Towns fear a sharp decline in state education assistance

Though state government’s impending fiscal woes are well-documented, a new report shows local schools also face a financial hit 10 months from now that could reverse efforts to increase education assistance.

In a briefing to candidates for state office, the Connecticut Conference of Municipalities also noted that non-education programs have dwindled to to what CCM regards as dangerously low levels.

But despite town leaders’ pleas to be spared, gubernatorial candidates and key lawmakers declined to offer that assurance Monday, pledging only to consider options to mitigate the fiscal pain.

“The state is going to have to supplant an unprecedented amount of money” in the next two-year budget cycle, CCM Executive Director James Finley said Monday. “The biggest fear for the cities and towns is that the state is not going to honor its funding commitment.”

State government’s “commitment” in this fiscal year’s $19.01 billion budget involves more than $2.8 billion in municipal grants, including nearly $1.9 billion for the Education Cost Sharing program.

state aid to municipalities 8-31-10

But the ECS grants have been supported this year and last by $271 million in annual emergency federal stimulus aid set to expire in 2011-12.

That annual figure is nearly 150 percent the size of the $182.2 million ECS increase approved for 2007-08 – the largest in Connecticut history – by Gov. M. Jodi Rell and the legislature.

ECS rose another $80.1 million in 2008-09 but has remained flat since then. So if the expiring stimulus is not replaced, the 2007 education initiative – which both Rell and legislators have hailed as one of the top accomplishments of recent years – will have been entirely reversed.

“We’re well aware there’s a huge hole in ECS out there,” Rep. John Geragosian, D-New Britain, co-chairman of the Appropriations Committee, said Monday. “But we’re facing a crisis. I don’t think we can guarantee anything at this point.”

“It’s wise for municipalities to be concerned about what will happen in the next budget. The state’s revenue picture isn’t really improving and we face a nearly $3.5 billion deficit,” said Rep. Craig Miner of Litchfield, ranking House Republican on the Appropriations Committee, referring to the $3.37 billion shortfall nonpartisan legislative analysts are forecasting for the next fiscal year.

“I think it would be a big mistake for anyone to make promises to any group,” Senate Minority Leader John McKinney, R-Fairfield, said, adding cities and towns can take steps right now to safeguard against a potential cut in 2011-12.

Specifically, Connecticut schools benefited earlier this month when Congress enacted a stimulus extension measure that provided an additional $110 million to help avert teacher layoffs.

But the federal legislation gives school districts the option of spending the funds any time between now and September 2011 – a deadline that comes two months after Connecticut’s 2011-12 fiscal year has begun.

In other words, school districts could hold those funds to mitigate any cut in state ECS funds they might receive 10 months from now.

East Hartford Mayor Melody Currey, a former state legislator and current president of CCM, said her community opted to sit on the extra federal aid for exactly that reason.

But Currey also said encouraging communities to save today’s windfall to guard against tomorrow’s fiscal rainy day won’t solve the problem.

That’s because cities and towns already have been facing cutbacks in state aid, though not as large as the potential hit in school funds centered in 2011-12.

State government’s share of video slot revenues from Indian casinos has slipped from $430.5 million in 2007 to a projected $367.8 million this year, and the portion shared with towns has fallen from $91 million to $61.8 million over the same period, according to state budget records.

In similar fashion, grants to mitigate property tax revenues municipalities cannot collect on state land, colleges, hospitals and manufacturing equipment, have fallen from $252.2 million in 2007 to $235.8 million this year.

And while the $22 million allocated for municipal road maintenance is the same level allocated in 2007, state government had provided as much as $35 million per year for this purpose during the first half of the past decade.

“We’ve taken hits everywhere on the town (non-education) side of the budget,” Currey said, adding that East Hartford’s fire, police and town hall staff all took pay cuts last fiscal year.

Democratic gubernatorial candidate Dan Malloy, who was Stamford’s mayor for 14 years through 2009, said that while he’s well aware of the fiscal challenges municipal leaders are facing, “I consider putting the state’s fiscal house in order to be top priority.”

And though he declined to guarantee protection for any specific grant program, Malloy said not averting at least a portion of the looming ECS cut “would be devastating. It would endanger the future of Connecticut’s ability to compete with other states.”

Republican gubernatorial candidate Tom Foley, who has pledged to eliminate the largest state budget deficit in Connecticut history without tax hikes, also declined through campaign spokeswoman Liz Osborn to promise to spare any municipal grant from the budget axe.

“Tom is going to look at the budget as a whole,” Osborn added. “But he believes reductions should not be made at the expense of our children’s future.”

Both Foley and Malloy have said they are open to relieving certain mandates on cities and towns. And while Foley is willing to consider CCM’s request to suspend binding arbitration to mitigate cuts in town grants, Malloy prefers to open new revenue-raising options besides the property tax to local governments.

Chester First Selectman Tom Marsh, a third-party candidate for governor, largely echoed their comments, saying that while he believes there is little hope of sparing municipal aid from any cuts and also closing a 2011-12 state budget deficit that approaches 20 percent of current spending, education aid should be touched last.

But Marsh said he also believes it’s time to allow communities to retain a portion of the state taxes raised within their boundaries, particularly the sales tax.