CT municipalities fear they may finally take a budget hit

After being spared the state budget axe again and again since the Great Recession, leaders of Connecticut’s cities and towns are fearful their perfect track record may be at risk.

House Speaker J. Brendan Sharkey

CTMIRROR.ORG

House Speaker J. Brendan Sharkey

Though they suffer no major cuts in Gov. Dannel P. Malloy’s proposed new budget, municipal leaders see legislators – who are scrambling to plug other holes in the governor’s plan – eyeing the $3.2 billion municipal aid package hungrily.

And the debate no longer is just about preserving overall aid. For the first time in many years, lawmakers are considering several proposals that would force cities and towns to share – or battle for – scarce dollars, depending upon perspective.

“I think we’ve done right by cities and towns,” House Speaker J. Brendan Sharkey said this week, referring to four consecutive years during which state officials wiped billions of dollars in red ink off the state’s books while not only sparing municipalities, but modestly increasing education grants.

Legislators are staring next fiscal year at another big projected deficit – about $1.3 billion according to nonpartisan analysts. “I think (municipal aid cuts) have to be on the table,” Sharkey said.

But longtime Coventry Town Manager John Elsesser said local governments already have pushed the envelope on efficiency over the last decade. And the last time communities received a big boost in state aid that wasn’t tied to education was in the early 1990s, when cities and towns first received a share of casino receipts.

“We’ve made staffing cuts,” Elsesser said. “We’ve renegotiated contracts. We’ve made some hard choices.”

The Connecticut Conference of Municipalities released survey results this week showing that 61 participating city and town governments have eliminated more than 300 positions over the last two years. As expected, most cutbacks centered on non-education services, including road maintenance, library hours, firefighter and emergency medical technician shifts, town hall staffing, and youth and senior programs.

Local leaders surveyed also said they fear over the coming year they will be unable to adequately fund contractually required employee health and retirement benefits.

But with a 2007 lawsuit challenging the adequacy of state funding for local schools headed to trial this October, the odds that legislators will instead make big cuts in education grants are slim.

That means the pressure on local police, fire and public works services isn’t likely to ease up.

Senate President Pro Tem Martin M. Looney, D-New Haven, said it’s too soon to predict the final local aid package. But both he and Sharkey said local leaders better prepare for change.

Sharkey established a panel several years ago that has been working to find new options to promote regionalization of services and cost-sharing among communities. And the speaker said the search for new ways to reduce the cost of local government probably will continue for years.

But municipal leaders say this effort hasn’t been as smooth as state officials have hoped.

Senate President Pro Tem Martin M. Looney

CTMIRROR.ORG File Photo

Senate President Pro Tem Martin M. Looney

This year’s state budget calls for a $10 million reduction in approved municipal aid, presumably to be offset by lifting state mandates that communities provide services that cost an equal amount. But the Malloy administration has recommended that legislators achieve the savings this year – and then some – by canceling a $12.7 million grant owned to municipalities.

And the governor’s new budget calls for a $20 million, undefined savings in municipal aid to be achieved next fiscal year.

Further complicating matters, majority Democrats in the Senate have proposed a controversial omnibus bill that would redistribute non-education aid.

One provision would have the state, rather than communities, levy the property tax on motor vehicles. The funds would be sent back to communities, but redistributed based upon a formula that reflects population and wealth. Critics argue this would benefit cities, but leave many suburban and rural communities with less.

A second provision would redistribute a grant Connecticut uses to offset the fact that property owned by the state and by nonprofit colleges and hospitals is exempt from local taxation.

The PILOT (Payment In Lieu Of Taxes) grants currently reimburse communities for 34 percent of lost property taxes tied to colleges and hospitals, and 27 percent of the lost taxes involving state property.

This provision would enable the 30 communities with the most tax-exempt land to enjoy better reimbursement rates. And unless lawmakers can find an extra $45 million to beef up the $209 million PILOT program, the other 139 cities and towns would see their reimbursement rates drop.

The third provision of this bill would siphon off a portion of property taxes collected on commercial and industrial properties within a region and redistribute them based on population and other factors.

“We appreciate the intent behind (the bill) and the need to assist our core communities,” said Ron Thomas, CCM’s director of public policy. But he added that “many municipalities need assistance.”

Elsesser said regional redistribution of property tax revenues “is very complicated. It’s got to be drafted carefully, and I don’t think they have done that because, for that to happen, the towns have to be at the table.”

Local leaders “have the responsibility to run their municipalities and we have the responsibility to provide support for them from the state’s revenue structure,” Looney responded.

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