Mayors accuse Malloy of obscuring cuts to cities

Connecticut’s mayors launched a pointed attack Friday on Gov. Dannel P. Malloy’s proposed budget, saying the former mayor of Stamford is obscuring cuts to municipalities and usurping their authority by shifting state aid from discretionary to education grants.

It was a startling personal critique of Malloy’s second proposed biennial budget and a rebuke by a constituency that Malloy protected at significant political risk in his first budget, when he raised taxes by a record $1.5 billion rather than cut municipal aid.

With varying degrees of enthusiasm and a hint of trepidation, the bipartisan group accused Malloy of fiscal fraud, saying his budget’s prose sets priorities of economic development and education, while his numbers undermine them.

“When you read the budget, it’s completely different,” said Danbury Mayor Mark Boughton, a Republican. “Black is white, white is black. You’re looking through the looking glass. Nothing is as it seems.”

At his own press conference hours later, the Democratic governor ignored the accusations of dishonesty and defended directing more resources into education, particularly to the 30 lowest-achieving districts.

“I am saying that in this state and in almost every one of the municipalities represented, education has to be the priority,” Malloy said. “You’re absolutely right, I am saying that.”

The mayors’ press conference was organized by the Connecticut Conference of Municipalities, and it featured the mayors of Bridgeport, Danbury, New Haven, Norwalk and Waterbury and the first selectman of Somers, Lisa Pellegrini.

“I honestly believe if Gov. Malloy was still Mayor Malloy, he’d be up there with us,” Norwalk Mayor Richard Moccia said after the press conference.

Boughton, Moccia and Pellegrini are Republicans, but Bridgeport Mayor Bill Finch, New Haven Mayor John DeStefano Jr. and Waterbury Mayor Neil O’Leary are Democrats. Hartford Mayor Pedro Segarra, a Democrat who was originally scheduled to speak was a no-show, and did not return calls for comment.

“I understand the frustration,” Malloy said. “They got a tough job to do. I’ve done that job for 14 years.”

O’Leary supported Malloy, the first Democratic governor in 20 years, and still considers him an ally, but he complained the administration made no effort to consult with mayors before releasing the budget.

“We’d just like to have a voice at the table,” O’Leary said.

Even an urban school superintendent, while grateful for Malloy’s focus on education, questioned his shift in aid formulas in testimony before the legislature’s Education Committee Friday. Malloy wants to reconfigure the PILOT (Payment In Lieu Of Taxes) grant that reimburses communities for lost property tax revenue tied to exempt, state-owned property. His proposal would have that money instead going to fund education, and not restrict districts in turn from cutting the amount they provide locally for their schools.

Hartford, as the seat of state government, would lose $25.3 million in PILOT, while gaining $18 million in education funding.

And Malloy is proposing that most of that boost in education spending go almost entirely for the low-achieving districts to fund new initiatives.

“Carving out additional dollars for specific initiatives does not necessarily make sense because as you can see we have already taken on many of these initiatives and so we ask for the highest level of flexibility,” Hartford Superintendent Christina M. Kishimoto said.

The mayors’ criticism Friday was geared at the proposal to reduce what the state currently does send them funding for. The mayors said they would weigh in at a later date on Malloy’s proposal to limit their ability to collect taxes locally on cars. The Connecticut Conference of Municipalities estimates towns collect $566.6 million a year in taxes for vehicles, and the proposal would shed that number down to $46.6 million.

O’Leary acknowledged a little nervousness after the press conference. The mayors are risking a deterioration in an important relationship, whose potential consequences were brought home by the glowering presence of Malloy’s chief of staff, Mark Ojakian.

“That’s why we’ve got to be together,” Boughton said. “We have each other’s back.”

Finch and DeStefano were softer in their rhetoric, to a point. But they were unified in their basic complaint: Rather than admit his first budget didn’t solve all the state’s fiscal ills, Malloy is obscuring cuts to cities and towns, while shifting other aid to education from their operational budgets.

With his proposed formula changes, Malloy is attempting to force municipalities to spend more on education, since education aid comes with strings attached.

“You know us mayors, we can’t stop being mayors,” DeStefano said, shrugging. “We want to make decisions for everybody. That’s actually a fault we have.”

The political subtext was complicated. The mayors have all worked with Malloy, a past president of CCM, and more than one has clashed with him.

