HARTFORD, CT — Gov. Dannel P. Malloy is headed to Aspen, Colorado for a Democratic Governors Association meeting, but before leaving he sent a letter possibly hoping to nudge Democratic legislators looking to spare municipalities from the budget ax.
In a letter Thursday to Office of Policy and Management Secretary Ben Barnes, Malloy said more than $5 billion of the state budget goes to municipalities. At least $4.1 billion of that goes to support education. It’s a point he’s been making since before he released his first budget in February.
A former mayor for 14 years, Malloy said he’s made it a priority to protect municipalities during the past seven years, but that he can’t do it any longer.
“We’ve reduced state services; we’ve cut funding to private providers; we’ve asked state employees to come to the table with concessions; and we’ve raised revenue,” Malloy wrote. “Throughout all of this, we’ve held town aid harmless. In fact, it could be said that we have sacrificed state services and raised revenues in order to shield town government from facing difficult choices required of state leaders and implementing reforms.”
Malloy said as they look to finalize a two-year budget how the state funds municipalities needs to be part of the discussion.
Malloy asked Barnes to come up with a report analyzing municipal aid, local tax levels, expenditure trends, and fund balances. The reports should be made publicly available when they are completed and should include both historic trends and current fiscal conditions.
But House Speaker Joe Aresimowicz, D-Berlin, said any final budget proposal is likely to look different than Malloy’s when it comes to municipal funding.
“There is bipartisan consensus among Democrats and Republicans in the legislature to mitigate cuts to municipal aid that the governor originally proposed, and is now further looking at,” Aresimowicz said Thursday. “Agreeing on exactly how to do this is the challenge we are all working on, and will require compromise by all parties, but when a budget is finalized I believe we will not see these cuts at the level of the governor’s plan.”
Senate Republican President Len Fasano, R-North Haven, agrees with Aresimowicz’s position on municipal aid.
“If a municipality has shown fiscal responsibility and been successful in making tough decisions to achieve a positive financial outlook that town or city should not be penalized simply for their smart budgeting,” Fasano said.
He said the legislature needs to create “stability and predictability for all towns and cities” and avoid action that will result in property tax increases and greater burdens on businesses and residents throughout Connecticut.
Adam Joseph, a spokesman for the Senate Democratic caucus, said they are “working diligently to produce a budget that protects vital services and is fair and equitable to cities and towns.”
However, the governor still has a lot of sway when it comes to the budget and his letter doesn’t signal good news for municipalities, which have mostly adopted their budgets and started hiring for the school year.
“Although many towns assumed reductions in state aid in crafting local budgets, it sounds like towns could be facing deeper cuts,” Council of Small Towns Executive Director Elizabeth Gara said..”It appears that the governor is intent on shifting significant resources from smaller towns to the cities.”
The result will be an increase in property taxes, Gara said.
She added that it would also wreak havoc on school systems.
Legislative leaders sought to change Malloy’s proposal to shift $400 million in teacher retirement costs to municipalities, but were unable to come up with any easy answers.
At the end of June, the House Democratic caucus proposed raising the sales tax from 6.35 percent to 6.99 percent to help municipalities cover the cost of the shift in teacher retirement costs.
The tax increase is still on the table, but discussions are still ongoing behind closed doors so it’s unknown whether it will be part of a final budget package.
The House Democratic caucus also proposed allowing municipalities raise the sales tax on food and beverages sold at local restaurants to help support their Grand List. The 1 percent food and beverage sales tax would go back to municipalities.
