Gov. Dannel P. Malloy tried Wednesday to erase any doubt he may have created about sparing municipal education grants from the budget axe when he met with the mayors of Connecticut’s three largest cities–but he declined to talk about other local aid programs.

Accompanied by Pedro Segarra of Hartford, Bill Finch of Bridgeport and John DeStefano of New Haven, Malloy said the budget proposal he will deliver to the legislature next week will include a $1.9 billion Education Cost Sharing program for 2011-12–the same funding level provided this fiscal year.

“Let me be very clear: Next week’s budget will include full funding of ECS,” the governor said during a late afternoon press conference outside his Capitol office. “Nobody should be shocked by that.”

Malloy, who inherited a projected $3.7 billion deficit on Jan. 5, pleasantly surprised municipal leaders across Connecticut during the fall campaign when he pledged ECS would be spared from cuts, even though it faces a major funding crisis of its own next year.

That’s because the program is partially supported this year by $271 million in emergency federal stimulus, aid that expires on June 30. So when the new fiscal year begins on July 1, Malloy is promising not only to preserve a program that represents 1/10th of the entire, $19.01 billion state budget, but also to find a way to replace the expiring federal aid.

“It was always my intention to hold communities harmless,” said Malloy, who was mayor of Stamford from 1996 through 2009.

But his intentions appeared less clear shortly after being sworn into office when he began referring to full funding as a “goal” he would “try to accommodate.”

The single-largest municipal grant program, ECS distributes funds based on a complicated formula that analyzes a community’s wealth, student enrollments, and numbers of children from families on federal assistance.

Connecticut’s urban centers have been the largest recipients of ECS dollars since the program was launched two-and-a-half decades ago, and big city mayors, all Democrats,  greeted the Democratic governor’s pledge warmly on Wednesday.

“This is very well-received news,” Segarra said, noting his community faces a $10 million deficit this year and a projected $40 million shortfall in 2011-12.

“It’s good to have people mean what they say,” said DeStefano, who defeated Malloy in the 2006 Democratic gubernatorial primary before losing the general election to Gov. M. Jodi Rell.

Bridgeport Mayor Bill Finch added that the cities already are facing cutbacks, even with the prospect of sustained ECS funding. “We’re laying people off where we have to,” he said. “We’re working smarter with less resources.”

Though Malloy and many municipal leaders long have insisted that Connecticut’s overall tax structure places too much emphasis on local property taxes, the state’s chief municipal lobby said Wednesday that an ECS cut would have sparked a nightmarish surge of tax hikes and layoffs at the local level.

“It would have had a devastating impact on their ability to provide public education as they do now,” James Finley, executive director of the Connecticut Conference of Municipalities, said afterward.

Malloy declined to answer when asked whether he would consider reductions to non-education municipal grants, which total roughly $1 billion in the current budget.

Municipal leaders typically refer to this as the “shell game,” sparing a well-known grant such as ECS from a budget cut while reducing lower-profile grants outside of the education arena. According to CCM, non-education aid has been reduced close to $100 million in total over the past two fiscal years.

The new governor said he remains open to exploring new revenue-raising options for cities and towns, which currently generate almost all of their local dollars through the property tax.

And though Malloy never mentioned wage- or benefit-concessions by name, he appealed to municipal teachers’ unions to do “everything in their power to ensure there aren’t any layoffs.”

Keith has spent most of his 31 years as a reporter specializing in state government finances, analyzing such topics as income tax equity, waste in government and the complex funding systems behind Connecticut’s transportation and social services networks. He has been the state finances reporter at CT Mirror since it launched in 2010. Prior to joining CT Mirror Keith was State Capitol bureau chief for The Journal Inquirer of Manchester, a reporter for the Day of New London, and a former contributing writer to The New York Times. Keith is a graduate of and a former journalism instructor at the University of Connecticut.

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