DeStefano and Malloy were rivals for the 2006 Democratic nomination for governor, and DeStefano, Finch and Segarra all backed Ned Lamont over Malloy in the 2010 Democratic primary.

Boughton was the GOP nominee for lieutenant governor in 2010, and he is a potential candidate for governor against Malloy in 2014. The governor arrived at his press conference well aware of how Boughton’s community would be fare under his budget.

“Let me just point out Danbury receives just about more additional education funding than just about any other municipality,” Malloy said.

A town-by-town breakdown of municipal aid proposed in Malloy’s budget has Danbury public schools getting an additional $9.2 million next year. However, the list provided by Malloy’s budget office also shows that Danbury’s municipal government stands to lose $5.49 million next year for its operating budget and gain $1.4 million for construction projects.

The governor acknowledged the change in formulas will cause challenges for some mayors, but he said no city or town would receive less state aid under his proposal than they are getting in the current fiscal year.

When pressed whether he would make the same assertion if his proposed boost in construction funding for municipalities are not factored in, Malloy directed questions to his budget director.

Are cities and towns being held harmless when it comes to state aid for their operating budgets?

“Yes,” Benjamin Barnes, the budget director said. “There may be some situations where they may have to be more flexible or creative about how they will assemble their budget. They may have to change how they finance certain activities in order to minimize the impact of our budget proposal.”

Malloy, who inherited a $3.6 billion deficit upon taking office in January 2011, was lavishly praised by Republican and Democratic mayors in 2011 for taking the politically risky step of seeking a historic tax increase, allowing him to maintain state aid to municipalities.

The governor has said he is still trying to safeguard municipal services.

“We set our priorities. We fund our priorities,” Malloy told reporters a day earlier. “I have made some tough decisions in this budget, including cutting it by $1.8 billion in same services budget… We had to set priorities. Our priorities are education.”

The problem, however, is how the governor wants to pay for the increase in state funding for education.

His budget proposes shifting $73.6 million in state funding now provided to local leaders for general government expenses to fund education.

Additionally, Malloy is proposing the state spend another $143.9 million in the state’s lowest-performing school districts to largely fund new reforms. Malloy’s proposal is paid for by cutting funding for other programs in the education department’s budget, including funding for transportation to districts.

O’Leary, the Waterbury mayor, said the new education funding comes at the expense of money for police officers, firefighters and other municipal employees.

“This proposed budget takes $10 million, give or take, out of my operating budget and puts it over into [education],” he said.

He added the new funding districts would get for education also “has huge strings attached.”

The governor’s budget  would require that the increased spending go towards implementing the new teacher evaluations or national Common Core State Standards.

Education Commissioner Stefan Pryor has made it clear that this funding for districts cannot be used to close their budget deficits created from cuts in municipal aid. He has routinely said that the “substantial majority” must go to implement new reforms, and districts will be required to submit their plans to his department before any additional funding is provided.

“The problem with the money that is being replaced here is that we have got to go out and spend more money,” DeStefano said.

By his estimate, New Haven will lose $15 million in state funding to pay for its operating costs.

Finch made the a similar point regarding Malloy’s increased funding for construction and other capital projects while shedding operating funding. In Bridgeport, state funding directed at education will increase by $7.1 million next fiscal year, but appropriations for other operating budget grants are reduced by $14 million. State funding to cover construction projects in Bridgeport is increased to makeup for the difference.

“I can’t use capital money to pay for police and fire,” he said. “The actual impact on the cities is going to be to either increase property taxes or fewer public safety personal. That’s the choice.”

Malloy’s dedication to boosting state funding for education comes as the date approaches that a court could determine if the state is adequately funding education. A coalition of mayors and firstselectmen are suing the state for what they call a “chronic underfunding” of education by the state.

The state Supreme Court in 2010 ruled that the state is responsible for paying for children to receive an “adequate” education and sent the case to the Superior Court to determine if the state is providing that. The trial is set to begin in July 2014.

Malloy, who as mayor of Stamford joined the coalition suing the state, said the lawsuit now against him is a lingering concern.

“What that lawsuit represents for me is a reminder of what our priorities need to be,” Malloy said, defending his proposal to direct existing state funding to municipalities more towards education.

Twenty-two percent of the current $20.5 billion state budget is spent on cities and towns. Of that state support, 70 percent goes directly to pay for education.