After chastising legislators for rejecting his calls for tolls, Gov. Ned Lamont faces another budget quandary centered on Connecticut’s cash-starved transportation network.
With big deficits looming, Gov. Ned Lamont is expected to propose significant spending cuts in February unless he tries to steer money away from transportation.
With big deficits looming over the next two fiscal years, Lamont already is expected to propose some ugly spending cuts in February as he tries to avoid tax hikes while potentially gearing up to seek re-election in 2024.
Or, to mitigate those unpleasant options, he could try to steer money away from transportation — which could lead some to question his commitment to the program.
“I have no intent to change the law” and shift funding away from transportation, the governor said Monday. “But my life would be a heck of a lot easier if they [legislators] could vote on a plan.”
Lamont asked lawmakers in 2019 to approve tolls on all vehicles and, in 2020, to impose fees just on large trucks. Lawmakers acted on neither but also approved no substitute plan to fund transportation over the long haul.
Meanwhile, the state budget’s General Fund will run $2.1 billion in deficit next fiscal year unless adjustments are made, nonpartisan analysts warned last Friday. That’s a 10 percent shortfall.
The governor and legislature are expected to use Connecticut’s record-setting, $3.1 billion rainy day fund to mitigate that problem.
But analysts also project potential deficits of $2.2 billion and $2.1 billion in the 2023 and 2024 fiscal years, respectively. That means the reserve might need to be spread over several years to cushion the blow as Connecticut recovers from the coronavirus-induced recession.
And a significant part of the immediate budget challenge involves a commitment to steer more resources — specifically, tax receipts from motor vehicle sales — away from the General Fund and into the Special Transportation Fund.
The governor is supposed to deliver an extra $180 million to the STF next fiscal year, and then boost the annual transfer by another $90 million in 2022-23.
Lamont could argue the General Fund simply can’t spare these resources right now as it tries to avoid tax hikes at the worst possible time.
According to the state Department of Labor, nearly 190,000 residents currently are collecting weekly unemployment benefits. By comparison, the state lost roughly 120,000 jobs in the last recession, which ran from December 2007 through mid-2009. Connecticut’s restaurants and the rest of its hospitality sector remain particularly fragile, with COVID-19 cases climbing upward since late August. And with the coronavirus slowing demand for transit programs, the governor could argue this program could tighten its belt for another year.
The governor also noted that the sales tax, the second-largest revenue engine after the income tax, really was designed to cover the General Fund.
“It doesn’t really impress me as a strategy, Let’s borrow from Peter to pay Paul,” Lamont said Monday.
The transportation fund has been primarily supported