Municipal groups: Cuts in aid by another name hurt just as much

One way to look at controversial provisions in each of the last two state budgets is to say they order $30 million in cuts to municipal aid – an option that is traditionally taboo among legislators from both political parties.

Another option is to say local aid isn’t really being cut. That’s because – according to the measure legislators enacted – the $30 million reduction is offset by a matching amount of cost-saving ideas and initiatives crafted by a special panel.

The only problem, say the two chief lobbying agencies for cities and towns, is that while municipal aid is being cut, the cost-saving options aren’t being delivered as promised.

In fact, they add, local leaders spent more time at the Capitol last year battling expensive new state mandates than securing budgetary relief.

This concern came sharply into focus last Friday for the Connecticut Conference of Municipalities and the Connecticut Council of Small Towns after Gov. Dannel P. Malloy announced he would withhold $15 million in non-education grants to help keep the current state budget in balance.

At issue are savings targets, commonly referred to as “lapses,” built into the state budget.

State agencies and public universities, collectively, are expected to meet hundreds of millions of dollars in savings targets annually. These routinely are achieved by delaying hirings, postponing projects or achieving operating efficiencies.

Legislators sometimes set new lapse targets as a last-minute means of cutting the bottom line and bringing a new budget proposal into balance.

Starting last fiscal year, legislators and Malloy decided to build a $10 million lapse into the $3 billion-plus municipal grant program.

While municipal lobbyists argued it was a cut, legislators insisted it was not. A special legislative panel, the MORE (Municipal Opportunities & Regional Efficiencies) Commission, would come up with enough cost-saving ideas to offset that cut.

The MORE Commission released a battery of proposals in February, including: expanding municipal taxation options, encouraging communities to share costs regionally and reforming special education. Most of these ideas, though, never were approved by the full legislature.

Nonetheless, before the fiscal year ended on June 30, the Malloy administration secured the state’s savings, canceling $10 million in sales-tax-revenue-sharing payments owed to communities.

About the same time, the governor and legislature built a $20 million-per-year municipal aid lapse into the biennial budget for 2015-16 and 2016-17.

And on Friday, faced with shrinking income tax receipts tied to a weakened stock market, Malloy’s budget chief, Benjamin Barnes, said that, while he’d hoped to avoid enforcing the municipal aid lapse for a second year, the administration had no choice.

Barnes specifically announced that $15 million would be withheld from a non-education grant program that reimburses communities for a portion of the funds they lose because state properties, colleges and hospitals are exempt from local taxation. And the other $5 million might need to be withheld before the fiscal year ends on June 30.

At this point, House Speaker J. Brendan Sharkey of Hamden, a Democrat like Malloy, cried foul in a written statement released last Friday shortly after Barnes announced the $15 million would be withheld.

Under our budget agreement, the bipartisan MORE Commission was charged with identifying additional municipal savings, and they haven’t been given the opportunity to do so yet,” Sharkey wrote, also objecting to some emergency budget reductions outside of municipal aid ordered by Malloy. “…Though the governor has the authority to make these cuts at this time, the legislature will continue to monitor the status of the budget, and look to mitigate these cuts next session.”

Elizabeth Gara, executive director of the Connecticut Council of Small Towns, said legislators will find municipal leaders more than ready to discuss the grant “lapses” during the next legislative session, which begins in February.

“Municipalities have to be able to count on the amount of state aid that is appropriated to them in the budget,” she said.

“We continue to have the goal post moved on us and that’s a very difficult way to govern,” said Joe DeLong, executive director of CCM. “You feel like it’s smoke and mirrors.”

City and town leaders “all understand that the state has challenges,” DeLong added. “But we want to be more of a partner.”

Local leaders have tried to partner with the legislature in recent years, offering proposals to cut municipal costs through reforms to binding arbitration and to the prevailing wage statutes that regulate wages on publicly funded construction projects, Gara said.

Not only has the legislature failed to adopt cost-saving ideas – whether offered by communities or by the MORE Commission, DeLong added, it instead has considered expensive new mandates. For example, a measure to broaden public-sector workers’ ability to receive disability benefits for post-traumatic stress disorder passed in the Senate, despite objections from CCM and COST. The bill died on the House calendar.

“If we could get away from spending so much time on defense,” DeLong said, “we could sit down with state legislators and try to realize these efficiencies.”

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