From New York to Maine, states in the Northeast took up a range of borrowing-related issues in their recently concluded legislative sessions.
Lawmakers in Maine expanded the use of tax increment financing, New Hampshire will see bond proceeds used to finance the transfer of a major stretch of Interstate highway to its toll road authority, and Massachusetts created a new bonding authority. And in New York, well...
Tax increment financing was already allowed in Maine, but not specifically for transit-oriented development. That has changed, as Gov. John Baldacci signed a law expanding what TIF districts can be used for, including bus, ferry, and rail systems.
The change will "enable TIF funds to go towards both transit capital and operating expenses, and [we] hope that communities will zone for high densities and mixed use ... to make them transit-friendly and have a positive impact where the transportation system is enabling more development and more development is helping support the transit system," said South Portland's director of planning and development, Tex Haeuser, who brought the idea to the Legislature.
"We just don't have that many economic development tools and this is one. [TIF financing] works for downtown revitalization and it works for other things," he added. "We thought, 'Let's see if we make it help on the transportation end of things.' "
In New Hampshire, the Department of Transportation will sell a 1.6-mile portion of Interstate 95 to the New Hampshire Turnpike System for $120 million, under a law Gov. John Lynch signed last week. The purchase will be funded through bond proceeds backed by toll revenue on the highway. The bond proceeds will in turn be deposited into the state's cash-strapped highway trust fund.
The trust fund is not able to keep up with road and bridge maintenance, according to Rep. Candace Bouchard, the law's sponsor. "This was a way to put money into the trust fund, $120 million to be paid out over 15 years," she said.
Bouchard said that the move was part of a compromise to fund highway projects after Lynch said he would veto an increase in gas taxes and car registration fees that passed both houses of the General Court. The law creates a more complete turnpike system because the piece of road being sold was the only part of I-95 in the state that was not part of the system. The law also permits open road tolling on the turnpike.
The New Hampshire legislature also passed a law that would allow towns and cities to take away bonding authority from debt-issuing entities. Currently, towns and cities can authorize bond issuance for certain entities but have no ability to remove that authorization if it is later determined not to be needed.
Meanwhile, the big news in the Bay State this session was the end of the Massachusetts Turnpike Authority. MassPike will cease to exist at the end of the year and will be replaced with a new bonding authority that will oversee both roadway and mass transit systems in the state.
Connecticut began its fiscal year with Gov. M. Jodi Rell vetoing the two-year budget passed by the General Assembly. That budget did not include a transportation package, but Rell's proposed budget included $5.2 billion of transportation spending for fiscal 2009, 2010, and 2011.
Of that proposed $5.2 billion, the state would sell bonds for $1 billion of projects in fiscal 2009 and $1 billion for projects over the next two years. The total package also included rainy-day funds and federal stimulus money. The assembly has proposed less borrowing, just $355 million in the new biennium.
In New Jersey, the Legislature last month passed open-space legislation that would authorize the sale of $400 million of general obligation bonds. The Green Acres, Water Supply and Floodplain Protection, and Farmland and Historic Preservation Bond Act of 2009 would use $218 million to acquire and develop lands for public recreation and conservation, $146 million to preserve farmland, $24 million to purchase properties that are prone to flood or storm damage, and $12 million for historic preservation purposes.
Legislative chaos in New York meant that numerous bills never went anywhere, and as of last week, the fates of many others were in question. A Republican coup in the Senate, made possible by one Democrat who shifted his allegiance and another who shifted his temporarily, brought the chamber to a deadlock.
With neither side acknowledging the other's leadership and an even 31-31 split of senators, nobody has the votes to do anything. Each conference party claimed to pass bills but the legality of the votes, as well as the whole proceeding, has been subject to nasty political and legal battles.
Routine and noncontroversial extender bills had not been passed as of the end of last week, or least had not been passed in votes recognized by the governor, creating potential crises for issuers across the state. Most counties in the state - with legislative exemption - have sales taxes in excess of the 3% permitted under state law. Most of those counties will see their additional tax expire at the end of November unless action is taken.
The New York State Housing Finance Agency lost its ability to sell bonds and the State of New York Mortgage Agency would lose its ability as well after July 15, if nothing has happened by then. Nassau County has been waiting for authorization to sell bonds to fund an early retirement incentive program.
New York City was counting on approval of sales tax increases that Mayor Michael Bloomberg said are worth $60 million a month. The city has also lost its ability to sell bonds through negotiation and as variable-rate. It has also lost its ability to enter into derivative contracts.
Although the Empire State's legislative session is over for the year, its business is not, and it's anyone's guess how and when it will get done.
