Municipalities have largely been held harmless from state budget cuts for the past six fiscal years, but Gov. Dannel P. Malloy is no longer excluding them from the nearly $570 million in spending cuts he will announce later today.
The Connecticut Conference of Municipalities said Tuesday that the proposed 5.75 percent cut to municipal aid means cities and towns would lose $50 million next fiscal year. Officials from the Malloy administration said if all municipal aid, including education grants and teacher retirement contributions are taken into account, all but one town will see an increase in funding.
The Malloy administration has no plans to cut the Education Cost Sharing grant.
But officials from the Connecticut Conference of Municipalities said as a result of a reduction in municipal aid, “towns and cities of all sizes – and their residential and business property taxpayers – will have to make up the difference in lost revenues the only way the state allows, by increasing the property tax. Remember, the property tax remains the most burdensome and regressive tax paid by residents and businesses across Connecticut.”
Late last year, the legislature approved cutting about $20 million in municipal funding at the same time as it established a Municipal Revenue Sharing account, which used a half percent of the sales tax to provide money to 32 cities and towns with high motor vehicle tax rates.
Cities and towns say they are already doing everything they can to save money and be more efficient.
“At this point, with town budgets already stretched thin, every dollar of state aid that is cut will force increases in local property taxes or cuts in critical services,” Coventry Town Manager John Elsesser said.
Elsesser, who is also president of the Connecticut Council of Small Towns, said “Small towns have worked hard to control local budget growth, recognizing that property taxpayers shoulder a heavy burden for funding local services. Cuts in state aid will hurt. It will mean increases in property taxes, layoffs or cuts in critical services at the local level.”
But with state lawmakers staring at a more than half-billion budget deficit, spending cuts are inevitable.
If that’s the case, Betsy Gara, executive director of COST, said the state needs to have a serious conversation about mandate relief.
“Despite widespread recognition that unfunded mandates drive up local budgets and property taxes, the state has not adopted any meaningful changes that will provide towns and taxpayers with relief,” Gara said. “Instead, each year dozens of new or expanded unfunded mandates are considered and some are adopted.”
House Speaker Brendan Sharkey, D-Hamden, has said the state needs to have a serious conversation about achieving municipal efficiencies through regional cooperation.
“We cannot operate government without demanding efficiencies that will realize the kinds of savings that we need to keep the budget in balance year to year and reduce our reliance on property taxes,” Sharkey said last week.
That means taking steps to require performance measures for grants that are doled out to cities and towns.
For Sharkey, it also means requiring towns to combine their emergency call centers. He said it’s absurd that the state allows every single town and every single municipal police department to run their own call center.
“That’s low-hanging fruit,” Sharkey said.
But Gara said sometimes there are barriers that limit municipalities’ ability to regionalize.
“Lawmakers need to address those barriers if towns are expected to rely on regional solutions to help reduce costs,” Gara said.
Sharkey said he thinks now is the time to have those conversations about regionalization and performance-based funding.
Malloy and Ben Barnes, his budget director, seem to agree with Sharkey.
Malloy is expected to announce sweeping changes to how the state budgets for state services by basing a budget on actual revenue projections and not on what the state wants to spend, but on how much money it actually has to spend.
He’s also expected to speak about the need for recipients of state funding to compete for available dollars based on the results they’re able to achieve.