For more than two decades, state government has cut the amount of the casino gaming revenues it shares with all cities and towns.
But municipal advocates urged Gov. Ned Lamont and the General Assembly Wednesday to reverse that trend, noting that while budget caps have kept state coffers flush, inadequate aid has left many communities struggling.
“It was a great injustice,” New London Mayor Michael Passero, president of the Connecticut Conference of Municipalities, said during a morning press conference at the Capitol.
“Revenues which were intended for municipalities — especially municipalities like mine — started to be diverted [in 2002] because of the state’s own fiscal woes,” he added. “That diversion has continued to this day, even though the state is much more healthier, financially.”
Technically, the General Fund for this year’s $27.2 billion state budget is projected to be $6 million in deficit, a miniscule shortfall that represents 1/40th of 1% of spending.
But that doesn’t include more than $1.8 billion in income and business tax receipts that a special savings program withholds from the budget.
Those unspent dollars are more than 30 times the $52.5 million in casino revenues the state will share with its 169 cities and towns this budget cycle.
That $52.5 million is roughly 14% of the $365 million in video slot revenues the state will receive this fiscal year from tribal casinos through an arrangement that dates to the early 1990s.
Municipal advocates called Wednesday for a 50-50 split from now on, saying it would help restore towns to the level of support they received decades ago.
Weicker secured CT’s share of casino revenues
Connecticut’s first casino opened in 1992 when the Mashantucket Pequot tribe, having received federal recognition, opened Foxwoods on its sovereign land, located near the Ledyard-North Stonington border in New London County.
That casino originally opened only with table games.
It added the extremely popular video slot machines one year later when then-Gov. Lowell P. Weicker Jr. negotiated a compact that ended the state’s legal objections to the game.
In return, the tribe has given Connecticut 25% of receipts from the video slots, an agreement that the Mohegan tribe agreed to follow when it opened the Mohegan Sun in 1996 on sovereign land within the boundaries of Montville.
Weicker, an opponent of casino gambling, argued that gaming centers would greatly increase demand for social programs, public safety, affordable housing and other services provided chiefly by municipalities, which should therefore get most of the state’s share of gaming revenues.
When state lawmakers crafted a budget for the 1993-94 fiscal year, they anticipated $113 million from the recently opened Foxwoods and pledged 78% of the funds, $88.1 million, to communities, according to state budget records.
Based on the U.S. Bureau of Labor Statistics’ inflation calculator, that aid would be worth almost $200 million now.
By 2000, the state’s share of revenues topped $300 million, and lawmakers increased the annual amount sent to communities to $135 million — but that didn’t last for long.
Just one year later, worsening state finances prompted legislators to cut towns’ share to $127.4 million. And by 2003, as Connecticut moved out of recession, the portion was down to $77.5 million.
It would climb back to about $85 million in 2004 and remain close to that level until the next recession. But in the 2009-10 fiscal year it would hit a new low, reduced to $61.7 million, or about 16% of the $384 million Connecticut was set to receive from casinos.
The toll of that erosion has been felt by many cities and towns, municipal leaders say.
In New London, where 20% of families live in poverty, aid from all state grants represented 41% of the city’s revenues in 2017 but 33% now.
Towns face an uphill battle in pursuit of casino funds
But it remains uncertain whether towns will receive a greater share of casino receipts. That’s because there are many other initiatives, including some that also would help towns, fighting for a share of Connecticut’s flush coffers.
Lamont, who is seeking reelection this November for a third term, wants to spend $500 million on a one-time $200-per-person tax rebate to be paid out in late October.
Majority Democrats in the House and Senate still hope to find hundreds of millions of dollars to expand a $300 million initiative last June to increase affordable child care.
And many lawmakers also want to increase education aid to local school districts by $150 million or more next fiscal year.
Sen. Cathy Osten, D-Sprague, whose southeastern Connecticut district includes many communities around the Foxwoods Resort Casino and the Mohegan Sun, said lawmakers’ focus on boosting local aid for K-12 schools is necessary and appropriate. But Osten, a former first selectwoman, said cities and towns have pressing general government needs outside education that require state assistance as well.
“If we’re really going to address property tax reform, we have to address both sides of the ledger,” she said. Casinos have brought many jobs to Connecticut, but the state has a responsibility to help communities provide the support services that go along with this economic activity, Osten added.
Sen. Heather Somers, R-Groton, a former mayor of her home community, also supports giving communities half of annual casino revenues.
“This is a promise that was made to our municipalities when we first entered the agreement with the two tribal nations, and it is a promise that has not been honored,” she said. “For me, this is really about fairness.”
But state government is grappling with some big fiscal challenges, both new and old.
Despite generating huge annual surpluses since 2017, about $1.8 billion to $1.9 billion on average, Connecticut hasn’t used those dollars to expand programs but rather to pay down one of the largest pension debt burdens in the nation. And it entered this fiscal year still owing a hefty $33.5 billion, according to Lamont’s budget office.
Connecticut also expects to lose hundreds of millions of dollars in federal Medicaid assistance starting next fiscal year. Congress and President Donald Trump ordered big cutbacks last July to help finance federal tax cuts.
Lamont repeatedly has warned lawmakers the state can’t afford to cover all proposals on the table. His budget spokesman, Chris Collibee, said any plan to give towns more casino revenues “must be included in a balanced budget.”
“In the coming weeks, we will work with lawmakers to find a responsible solution that provides real relief where it’s needed most,” he said.
