CT towns say they aren’t prepared for last-minute cut to state aid

While Connecticut municipalities decried a last-minute cut in state assistance Friday, Gov. Dannel P. Malloy’s administration defended the legality of his line-item veto targeting local aid.

Both the Connecticut Conference of Municipalities and the Council of Small Towns balked at the governor’s decision to reduce municipal aid for the fiscal year beginning July 1 by $20 million below the level legislators had approved.

Municipal advocates said most cities and towns approved their 2016-17 budgets weeks — if not more than a month — ago. This change, coupled with other unanticipated reductions, could leave many communities with deficits, they argued.

“This is a sharp poke in the eye for municipalities that have already struggled to adjust budgets and mill rates to reflect last-minute cuts to municipal aid,” said COST Executive Director Elizabeth Gara.

CCM Executive Director Joseph DeLong

Keith M. Phaneuf / CTMirror.org

CCM Executive Director Joseph DeLong

Because it isn’t entirely clear how the $20 million cut will be distributed, it will “especially force local governments to freeze or curtail spending for critical services during the new fiscal year and/or further drain municipal fund balances, which in distressed communities are already dangerously low,” Joe DeLong, CCM’s executive director, said.

The $19.76 billion budget for 2016-17 that legislators sent to Malloy’s desk last month bolstered town aid by $85 million compared with the current year — but remained controversial for several reasons.

More than half of that increase, $52 million, helps local property taxpayers but not local governments. Part of a program to cap municipal taxes on cars, it will be used to supplant tax revenues communities otherwise would have collected without the cap.

The increase also is far less than communities were expecting based upon the preliminary 2016-17 budget enacted last June.

Faced with worsening deficit projections, legislators and the governor scaled back a promised sales-tax-revenue-sharing plan with municipalities by more than $50 million, and cut more than $30 million from previously approved education aid.

The situation for cities and towns worsened Thursday when Malloy employed rarely used line-item veto authority to trim $22.4 million out of the 2016-17 budget legislators sent to him.

The governor eliminated $775,000 for federally qualified health clinics and the full $1.7 million appropriation for the Connecticut Humanities Council, a nonprofit that provides grants to historical societies, libraries and other cultural programs.

But the biggest cut involved $20 million that must be removed after the fiscal year begins from existing municipal grant programs.

Once that reduction is applied, municipal aid is up $65 million from the current year, and only $13 million is not tied to the car tax capping system. More importantly, the municipal aid package is more than $100 million less than what many communities anticipated when they approved their budgets earlier this spring, municipal advocates said.

The administration said this was necessary to offset savings that otherwise would have been achieved by enacting bail reforms and other anti-recidivism programs Malloy proposed but the legislature declined to enact.

Malloy said a new law mandating health insurance coverage for 3-D imaging breast cancer screenings also would add costs to state government not reflected in the budget.

The governor’s line-item veto authority has been tested a few times in the state’s court system, with one key challenge occurring 51 years ago.

Gov. John Dempsey vetoed three provisions of the state budget bill in 1965. These wouldn’t have canceled specific appropriations. Rather they required that certain investment earnings be used to pay off debt, and spelled out the fiscal years to which certain revenues would be applied.

This was challenged and the Supreme Court ruled later that year in Patterson v. Dempsey that the line-item veto authority applies only to “items of appropriation” and not to other parts of the budget bill.

“An item of an appropriation bill obviously means an item which in itself is a specific appropriation of money, not some general provision of law which happens to be put into an appropriation bill,” the court wrote, citing an earlier case. ”An item in an appropriation bill is an indivisible sum of money dedicated to a stated purpose.”

Here’s where what Governor Malloy did gets confusing.

Gov. Dannel P. Malloy

CTMirror file photo

Gov. Dannel P. Malloy talking to reporters this week.

The legislature adopted, and Malloy signed, a preliminary 2016-17 budget last June.

That original budget included a directive to the governor: Take $20 million in total out of the various approved municipal grant programs. The state was supposed to offset this loss to municipalities by sharing cost-saving ideas developed by a state study panel.

But when legislators adopted a revised 2016-17 budget last month, they canceled that directive to save $20 million on town aid.

And on Thursday, Malloy vetoed the cancelation language, effectively restoring the directive to save $20 million.

But is that really vetoing a specific line-item appropriation as the Supreme Court defined it in Patterson v. Dempsey?

Malloy spokesman Chris McClure said the administration believes the veto complies with the court’s interpretation, since it specifically reduces $20 million from appropriated grants.

The federally qualified health clinics and the humanities council also said Friday their cuts would be very painful.

The governor’s “unprecedented decision to cut Connecticut Humanities’ $1.73 million line-item will have little impact on the overall budget situation, but will be devastating to important cultural and community organizations – schools, libraries, museums – in every city and town in Connecticut,” said Douglas G. Fisher, the council’s executive director. “We continue to work with the administration and legislature to find a way to reverse these devastating cuts.”

“The elimination of this funding will directly impact the most vulnerable people in our state, by reducing the ability of health centers to provide timely access to health care,” the Community Health Center Association of Connecticut wrote in a statement, adding the $775,000, if spent, would have triggered partial reimbursement from Washington, D.C. “It also sends federal money that would have benefitted Connecticut residents to other states. This is a disappointing action for the 350,000 Connecticut residents who receive care from, and the thousands employed by, health centers across the state.”

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