Hartford — Gov. Dannel P. Malloy warned municipal leaders Tuesday that — unlike two years ago — “I can’t make any promises” about the town aid level he will recommend in his next budget this February.
Addressing hundreds of municipal officials gathered at the Connecticut Convention Center, Malloy — a former mayor — pledged that his administration would nonetheless remain a close partner with local government.
“This (budget) is a work in progress, so I can’t make any promises, but you are in my thoughts,” Malloy, a Democrat, said in his remarks to open the Connecticut Conference of Municipalities annual convention.
CCM, the chief lobbying arm for the state’s 169 cities and towns, sent the governor a letter last week urging him at least to keep municipal aid flat in his budget proposal for the 2013-14 and 2-14-15 fiscal years — a plan due to the General Assembly in early February.
Malloy said the letter expressed “legitimate concerns” about the fate of municipal budgets. “Quite frankly,” he added, “I’m a little worried about my own.”
The governor acknowledged that Connecticut’s recovery from the last recession has been much slower than many in government anticipated.
Two reports issued this past summer by the University of Connecticut painted a gloomy picture for the state’s sluggish recovery, including an estimate that the state might not recover all jobs lost in the last downturn until 2018.
Malloy’s budget office projected a $60.1 million deficit for the current fiscal year in its latest forecast, which was issued Monday.
And based on shrinking revenue estimates released last week by the legislature’s nonpartisan Office of Fiscal Analysis, that shortfall could be as large as $100 million.
In September Malloy directed all agency heads to search for new ways to streamline government and reduce spending.
But the governor insisted Tuesday that not all is doom and gloom. “We do see some good signs,” he said, citing a 12 percent jump in housing sales in August and climbing numbers in new housing construction as well.
There also is considerable uncertainty around state and municipal budgets tied to the presidential election. Levels of federal aid to states, as well as taxable state income tied to capital gains and dividends, could be shape dramatically by whichever party captures the White House.
“I don’t intend to raise taxes, so I need to take (the letter) into consideration,” but can’t offer any guarantees, the governor said.
“Most of the services provided for the public are provided by you all,” Malloy said. “And I have a particular respect for the work you do.”
“You are first and foremost on my mind,” added Malloy, who was mayor of Stamford from 1995 through 2009, and also is a former CCM president. “Local government needs to be treated as a partner in all we do in state government.”
During the 2010 gubernatorial campaign, Malloy pledged if elected he would not cut Education Cost Sharing grants — the single-largest state grant program involving nearly 1/10th of the entire, $20.5 billion state budget.
Malloy, who took office in January 2011, inherited a built-in hole of nearly $3.7 billion in 2011-12 finances. The biennial budget he and the legislature adopted spared all municipal aid from cuts, increased ECS by $50 million this year, and also gave municipalities a share of sales and real estate conveyance tax revenue worth about $50 million per year.
The governor said after Tuesday’s address that he believes most municipal leaders understand the uncertain fiscal climate Connecticut is facing. “It is just really too early to tell,” he added.
Hartford Mayor Pedro Segarra, a Democrat, said he believes the Malloy administration’s efforts to prioritize municipal aid and grow jobs are helping Connecticut’s economy, but it will take time.
Canton First Selectman Richard Barlow, a Republican, said afterward that he expects most communities will develop their next local budget on the assumption that state assistance will be spared from cuts, but also acknowledged that the economic recovery has been slow.
“That’s the conundrum every municipality faces,” Barlow added. “You have to make assumptions.”