NEW YORK (Reuters) - Connecticut’s infrastructure projects are in jeopardy after revenue that helps pay off the state’s transportation debt has decreased and additional funding sources have not yet been identified, according to a report released on Thursday.
Revenue that supports the state’s Special Transportation Fund (STF), a debt-servicing entity, has declined in the past few years, with the fund projected to operate at a deficit by fiscal 2020, said the report by the state’s Office of Policy and Management and the Department of Transportation.
As a result, transportation projects throughout the state could risk cancellation or deferral if measures are not taken to fund the STF, the report said.
“By fiscal year 2020 not only will the fund operate at a deficit, but we’ll erode the entirety of that fund balance and be operating in the negative for the first time,” said Chris McClure, a spokesman for the state’s Office of Policy and Management.
Revenue from the state’s gasoline tax, which flows into the STF, has declined over the years as people have increasingly chosen to drive hybrid or electric cars, McClure said.
“People are filling up less, so we generate less revenue,” he said.
In addition, annual debt service has increased to pay obligations on bonds issued over the last 20 years to finance transportation rebuilding, the report said.
Connecticut, which struggles with outstanding debt and unfunded pension liabilities, was hit with general obligation rating downgrades earlier this year by all three major credit rating agencies to the single-A level.
In October, Connecticut lawmakers were four months late in enacting a budget for the new fiscal year that began on July 1. The state already faces a $200 million deficit for the current year, McClure said.
To keep the STF solvent past fiscal 2020, the report outlined several proposals, including a rail fare increase, subsidy reductions and hiring freezes.
“Today we are at a crossroads, and a decision must be made: will we cancel important projects and let our roads and bridges deteriorate, or will we endeavor to face these problems head on and find new ways to support our transportation system?” said Governor Dannel Malloy in a statement on the report.
Reporting by Stephanie Kelly; Editing by Matthew Lewis