HARTFORD — Revealing a sudden $250 million hole (and growing), the governor’s budget secretary admitted he made a mistake on New Haven’s bungled railyard project.
Bob Genuario’s (pictured) admission came during a hearing Tuesday before the legislature’s Finance and Transportation Committees on a sudden shortfall in funds to improve New Haven’s rail maintenance facility. The rail yard project is rapidly emerging as a major embarrassment to the Rell administration. State Sen. Eileen Daily called the debacle “the next Big Dig,” referring to Boston’s tunnel boondoggle.
Mismanagement of the New Haven project has created a “mangled mess” worse than the I‑84 debacle, where hundreds of faulty storm drains were revealed along the highway near Waterbury.
The current screw-up at the Department of Transportation, which has cycled through three commissioners in the past year and currently has no permanent head, concerns an effort to improve maintenance facilities at New Haven’s railyard behind Union Station.
DOT officials say the rail yard doesn’t have adequate facilities to maintain its existing fleet. In a three-phase, 15-year plan, the state would add a storage yard, upgrade support utilities and add new tracks to accommodate an expanding fleet to meet expanding ridership.
The clock is ticking on the project, which is meant to be ready to receive 300 brand new “Virginia” rail cars. The cars, part of a $2 billion transportation package, are already over a year in delay from their scheduled arrival in September 2006. They are now scheduled to arrive next year, according to Gov. M. Jodi Rell.
“A Mangled Mess”
The source of embarrassment is that project costs have exploded beyond initial estimates, spurring a late-game funding emergency less than a month before this legislative session ends on May 7.
Upon introducing the project in 2005, DOT pegged the project cost at $300 million. A new estimate given in March 2008 put the cost at a whopping $1.17 billion. (The latter figure is in tomorrow’s dollars, with inflation accounted for until the project ends around the year 2020.)
Legislators have been presented with a sudden need to approve an extra $252 million bond authorization to fund only the first phase of the project. The bulk of the first phase is a $233 million component change-out shop.
Members the Finance Committee asked Genuario how costs could have possibly spiraled so far out of control, and why they didn’t know about it sooner.
State Sen. Andrew McDonald (pictured) called the project “a mangled mess of planning and lack of communication” that revealed the DOT’s “basic inability to properly administer their core functions.”
During the hearing, a repentant Genuario revealed he knew of exploding costs as early as June 2006. At that time, the cost of the project had more than doubled to over $600 million, he told the committee. He said he felt McDonald’s shock and anger at that moment, but he couldn’t believe the cost had really jumped that high: “I didn’t accept it at the time.” He went back to the DOT and asked it to lower the cost.
Meanwhile, costs continued to escalate.
“Unfathomable” Omission
In January 2008, the DOT came before the legislature announcing total costs had grown to $732 million. Even that figure was deceiving, DOT officials admitted, because it represented the 15-year project in January 2008 dollars, as if the project were built in a single day. Accounting for inflation, the real cost computes to $1.17 billion, Genuario said.
What could explain the wild growth in these figures?
DOT Acting Commissioner James Boice (pictured) said part of the growth came from a “natural evolution” in project costs from the rough estimate of the planning stage to the nitty-gritty of the design phase. When designers got to the site, they realized they’d better build a pedestrian bridge and parking garage for employees, he said. They also had to accommodate plans for a Hartford-New Haven train line, which would require the fleet to expand, he said.
New Haven State Rep. Cameron Staples, who co-chairs the Finance Committee, balked at the notion that the financial ballooning could be considered a “natural evolution.”
Moreover, it’s “unfathomable” that the DOT wouldn’t realize that it would have to find parking for employees as part of project, he charged. He indicated the debacle has cast doubt over the state’s ability to accurately predict project costs: “What will give us the confidence that you won’t be back year next year with a 1 or even 2 billion dollar figure?”
“Responsibility… Solely My Own”
Genuario sympathized with Staples’ concerns and took responsibility.
“Candidly and honestly I could have done and should have done a better job” in keeping the legislature in the loop when he first learned of ballooning costs, Genuario said. “Responsibility of this is solely my own.” Genuario said much of the problem stemmed from the unreliability of the first $300 million estimate, which was based on old figures and did not account for inflation.
Genuario said the cause for the recent surprise was that the DOT didn’t tell him it would need the bonding authorized this session as opposed to next year. When he found out the DOT preferred to have bonding authorized this legislative session, he came forward to the legislature, he said.
Gov. Rell has called for an independent audit of the project to look at other options and ways of reducing costs. The review should take place over the summer, Genuario said.
The committee recessed after two-and-a-half hours with plans to reconvene within the next week or so.
Plans remained up in the air as to whether the legislature would push through a $252 million bonding package before the session’s end. The funds would be financed by the state special transportation fund, which is generated from the state gas tax.
The gas tax or “gross receipts tax“ is already scheduled for an increase, as part of the governor’s transportation package. The gross receipts tax is currently 7 percent, or about 19.2 cents per gallon. Add that to the 25-cent excise tax charged at the pump and Connecticut residents pay a whopping 44.2 cents to the state for every gallon they pump. The gross receipts tax is expected to go up to 7.5 percent on July 1.
Sen. Daily (picture above) suggested that to fund a whopping $252 million bonding package, the legislature might have to look at raising that tax again.
First: this is a fiasco and Rell needs to be held accountable. Offering the heads of low-level officials is not enough; we don't vote for them, we vote for her.
Second, some tax has to be raised and it might as well be the gas tax. Presumably, the state wants fewer people to drive, and it needs money, so it should tax gas. Why raise the sales or income taxes - we don't want people to work less or to sell fewer things. The gas tax is too low anyhow because it fails to capture all of the environmental and social costs of driving.