Bipartisan State Budget Protects Municipal Aid, Achieves Significant Municipal Reforms
For immediate release
Thursday, October 26, 2017
Kevin Maloney, (203) 710-3486
The Connecticut Conference of Municipalities (CCM) today (Thursday, October 26) presented its initial analysis of the municipal impact of the bipartisan budget agreement that the Senate passed overwhelmingly last night and the House of Representatives is slated to take the bill up later today.
“Municipal leaders acknowledge the difficult choices made by state leaders in forging this bipartisan budget agreement and the impact they have on the lives of Connecticut residents,” said CCM Executive Director Joe DeLong. “The actions taken by State leaders to support cities and towns protects the interests of residents and businesses across the state and for that we are grateful.”
With the State facing a $5 billion biennial budget deficit, the state budget agreement spares towns and cities from the draconian cuts set to roll out under the Governor’s Executive Order and includes many significant structural reforms that municipalities have been advocating for years.
These accomplishments are due to persistent outreach efforts by municipal leaders to their state legislative delegations and to your residents, which helped shape the debate and influence their decision-making.
The final budget agreement provides for numerous municipal reforms sought by CCM since January in its ground-breaking public policy initiative, “This Report Is Different.” These items are highlighted below.
Here are the key points back to top
Beneficial legislative actions for member municipal leaders in the state budget agreement include:
Much State Aid Restored
· Through our advocacy efforts, towns and cities were able to mitigate state aid reductions that were first proposed and later expanded on under the Governor’s Executive Order. These cuts would have zeroed out education aid to 85 municipalities and greatly reduced funding for 50 more, which would have been devastating to our communities.
Under the bipartisan state budget agreement, every town will receive some level of education aid and will not be zeroed out. The overall ECS grant was reduced by $30 million for FY 18. The 30 Alliance District municipalities will be flat funded based on the FY 17 level and the $30 million ECS cut will be distributed among the remaining 139 towns.
Towns and cities were able to mitigate the level of state aid cuts provided under categorical grants to all towns, compared to the previous fiscal year.
· A more progressive and predictable Education Cost Sharing (ECS) formula was enacted for the second year of the budget that is designed to be more reflective of what is occurring in our communities.
The factors that will be used to determine the ECS grants in FY 19 are overall enrollment, the number of low income students and the municipality’s wealth.
No Teachers’ Retirement Mandate
· The new budget contains no mandated municipal contribution to the Teachers’ Retirement Fund. The Governor’s initial proposal sought to transfer the responsibility of $400 million of the Teachers’ Retirement Fund contribution onto cities and towns. Subsequent proposals attempted to require towns and cities to contribute $288 million over two years to the Teachers’ Retirement Fund. While this proposal was rejected, we anticipate that it may be considered in the future due to the daunting unfunded liabilities of the fund.
· There is a continued push by CCM to establish a Pension and Retirement Benefits Reform Commission to examine the future sustainability of state and municipal employee pension plans.
Motor Vehicle Tax
· Elimination of the property tax on motor vehicles was rejected. This would have shifted approximately $700-800 million onto an already overburdened property and commercial property tax base.
Other Provisions That Impact Municipalities
- Prohibiting arbitrators from considering municipal fund balances -- up to 15 percent of operating revenues -- a part of assessments of towns’ “ability to pay”.
- The motor vehicle car tax cap will be 39 mills in FY 18 and 45 mills in FY 19. Towns whose mill rates are above these thresholds will be reimbursed for lost revenue
- In binding arbitration cases for towns and cities, arbitrators will now be allowed to make decisions beyond choosing strictly between the “last best offers’’ from each side.
- Allows COG’s to establish revenue sharing agreements with other COG’s
- Appoints a municipal CEO to the Teachers Retirement Board
- Makes adjustments to the school construction program by, among other things increasing the percentage of a school construction grant that DAS can withhold pending the completion of an audit.
