(Updated 7:38 p.m.) The House Democratic caucus succeeded Thursday in getting Gov. Dannel P. Malloy to take $54 million in municipal aid cuts off the table in exchange for another 1,000 state employee layoffs.
On top of $54 million in municipal aid cuts, Malloy had recommended the elimination of 6,466 jobs from the state budget, including about 1,000 vacant positions and layoffs for nearly 5,500 state employees. In lieu of the municipal aid cuts, the grand total of job cuts is up to about 7,500 — a figure Malloy had previously suggested as a two-year target.
“They know there are a very limited number of ways to make up that cut and they were told it would come in state employee layoffs,” Roy Occhiogrosso, Malloy’s senior communications adviser, said of the restoration of municipal aid. The talks regarding municipal aid took the better part of the afternoon.
The new deal also cost the legislature its vote on any of Malloy’s rescissions, according to sources, which would mean that if the agreement holds up, it will be up to Malloy to make all the cuts.
House Speaker Chris Donovan, however, denied that the legislature had ceded that authority during a news conference shortly after 6 p.m.
“No, no, no,” Donovan said. “May to shall. It could be shall and we decide not to come in. It could be may and we decide to come in.”
House Majority Leader Brendan Sharkey, D-Hamden, jumped in to add that “if we don’t like those changes, we’re absolutely committed to making those changes.”
“Our hope is we don’t do any of these cuts and that the state employees eventually ratify the agreement and avert all layoffs and avert all cuts,” Donovan said. “In the meantime our caucus was very clear the cuts to municipalities, which was something we’ve never done in terms of rescission.”
Sharkey said the bill will say the governor has to present his rescissions to the legislature by July 15 and will give the governor three months of rescission authority over 10 percent of state funds. The legislature will maintain power over the rescission of state funds “ back to dollar one,” Sharkey said.
Rep. Roland Lemar, D-New Haven, said the municipal aid cuts would have forced New Haven and Hamden to layoff employees and send out supplemental property tax bills. He said the Democratic caucus was very concerned about ceding for the first time ever its power to the governor to cut municipal aid.
Malloy’s staff didn’t delineate the town-by-town impact of municipal aid cuts, but New Haven Mayor John DeStefano Jr. said Wednesday his staff was projecting it would add up to $5 million to $7 million.
Just last Friday, after the stunning torpedoing of Malloy’s concession plan, the governor assured DeStefano and other mayors that cities wouldn’t feel much of the sting of new cuts until the second year of the budget.
“As it turns out, that wasn’t the case,” DeStefano said Wednesday.
Though disappointed by the numbers released Wednesday, DeStefano made sure to note that Malloy, a former Stamford mayor, has “been very supportive of municipal budgets” process overall.
Rep. Edward Moukawsher, D-Groton, credited Rep. Linda Schofield, D-Simsbury, Thursday for putting the conversation about municipal aid into the spotlight by introducing an amendment that would take the money from the Earned Income Tax Credit.
“We’re not negotiating the budget right now,” Donovan said. “There could be other ways of doing it and that’s why we’re going to be working with the governor’s office.”
Malloy’s proposal also called for reducing the Earned Income Tax Credit, a tax credit given to working poor, from 30 percent to 25 percent to save $18 million.
As a former mayor, Malloy is sensitive to cuts in municipal aid.
“You guys have all been around the governor long enough to know how hard he worked to protect municipal aid in this budget,” Occhiogrosso said Thursday. “The proposal put forward in the last couple of days trimmed it modestly, really modestly given what other states have done.”
Jim Finley, executive director of the Connecticut Conference of Municipalities, lobbied against the municipal aid cuts. Finley said he appreciated the decision not to cut municipal aid and was especially thankful to the House Democratic caucus.
Rep. Phil Miller, D-Essex, who is also the full-time first selectman the town, said when he learned that the labor concession package was in danger of not passing he didn’t think there was any way town aid would escape cuts.
That’s why he was skeptical when he received emails from groups representing municipalities urging town executives to contact the legislature to fight against the cuts, he said.
“But when we caucused today, the overwhelming response of the Democrats was that we’ve all been in touch with our first selectmen and mayors and their budgets are done at this point,” he said.
While most towns have undesignated fund for unforeseen circumstances, those funds are usually used up dealing with unexpected things like bad ice storms.
Miller had trouble coming to a conclusion whether saving the towns from cuts was worth the estimated 1,000 additional layoffs to the state workforce, which he said troubled him.
“I’d be in the minority if I said, ‘Oh yeah, just let the cities and towns make a little bit of it up.’ So I’m glad that it won’t fall to the cities and towns and I’m just hoping that something can still be salvaged with the SEBAC accord,” he said.
Rep. Gerald Fox III, D-Stamford, said that according to a town-by-town estimate generated by the Connecticut Conference of Municipalities, his town would have lost around $450,000 under the proposed cuts. But he said he wasn’t convinced those estimates were accurate.
He said his town like other towns would have had to figure it out.
“It’s something you think towns could absorb. They do face a number of emergencies over the course of a year,” he said.
Was it worth the layoffs?
“It’s a difficult call. I recognize no one wants to make either choice but if we continue down this path I do think that municipal aid is going to have to be on the table next year,” he said. “Cities and towns should be ready for it.”