Thursday, February 08, 2007

Governor Rell's Clean Water Fund Proposal is Good But Not Good Enough and Also is Less Than Meets the Eye

After years of neglecting the state’s Clean Water Fund, Connecticut politicians seem determined to start putting money back into it in 2007 and therefore to get back in the business of paying for the sewage treatment upgrades that they mandated and that Long Island Sound needs.

Governor Jodi Rell took a step in that direction yesterday, allocating $245 million a year for the Clean Water Fund for each of the next two years. That sounds great, but in truth it seems to me that it’s less than meets the eye. Here’s how someone knowledgeable about the situation described it to me today:

The $245 million breaks down to $70 million in general obligation bonds and $175 million in revenue bonds. The two are part of the same package: the general obligation bonds pay for grants that are given to municipalities and the revenue bonds pay for low interest loans given to municipalities. Sewage upgrade projects that are approved by the state Department of Environmental Protection receive a percentage of the money in grants and a percentage in loans.

But the controlling number is the amount of the grant (the source of which is the general obligation bonds). The DEP program requires that whatever you get in low interest loans (from the revenue bonds) has to be matched by money you get in grants. The match is roughly 35 percent grants to 65 percent loans (it can vary from 30 to 40 percent, depending on the project). But 35 percent of $245 million is about $86 million, which means the $70 million in general obligation bonds is about $16 million short of what is needed to match the $175 million in revenue bonds. So unless the general obligation bond allocation is increased to $86 million, some of the cash in the revenue bond allocation will sit there unused.

Seventy million dollars is what environmentalists and municipal officials had been calling early last year. But as the reality sunk in that the years of neglect by Connecticut would require years of extra funding to compensate, they began saying that the real need was more like $150 million. (For context, last year’s budget included $20 million in general obligation bonds and $67 million in revenue bonds.) And the General Assembly is considering a bill that would put more than $70 million in the Clean Water Fund. Let’s hope the legislators can persuade the governor that the increase is worthwhile.



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