- Expands youth service bureau grant eligibility to those bureaus that applied in FY 19 and met town contribution requirements.
- Creates a task force to study the feasibility of forming a special education cost cooperative or other models to address special education spending and costs. CCM will have a membership.
- Delays certain reporting by ACIR
- Creates a Connecticut Achievement and Resource Equity in Schools Commission (CCM will have a membership) to make recommendations on education funding.
- Allows COG’s or two or more municipalities to appoint assessors.
- Makes changes to school admiration, including (1) allows certain BOE’s to share school superintendents, (2) allows cooperative agreements between town and BOE, (3) require legislative bodies to approve hiring of particular school administrators, and (4) allows a regional BOE to establish a finance committee.
- Establishes an irrebuttable presumption that 15% of a municipality's budget reserve cannot be used to pay for arbitration awards.
- Requires municipalities, when possible, to consult with their local BOE about jointly purchasing property, casualty, and workers' compensation insurance.
- Requires a local board of education to consult with its municipal legislative body prior to purchasing payroll software.
- Establishes 7/7 Program to provide state and local tax incentives available to eligible owners for up to 14 years after remediating, redeveloping, and using formerly contaminated, abandoned, or underutilized property.
- Allows for $518 million in new school construction grants for up to and makes changes to other existing projects.
- Allows municipalities to amend adopted budgets and adjust tax levies to reflect inaccurate state aid projections.
- Creates a Municipal Accountability Review Board to which financially distressed municipalities that submit to state oversight may access state financial assistance.
- Provides mechanisms to address crumbling foundations, among other things, in particular: (1) creates a “captive” insurance company to help homeowners repair or replace crumbling concrete foundations; (2) creates the Collapsing Foundations Credit Enhancements Program, administered by CHFA, to help homeowners obtain additional funding necessary to replace or repair crumbling concrete foundations; (3) allows taxpayers to reduce their State adjusted gross income by the amount of any financial assistance received from the Crumbling Foundations Assistance Fund; and (3) allows municipalities to jointly borrow, or individually bond, to fund projects to abate certain deleterious conditions caused by crumbling concrete.
- Reduces payments to municipal and district health departments in FY 19 by a total of $504,218.
- Allows a COG or two or more municipalities to appoint shared tax assessors
- Reduces the renters rebate program by $14.6m and $13.6 in FY 18 and FY 19 respectively, additionally it allows renters to apply to their towns for the portion of the rebate they will no longer collect from the state.
- Creates a process by which local tax assessors receive information from the DMV about motor vehicles registered in other states in order to add such vehicles to grand lists. Furthermore the bill requires municipalities to remit 1% of property taxes collected for any such vehicles to the STF.
- Eliminates a requirement for the Firefighters' Cancer Relief Program to be funded through E-911 charges, and instead funds the program with a $400,000 line item included in the General Fund.
- CCM has advocated for years for modest adjustments to the prevailing wage thresholds. The budget adjusts the thresholds for new public works projects from $400,000 to $1M. Remodeling, refinishing, refurbishing, rehabilitation and alteration projects will not be subject to prevailing wage rates if the total cost of work is less than $100,000.
- Protects municipal fund balances - During the 2017 regular legislative session CCM aggressively lobbied in support of legislation that would prohibit an arbitration panel from considering a municipal fund balance of 15% or less when determining the ability of a municipality to pay costs associated with collective bargaining agreements. While the bill did not pass the House or Senate it was included in the budget voted out of the Senate on Wednesday night.
- MBR - During the 2017 regular legislative session CCM supported legislation to allow municipalities to reduce their budgeted appropriation for education in an amount proportional to any reduction they may experience in education aid. While the legislation did not pass the house or senate it was included in the budget voted out of the Senate on Wednesday night.
- BOEs will be required to enroll as a provider in the state medical assistance program and participate in the Medicaid School Based Child Health Program. BOEs will be required to submit billable service information to DSS for special education students.