The budget and tax packages proposed by Governor Rell and the Appropriations and the Finance, Revenue and Bonding committees each contain important initiatives that, taken together, would make significant investments in Pre-K-12 public education, regional cooperation and property tax relief. However, neither one stands on its own in this regard. Municipal officials - and their business and residential property taxpayers – urge agreement on a bipartisan budget that combines the best elements of each proposal, as detailed below:

• ECS: Support Governor Rell’s proposal for a $228 million increase in ECS grants in the first year of the biennium and $154 million in the second year. The Governor’s proposal would enact a five-year plan to increase ECS funding by $1.1 billion.

  The Appropriations Committee would increase ECS by $204 million for FY 08, but provides for no increases after that. The ECS distribution formula should be changed so that it is fair to all communities in our state.

  Allow a portion of the ECS grant to be used for property tax relief, as proposed by the Governor (and also by the Education Committee).

• Special Education: Support proposals by both that would fully fund the Special Education Excess Cost grant so that municipalities would be reimbursed for costs that are more than 4.5 times the average per-pupil expenditure. In addition, support the Appropriations Committee proposal to maintain the $4 million Special Education Equity grant, which the Governor proposed to eliminate. Support the Appropriations Committee proposal for a new $1.2 million special education demonstration project.
• Other Education Grants: Support the Appropriations Committee’s restoration of funding for several smaller grant programs, such as for Priority School Districts, that the Governor had proposed to cut.
• PILOT reimbursements: Support, and go beyond, the Appropriations Committee’s proposal to increase reimbursements to municipalities for lost taxes due to state-mandated property tax exemptions for state property and for private, non-profit colleges and hospitals.

  Appropriations Committee would increase the PILOT – colleges & hospital reimbursement by $10 million and the PILOT- state property reimbursement by $7.1 million. These increases would still leave each PILOT reimbursement well below statutory goals. The Governor’s proposal would cut each reimbursement program by $5 million.

  Support the Finance, Revenue and Bonding Committee’s bill (HB 7401) that would require a study of state-mandated property tax exemptions and their impacts on municipalities.

• Pequot-Mohegan Fund: Support, and go beyond, the Appropriations Committee proposal to increase, by $10 million (to $101.1 million), payments to municipalities from the Pequot-Mohegan Fund. The Governor proposed a $5 million cut. The grant was funded at $135 million in FY02.
• Town Aid Roads: Support, and go beyond, the Appropriations Committee proposal that would “flat-fund” Town Aid Roads at $30 million. The Governor had proposed an $8 million cut in this grant, which was funded at $35 million in FY02.
• Real Estate Conveyance Tax: Support the recommendation of the Finance, Revenue and Bonding Committee to make permanent the present rates of the municipal Real Estate Conveyance Tax, preserving at least $40 million in (non-property tax) municipal revenue. The Governor did not address the tax, which the Finance Committee included as part of its recommended state tax package.
• Bonding: Support recommendations by the Finance, Revenue and Bonding Committee to increase general obligation bonding for the Clean Water Fund by $110 million in each year of the biennium ($40 million more than the Governor proposed for each year) and $275 million in revenue bonds each year. Support the Governor’s recommendations for $10 million each year for open space grants (the Finance Committee proposed $5 million).

  Support the Governor’s recommendation for $30 million each year for the Urban Act program (the Finance Committee recommended no new bonding) and the proposal by the Finance Committee for $20 million in bonding for the Small Town Economic Assistance Program (STEAP).

  Maintain LoCIP funding at $30 million, as recommended by the Governor and the Finance Committee.

• School Construction grants: Support the Finance Committee’s proposal to reject the Governor’s plan to reduce school construction grants and to cap the annual amount of those grants.

  Regional Cooperation: Support, and go beyond, the proposal by the Finance and the Appropriations committees to establish a $10 million fund to create incentives for regional service delivery (HB 7402).

RELATED INFORMATION:

	CCM Analysis: General Assembly’s State Budget Proposal FY 08 & FY 09
	General Assembly’s Proposed State Budget: FY 08 & 09 Impact on Connecticut’s Towns and Cities