Since the arrival of coronavirus more than two years ago, state and municipal officials have been jousting over who should pay to upgrade aging air quality control systems in Connecticut’s public schools.
Gov. Ned Lamont and the legislature took a step to help towns this year. But half of the $150 million they dedicated to the problem — which may not be enough — is temporary money that expires after 2025.
And as municipalities complete their applications for state aid this fall, leaders say one question still looms large. Will this cost fall primarily on a regressive local property tax system upon which Connecticut already relies heavily, or will state government — which saw its coffers swell amidst the pandemic but remains swamped with massive, long-term debt — pick up the tab?
“It’s this perpetual decision that’s always made,” said Joe DeLong, executive director of the Connecticut Conference of Municipalities. “If we have to pick our poison, we’re always going to push [new costs] onto the property tax.”
Towns that use ARPA funds get limited state aid
No one knows exactly how much it will cost to upgrade heating, ventilation, and other air quality control systems statewide in public schools that often skimped on maintenance.
Local education budgets are hampered by state aid that failed to keep pace with inflation. State government spent much of the past two decades — prior to 2018 — dealing with its own budget deficits, prompting officials to curtail one of the most generous school construction cost-sharing programs in the country.
If a district wanted to perform a smaller project — such as replacing or upgrading a heating/ventilation system — the entire cost was borne locally. But COVID-19’s arrival brought that issue to a head. And while COVID-19 infections and hospitalizations now aren’t close to those seen in 2020, the virus is expected to remain a challenge for years to come.
“The pandemic highlighted and underscored the issue of indoor air pollution,” said Sen. Saud Anwar, D-South Windsor, a physician and co-chairman of the Public Health Committee.
The health risks of dust mites and mold needed more serious attention even before the coronavirus entered Connecticut’s schools, he added.
When Lamont and legislators designated $150 million in June for grants to schools, they agreed to get half the funds from state borrowing. The other $75 million would come from the roughly $3 billion state government received through the federal American Rescue Plan Act [ARPA.]
Municipalities, depending upon their wealth, can seek reimbursement for between 20% and 80% of their air quality project costs.
But there’s a condition.
Towns also got ARPA dollars. And the state won’t match any local expenditures made using federal COVID relief dollars.
For example, if a town spends $3 million replacing school ventilation systems — using $1 million in ARPA funds and $2 million from local property taxpayers — the state only will reimburse a portion of the $2 million expenditure.
State Department of Administrative Services spokesman John McKay says this is consistent with state law that governs the general school construction grant program.
DeLong says this is an easy way for the state to limit its costs, and a double standard.
Lamont and the legislature expect to use more than $1.7 billion in ARPA funds by 2025 to support a host of initiatives in the state budget.
Why is a town expenditure backed with federal dollars somehow discounted, DeLong asked.
“I am very much appreciative of where we’ve come,” DeLong said of the aid state officials have committed to date. But, he added, the pandemic and high inflation have taken a toll on many municipal budgets. If the state’s share isn’t sufficient, “it creates a significant burden at the municipal level and risks several of these projects not getting done.”
Can property taxpayers afford to upgrade school air quality?
And what happens in two or three years when the state’s ARPA funds are exhausted?
DeLong and others say it would be a mistake to retreat to past practices and leave the cost up to local taxpayers.
CCM estimates that municipalities collect about $20 billion per year in property taxes, roughly double what the Connecticut income tax — the state’s single-largest revenue engine by a wide margin — generates annually.
But unlike the income tax, the property tax is regressive, meaning homeowners are charged the same rate, regardless of their earnings or wealth.
A study released in late February by the state Department of Revenue Services found that Connecticut’s state and municipal tax systems hit the poor and middle class much harder than the wealthy.
The analysis found households that earned less than $44,758 in 2019 effectively lost nearly 26% of their earnings to taxes, nearly four times the rate paid by Connecticut’s wealthiest families, according to the study.
“Any program built on our current property tax system is inherently inequitable and fails to reflect the wide disparities in property and community wealth that exist in our state,” said Lisa Hammersley, executive director of the School and State Finance Project. “The pandemic shone a bright light on the unacceptable learning conditions that students in many of Connecticut’s highest-need, most under-resourced districts have had to endure for years. We have an obligation to adopt a system that ensures all students can go to a school that is safe, clean, and conducive to learning.”
Coventry town manager John Elsesser, one of the local leaders who led the push for the state to fund at least a portion of air quality projects in schools, expects his town to seek aid before the application deadline closes in early December.
But Elsesser also said the challenge of protecting air quality in schools in the age of COVID is more than simply a local responsibility.
Quality ventilation, heating and cooling systems “are as critical as roofs or windows,” he added.
But state government has its own fiscal challenges, even though it closed last fiscal year with a record-setting $4.3 billion surplus and is on pace for a $2.3 billion cushion in 2022-23.
That black ink pales in comparison to the more than $90 billion in long-term liabilities it owes, including unfunded pension and retirement health care obligations and bonded debt.
Lamont, who warned Connecticut cannot assume the state’s coffers will remain this flush in the near future, touted the air quality grant program in a Sept. 14 press release.
“One thing the COVID-19 pandemic showed is that many school buildings in our state, particularly those that are of a certain age, are in serious need of air quality improvements,” Lamont wrote. “Modernized ventilation systems provide an important public health function that filtrate the air and reduce airborne contaminants, including particles containing viruses.”
But his administration didn’t offer any hints Wednesday about how it would fund the program once federal pandemic aid is gone.
“The administration will evaluate the success of the program to determine next steps,” McKay said. “The governor will present his budget in February for consideration.”
But both Anwar and the Public Health Committee’s other co-chair, Rep. Jonathan Steinberg, D-Westport, said they believe the legislature recognizes this is a problem the state and towns must solve together.
“We could easily run through the $150 million,” Steinberg said. “We’ve got a lot of old schools with really kind of retrograde HVAC [heating/ventilation/air conditioning] systems out there.”
Steinberg added that “it’s certainly something I want to monitor. … There will be a reckoning in 2024-25.”