(Updated) City officials are hustling to secure promised state reimbursements for upwards of $5 million in road-paving money after being caught off guard by the abrupt ending of a popular capital improvement program.
Whatever happens, they promise, the city will keep patching potholes.
The scurry began on Dec. 29 of last year, when Connecticut Office of Policy and Management Secretary Benjamin Barnes sent a letter to towns and cities throughout the state announcing the end of the Local Capital Improvement Program (LoCIP).
This three-decade-old program, which reimburses municipalities for eligible capital improvement projects like road and bridge construction, had exceeded its bonding limit by $35 million back in March 2016.
The letter apologized for any inconveniences that the sudden end of the program may cause for local governments. But it also made clear that the state’s hands were tied as long as the General Assembly maintained the program’s current funding cap.
(Click here to read a previous article about the concern expressed by the Board of Alders when Budget Director Joe Clerkin first presented the OPM secretary’s letter last week at a Finance Committee meeting.)
For New Haven’s finance and public works departments, which are responsible for handling all of the city’s LoCIP requirements, this announcement of the program’s imminent demise represented not just an unwelcome potential loss of reliable state funding for road-paving projects.
It also proved to be an incitement to pick up the pace in completing a series of required bureaucratic processes that had always demanded meticulous attention, but had never before required much urgency.
“This is a very detailed process which requires, among other things, compiling many different purchase orders and figuring out which expenditures are eligible,” explained City Controller Daryl Jones, referring to the paperwork his department helps public works complete and submit each year in order to receive LoCIP reimbursements. “It takes literally up to a month to prepare each reimbursement request document.”
The time-intensive nature of this paperwork had never been much of a problem in years past, however, because the state always gave participating cities a seven-year window to complete all relevant documents, from the initial project authorization forms to the final reimbursement requests.
Then, at the very end of last calendar year, what was once a reliable, generous seven-year window suddenly turned into a shuttered window with a “Closed” sign hanging out front, city officials said.
“The timing of this announcement was suspect,” Jones continued in an interview this week. “Most of the people in our department were on vacation, and it caught us off guard. If this announcement was made earlier, we would have had all hands on deck, devoting all necessary resources to getting the paperwork in. If we knew ahead of time.”
Like every other municipality in the state, the City of New Haven had no advance warning. That was doubly a problem, because the city was already behind schedule on its most recent LoCIP paperwork.
As of the beginning of this week, the city had received reimbursements for LoCIP-eligible projects through only Fiscal Year 2013. The final submission of the FY2014 paperwork had been delayed because of bureaucratic complications, including state changes to how it distributes funds to municipalities as well as state changes to the reimbursement request paperwork itself.
City officials felt like they had time to work out those problems, Jones said — again, because of that established seven-year window.
“It feels like we’ve had the rug pulled out from under us by the state,” said Department of Public Works Chief Financial Officer CFO Mark DeCola. “When they don’t provide any real due date or sense of urgency, these tasks inevitably fall into a certain pecking order. After all, LoCIP-related paperwork is only 1 - 2 percent of the work our clerks have to deal with on an annual basis. This makes us look like we’re not doing our jobs, which is just not the case.”
Hurrying to catch up with the increasing vulnerability of the state program, Jones said, the city formally submitted on Wednesday the final FY2014 LoCIP paperwork, which includes requests for around $1.6 million in expected reimbursements for road-paving projects completed during that time period.
His department and public works are now undertaking a final review of the prepared FY2015 and FY2016 paperwork, which also amount to around $1.6 million each in expected state road-paving reimbursements. They have spent only $200,000 of the budgeted FY2017 LoCIP-eligible project money thus far, considering that most road-paving operations happen in the spring and summer, and will be holding off on spending any more of those expected state funds until officials are more certain about the program’s future.
Even if the state program were to end completely, however, and not shell out any more expected reimbursements, the city would be able to continue its road-paving program and continue with its five year capital improvement plan by bonding for more money in its capital budget, DeCola said. The general fund would remain untouched.
“Being a relatively big city with a public works budget, we depend on LoCIP, but not exclusively,” DeCola said. “But for some of these small towns with no public works budgets, if they don’t have LoCIP, they’re in real trouble.”
At the onset of a state legislative session with a looming $1.5 billion budget deficit, an 18-18 tie between Republicans and Democrats in the State Senate, and an accelerating trend in the state’s shifting of costly responsibilities onto the backs of municipalities, underfunded programs like LoCIP do indeed stand a real chance of going away for good.
“We simply cannot make new reimbursement payments under this program unless the General Assembly raises the bond cap by $35 million,” OPM Undersecretary W. David LeVasseur stated in an email. “By law, we cannot spend more than the cap, so reimbursements have been suspended for any projects not approved by OPM by December 22nd of 2016.”
The city, through lobbying of its own state delegations as well as through the advocacy of such organizations as the Connecticut Conference of Municipalities (CCM), hopes to hold the state accountable for at least the LoCIP money that has already been promised for approved projects. After that, the conversation would shift to a sustainable path forward for working with the state to get some kind of support for capital improvement and maintenance projects.
“One of the things you don’t want your legislature to do, especially in hard economic times, is balance the state budget by taking money away from existing economic development projects,” CCM Executive Director Joe DeLong said. “We’d be harming the state by pulling the funding from these programs. It’s kind of like building a house and telling a contractor that you have enough money to pay for the work. And then, halfway through, saying sorry, that you’re not going to pay and you don’t actually have the money.”
[UPDATE: Av Harris, the Director of Communications for the City of Bridgeport, followed up via email with the New Haven Independent about how his city is slightly ahead of the Elm City in requesting and receiving LoCIP reimbursements.
“We received state FY2015 LoCIP [reimbursements of] $2.3 million in June 2016. We also received in the last twelve months another approximately $1 million in old LoCIP funds which the city had not yet been reimbursed for various projects from the years 2007 - 2014.”
Harris said that the City of Bridgeport had submitted its FY2016 LoCIP reimbursement requests for another $2.3 million a month ago, but had been told by the state that the requests were sent in too late, because the reimbursement distribution freeze had kicked in retroactively in early December.
However, he wrote, “the LoCIP program is not ended, it is merely frozen for a few months while the state seeks legislative bonding authorization to release more funds to municipalities, which we have been told by OPM to expect in April.”]