House Democratic leadership has a new plan to redistribute reduced non-education grants to cities and towns largely on the basis of wealth.
Though caucus documents initially cited significant cuts in non-education grants as “lapses” — unspecified reductions to be achieved by Gov. Dannel P. Malloy — Speaker Joe Aresimowicz’s office said the plan would not shift the burden of determining most of the specific cuts onto the chief executive.
Four different property tax relief grants would be merged, and then reduced by a total of $117 million this fiscal year and then by another $33 million in 2018-19.
The legislature would determine each community’s share of these reductions using a wealth index the state compiles annually. This reflects: per capita income, the value of taxable property in each community, local property tax rates, numbers of children on public assistance, and unemployment.
Communities’ non-education grants could be reduced by 12 percent to 90 percent from last fiscal year’s levels, depending on their rankings on this wealth index.
The House Democratic Caucus proposal still would contain about $25 million per year in unspecified municipal aid lapses, which the governor must achieve after the next budget is in force.
Malloy and his fellow Democrats in the slim House majority have been sparring for months over how much revenue to raise to balance state finances over this fiscal year and next — and what burdens to place on cities and towns.
The governor says House Democrats are relying too heavily on tax hikes and need to find more spending cuts. But with much of the budget — debt costs, retirement benefits, and Medicaid — fixed by contract or federal entitlement rules, there are few places to cut outside of local aid.
Savings targets built into state budgets — deemed “lapses” because the savings lapses back into the General Fund — are nothing new.
Generally, though, they are achieved by state agencies by delaying hirings and purchases or discovering ways to run programs more efficiently.
Some town leaders have said the idea of “lapsing” municipal aid is misleading, since the only way to achieve the savings is to reduce payments to communities.
Still, municipal aid “lapse” targets ranging from $10 million to $20 million have been incorporated into state budgets in recent years.