The 12-member panel of municipal leaders and lawmakers created by Gov. M. Jodi Rell to cut $84 million in municipal aid from the state budget voted Wednesday not to cut the funding.

East Hartford Mayor Melody Currey, who was one of the members of the panel appointed by Rell, said Thursday that the mayors and first selectmen collectively decided “we can not sustain a $84 million cut.”

Instead, the group put forth a list of unfunded mandates it would like to see the state change immediately and other unfunded mandates it would like to see changed during the next legislative session which starts in February.

Rell can’t unilaterally cut municipal aid and it’s unlikely that lawmakers on both sides of the aisle would approve municipal spending cuts during a special session Dec. 15.

Rell’s Budget Secretary Robert Genuario voted against the decision not to cut municipal aid. He said he spent three hours telling the legislature’s Appropriations Committee Wednesday that cities and towns had to be part of the solution.

“To suggest municipalities are not part of the problem is to ignore the math,” Genuario told lawmakers Wednesday. He argued that municipal revenue derived mostly from property taxes is more stable then state revenues.

Municipal leaders respectfully disagreed.

Some of the immediate suggestions municipal leaders made include making the real estate conveyance tax permanent, allowing towns to shorten the school year by extending the school day, allowing them to post public notices online instead of in newspapers, eliminate municipal responsibility to remove and store the possessions of evicted tenants, and prohibit the enactment of future unfunded mandates without a two-thirds vote of the General Assembly.

And some of the longer term solutions include giving municipal leaders local tax options.

The panel suggested allowing local leaders to decide the tax mix that works best for their community, including hotel and lodging taxes, restaurant food and beverage taxes, and retail sales taxes.

One of the more controversial suggestions was one to change binding arbitration laws. Binding arbitration is how the towns and union workers settle their contract disputes.

Currey said she made a motion to change the language adopted by the panel Wednesday because she believes the process works for the most part, but there’s always room for improvement.

For example, Currey said she would have been amenable to a 90-day time frame by which the panel of three arbiters had to issue a decision. Currently East Hartford’s police contract has been in arbitration for more than two years and putting a 90-day time frame would help speed the process along. But after several members of the committee started offering friendly amendments things got a little complicated and her amendment was voted down 5 to 8.

The Connecticut Conference of Municipalities applauded the panel’s decision not to cut municipal aid.

“The panel has sent a clear message to the General Assembly to protect municipal aid and provide mandates relief – two routes to preventing state-imposed property tax increases and local service cuts,” Jim Finley, executive director of CCM, said Thursday.

It was still unclear Thursday if the legislature’s Democratic majority will take up Rell’s $337 million proposal to cut spending.

House Speaker Chris Donovan, D-Meriden, said Thursday that during the Appropriations Committee public hearing Wednesday a number of people spoke about the detrimental effect the cuts would have on the economy.

“We heard a lot about job loss,” Donovan said near the elevators of the Legislative Office Building. “I don’t think creating job loss is good for economy recovery.”

The House Democratic caucus will talk about their options on Monday and the Senate Democratic caucus will discuss a possible return tomorrow.