A Connecticut investment panel is challenging poor cities seeking economic aid to think big
Top state lawmakers and Gov. Ned Lamont’s administration challenged Connecticut’s poorest cities and towns Wednesday to think big if they want to tap a new pot of state financing to revitalize their communities.
The Community Investment Board 2030 launched a process that potentially could channel $875 million in state financing over the next five years — and as much as $1.5 billion over the next decade — into nearly three dozen distressed municipalities.
“This wasn’t just a one-off thing that was stuck in the budget,” House Speaker Matt Ritter, D-Hartford, who co-chairs the board, said following Wednesday’s meeting. “These pots of money are going to be for projects you can look back at in five or 10 years and see a difference.”
Cities and towns, community development corporations and other nonprofit entities are being asked to take a holistic approach, the speaker said. Though they could seek funding for one capital project, such as downtown parking and sidewalk repairs, long-term plans that might include several elements — job creation, expansion of affordable housing or filling a gap in vital support services — will have a big advantage.
In addition, if a community is prepared to invest some of its own resources, or leverage support from private philanthropy or business, they also will have a leg up.
The hope, Ritter added, is that municipal leaders will work closely with civic groups as well as their state and federal legislators. The first round of funding, $175 million, would be available in the 2022-23 fiscal year, which begins next July 1.
“I think this is a fantastic opportunity to do some long-term planning and allow local municipalities some control,” said Senate Minority Leader Kevin Kelly, R-Stratford, who also serves on the investment board. “I’m very excited and encouraged by this.”
Paul Mounds Jr., Lamont’s chief of staff and a member of the investment panel, said the initiative has the potential to be “very consequential” and “to ensure we have generational change in our communities.”
Besides legislative leaders and members of the Lamont administration, the panel also includes state Treasurer Shawn Wooden, Comptroller Kevin Lembo, Secretary of the State Denise Merrill and Attorney General William Tong.
The group cannot disburse dollars unilaterally to cities and towns. Most state borrowing must be considered by the State Bond Commission — a 10-member panel chaired by the governor. And while that group also includes legislators and other constitutional officers, the governor has sole control over its agenda.
But Lamont has only two months to decide whether to forward projects endorsed by the investment board to the bond commission.
The initiative also is subject to some other limitations, specifically two state capping systems that limit borrowing.
And since a significant portion of state bonding already is earmarked to support municipalities, those debt limits — if not carefully managed — could force future legislatures to reduce other aid to cities and towns to accommodate this new venture.
The investment board was crafted largely by Ritter to find middle ground between Gov. Ned Lamont, a fiscally moderate Democrat, and more liberal party members in the legislature.
Progressive Democrats pushed hard last spring for tax hikes on wealthy households and major corporations worth hundreds of millions of dollars annually. Those resources would have been pooled in a new fund to spark economic development and other investments in programs in poor communities.
But while liberals argued that the coronavirus pandemic has exacerbated Connecticut’s long-standing severe inequalities in wealth, economic opportunity, health care and education, Lamont said that pandemic also left the economy particularly vulnerable to any major state tax hike.
Lamont, a Greenwich businessman, also has insisted that boosting state taxes on the wealthy would cause Connecticut’s biggest taxpayers to flee the state and that wealth redistribution via taxation should occur chiefly at the federal level.
Lamont and lawmakers adopted Ritter’s compromise, which included no major tax hikes. Instead it authorized $175 million in annual state financing for each of the next five years for investments in the 34 communities classified as “distressed” — due to high poverty levels — by the state Office of Policy and Management. It also includes a provision to renew the program for another five years and to expand the state’s annual bond investment in future years. That would require another vote of approval from the legislature.