between the branches.
“I appreciate all of our roles and that’s not a role I feel comfortable taking on,” Aresimowicz said.
The bill will receive a public hearing on Monday.
Also on the agenda for that public hearing is Senate Bill 1139, which looks to eliminate the motor vehicle tax over five years. It would seek to hold towns mostly harmless from the loss of revenue by allowing them to assess property at 100 percent of its value. Currently, the assessed value is at 70 percent.
Rep. Jason Rojas, D-East Hartford, said the goal of the legislation is to try and hold towns harmless if the motor vehicle tax is eliminated. He admitted it does create some winners and losers, but believes towns will be able to find a way to balance their revenues over the five years they are given to adjust.
The Connecticut Conference of Municipalities warned that getting rid of the motor vehicle tax can’t be done in a vacuum.
“It is worth more than $800 million to municipalities,” Kevin Maloney, a spokesman for CCM, said. “It needs to be part of a more holistic approach to property tax reform.”
He suggested greater local revenue diversification and relief from things like the minimum budget requirement for local public education.
Another bill — SB 1138 — that will get a public hearing Monday is one that would create an investment fund with revenue from cannabis legalization and a voluntary tax paid by colleges and hospitals.
The General Assembly would have to legalize cannabis before the state realizes any new revenue, which is estimated to be around $50 million annually.
The bill would also require colleges and hospitals to contribute 25 percent of what they would pay in property taxes to the state and the state would then redistribute the money to the towns. By having the state collect the revenues, instead of municipalities, it could loosen the spending cap, Rep. Chris Davis, R-East Windsor, said.
The bill would also create community impact zones, development opportunities, and a tax credit for communities that have been the most impacted by the “War on Drugs.”