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Gov. Dannel P. Malloy (CTNewsJunkie photo)

ROCKY HILL, CT — Gov. Dannel P. Malloy told local elected officials that he would trade the state’s $1.5 billion budget deficit for their budget woes and cash balances any day of the week.

“You think you’ve got problems? I’ll give you $1.5 billion worth of problems if you want them,” Malloy joked during his opening remarks at the annual Connecticut Council of Small Towns meeting Wednesday in Rocky Hill.

The governor hinted last week during his state-of-the-state speech that municipalities, which receive $5.1 billion in state spending, won’t be spared cuts this year. However, he offered few specifics to the group Wednesday.

He did, however, point out the obvious — that Connecticut is very reliant upon property taxes and he told the group that represents 139 small communities that they will like his budget when it comes to mandate relief.

Malloy also said the state is going to play a larger role in supporting the larger cities and in holding people to a “different accountability scale.” Malloy said he also plans to release information about how much each community receives from the state.

He said state support for local municipal government is 22 percent of overall state expenditures.

At the same time, Malloy said he doesn’t know what the two-year budget he will present to the legislature on Feb. 8 will look like.

“If everyone wants state government to be smaller and less expensive then everyone has to play a role,” Malloy said. “What role that means anyone plays is open for the legislative process, I suppose.”

Municipal leaders from cities and towns of all sizes have complained about a recently established state spending cap on municipal budgets.

In order to receive about $250 million from the state through a revenue sharing program, municipalities can’t increase their budgets by more than 2.5 percent per year. Communities that exceed that amount will have their share of the funding reduced. The penalty for exceeding the cap is a reduction in the revenue sharing grant of 50 cents for every dollar the municipality spends over the cap.

Following about $50 million in mid-year budget cuts late last month, Betsy Gara, executive director of COST, said the state needs to give municipalities the tools they need to mitigate the cuts.

“Although everyone agrees that unfunded mandates drive up local budgets and property tax burdens, meaningful mandate relief measures have languished in the legislature,” Gara said. “Despite this, each year the legislature considers and adopts new mandates on towns and cities, without providing adequate funding to support implementation.”

Vernon Mayor Daniel Champagne asked the governor to help cities and towns by getting rid of some of the mandates.

“We get rid of some of these big mandates that are coming down on us, we can save this money,” Champagne said to applause.

“I think on the mandate front you’ll be happy with the budget,” Malloy told him.

Mansfield Town Manager Matthew Hart asked Malloy to explore more revenue streams. He said Connecticut is the most reliant on taxation when other states have user fees and tolls that help contribute to the revenue mix.

“We’re dead last in fees of the 50 states,” Malloy said. “If I send a fee package up to the legislature I will die of a thousand cuts.”