Lamont, legislature headed for a showdown over funding of watchdog agency 

Gov. Ned Lamont may be headed for a showdown with the legislature over what appears to be a fraction of the state budget too small to measure.

But what’s really at stake is the oversight of a major wind-to-energy project in Long Island Sound and whether a long-underfunded watchdog agency – founded not long after a Republican governor went to jail – should have the resources to probe this venture.

“It doesn’t matter whether we have a Democrat or a Republican in office,” said Rep. Toni E. Walker, D-New Haven. “It’s important that we have transparency.”

When it comes to the State Contracting Standards Board, “it’s very much time to fund it properly so it can do its statutory due diligence – or to disband the organization,” said Sen. Cathy Osten, D-Sprague, the other co-chair of the appropriations panel. “And I favor funding it.”

Osten, Walker and others hope to reverse what they say was a mistake Lamont and the legislature made – quickly and quietly – when the new state budget was adopted in June.

That mistake, they say, was to empower the contracting board to investigate the Connecticut Port Authority – but then to take away the extremely modest resources needed to do the job at the last minute.

The contracting board was supposed to get $450,000 extra, both this fiscal year and next, to add five staffers. With its current staff of one, the board is severely constrained.

That reversal hasn’t set well with some legislators this summer who’ve been hoping for more details about a controversial $700,000 fee the port authority paid to find an operator for a wind-farm-related project at State Pier in New London.

“It was our intention to have a robust process that the port authority was subject to,” said Rep. Roland Lemar, D-New Haven, co-chairman of the Transportation Committee. “An eviscerated Contracting Standards Board cannot complete the task that we had envisioned.”

Port authority has a checkered past

That task was to review the contracts and procurement policies of a group whose brief history has been mired in controversy.

Created by the legislature in 2014 to facilitate development of Connecticut’s deep-water ports, the authority made headlines in 2019 when it paid then-Chairwoman Bonnie Reemsnyder’s daughter $3,000 for six professional photographs hung in its Old Saybrook office. Reemsnyder resigned in July of that year.

The state auditors of public accounts blasted the authority three months later, disclosing its leaders had spent thousands of dollars on expensive meals and liquor, incurred excessive legal fees and generally acted without clear policies governing purchases, personnel matters and ethics.

Lamont, who inherited the authority when he took office in January 2019, overhauled the quasi-public entity’s leadership and assigned his budget office to professionalize operations there.

The stakes are high, because the state is working with Eversource and its Denmark-based partner, Ørsted North America, to transform New London into the green energy capital of the Northeast with an offshore wind farm ultimately capable of generating 4,000 megawatt hours of electricity.

The Contracting Standards Board Chairman Lawrence Fox, a West Hartford Democrat, told the CT Mirror that the board also took an interest in early 2019. That was shortly after the authority had selected Gateway Terminal to operate State Pier and remake it into a heavy-lift capable port that can accommodate wind generation equipment.

The contracting board specifically focused on more than $700,000 in fees paid to Seabury Capital Group to help with search for a pier operator . The Day of New London first reported that those payments included a $523,000 “success” or reward fee – and that this happened three months after Henry Juan III of Greenwich, who was a managing director with Seabury, resigned from the authority board.

Juan could not be reached for comment Tuesday.

John Henshaw, who became the port authority’s executive director in September after serving as a member of the Portland Harbor Commissioner in Maine, said the authority has been cooperating with the contracting board as well as other state agencies.

Lamont’s communications director, Max Reiss, said Tuesday that “the governor’s position has not changed” and that “there are existing accountability measures in place” already without an expansion of the contracting board.

Attorney General William Tong and the state auditors also have been investigating the port authority’s contract with Seabury Capital.

Contracting board has never been properly funded

But Fox said the contracting board’s ability to make headway is severely constrained by a longstanding problem: few resources.

The board – the linchpin of the landmark “Clean Contracting” system created in 2007 by the Democrat-controlled legislature and Republican Gov. M. Jodi Rell – was Connecticut’s response to the contracting scandals that drove Gov. John G. Rowland from office amid an impeachment inquiry in July 2004. Rowland later served 10 months in federal prison after admitting he accepted about $100,000 in gifts from state contractors and his staff.

The panel would be empowered to review contracts and procurement practices for most government agencies.

Not long after the board’s creation, though, Connecticut would fall into the Great Recession, and legislators and Rell would siphon away nearly all resources, leaving the volunteer standards board with no staff.

An executive director would eventually be hired, but once the recession had ended, Democrats would take control of the governor’s office – first Dannel P. Malloy, who served from 2011 through 2018, and then Lamont.

And neither has shown much need for the contracting board, which has remained fiscally shackled for nearly a decade and a half.

Malloy tried in his first six months to suspend contracting board operations for two years so he could more easily privatize state services and cut operating costs.

Lamont, who also has made no secret of his plans to privatize more state services as veteran government employees retire over the next few years, offered a bill in 2019 to make it easier to launch public-private ventures.

The legislature killed Lamont’s proposal, though, after AFL-CIO President Salvatore Luciano called it “reckless and shortsighted” and “an alarming attempt to return us to the shadowy Rowland years.”

Budget battle isn’t really about the dollars

Leaders of the Appropriations Committee thought the contracting board was the answer this year as legislative interest in the Port Authority’s dealings grew.

After questions were raised about the contracting board’s jurisdiction regarding quasi-public entities like the Port Authority, the legislature passed a measure clarifying that the board could review such matters.

The biennial budget legislators negotiated with Lamont included just under $700,000 per year for the contracting board —the same level the board was supposed to have when it was launched 14 years ago. This year’s funding included $450,000 to fund additional positions.

But shortly after that was passed, legislative leaders – at the request of the Lamont administration – included a provision in a subsequent budget policy bill that barred the board from spending $450,000 of its annual allotment.

Fox said those funds were to create five new positions to support Executive Director David Guay – whose only assistance currently comes from a college intern.

Without those funds, Fox added, the board will do what it can, but any comprehensive review of the port authority is not realistic.

Both Osten and Walker said they will propose restoring those funds when the regular 2022 General Assembly session convenes next February – or possibly sooner. Legislative leaders have not dismissed the possibility of a special session this fall if the governor’s emergency powers tied to the coronavirus pandemic need to be extended past September.

Osten and Walker both said the administration’s discomfort with the contracting standards board is the issue, and not the proposed spending.

In the context of this fiscal year’s $20.8 billion General Fund, $450,000 is equal to about 1/462th of 1%. General Fund spending is still $22 million under the spending cap.

The legislature’s top-ranking leaders, House Speaker Matt Ritter, D-Hartford, and Senate President Pro Tem Martin M. Looney, D-New Haven, agreed money is not the issue.

“I do not think [Lamont administration officials] have any desire to see Connecticut go backwards, but they do see it as an infringement on some of the executive powers they have,” Ritter said, adding he remains hopeful some compromise on expanding contracting board resources can be reached.

Looney said he also is optimistic, adding it’s important to remember the board was broadly viewed as a much-needed reform when it was enacted following the Rowland scandals.

“We should not cavalierly undermine its potential powers and usefulness,” he said. “I think it’s another aspect of transparency in government that I think inspires greater public confidence.”

There also is bipartisan support for restoring the funds.

Senate Republicans have pressed hard for an investigation into the port authority’s actions. And Senate Minority Leader Kevin Kelly, R-Stratford, said it’s a contradiction to empower the contracting board to review the matter – and then to deny them the necessary resources.

“This is an issue that’s really about transparency and good government,” he said. “You see the necessity, but then you’re cutting the money?”