CCM Calls For State To Repeal Spending Cap

CCM Calls For State To Repeal Spending Cap

Mayors and first selectmen called Tuesday for the repeal of a municipal spending cap that was passed by the state legislature to prevent towns from excessive spending.

Under the cap rule, municipalities that exceed a 2.5 percent increase in their annual budget could lose state aid. The cap was approved in 2015 by the Democrat-controlled legislature as part of a package deal to award millions of additional dollars in state aid to the municipalities.

But the towns never agreed to the idea, and officials are now trying to block the cap before it takes effect on July 1, 2017.

Saying the cap is ill-defined and poorly written, mayors and town officials blasted the concept at the annual convention of the Connecticut Conference of Municipalities at the Foxwoods Resort casino hotel.

"Probably what's most offensive, and these are my words, is clearly the state has a financial disaster on their hands, and for them to lecture us about reducing spending or managing our finances is frankly absurd," said Danbury Mayor Mark Boughton, a former Republican state legislator who is now CCM's president. "We would ask politely and respectfully that they go back and reconsider that entire initiative. ... Let's have that discussion after the state gets its financial house in order."

The cap, officials said, would have many negative impacts, including exempting binding arbitration awards. As a result, local officials believe that unions would have an incentive to avoid compromise and instead go to binding arbitration because the awards would be outside the cap. An award to increase wages by 5 percent, for example, would not be blocked under the 2.5 percent cap.

Second, they say the cap would encourage borrowing money for operating expenses — which is generally deemed as a bad practice financially — because the borrowed money would not count against the cap. Road paving, for example, historically has been paid in many towns from the local operating budget, instead of through borrowed money, they said.

COST also agrees back to top

Besides CCM, the cap is opposed by the Council of Small Towns, which represents numerous rural and suburban communities with populations under 30,000.

Since the implementation of the cap was delayed until 2017, the towns now have time to increase their lobbying against it as the next legislative session approaches in January.

But Senate President Pro Tem Martin Looney, one of the most influential lawmakers at the Capitol, has been strongly in favor of the cap, saying it is only fair if the towns are receiving more state money.

"To protect taxpayers, create accountability and ensure that new aid provided to towns will be used to deliver tax relief, the General Assembly passed a soft spending cap to ensure that the new funding is spent wisely," Looney said Tuesday. "Some local leaders may have a misimpression of what the spending cap really is. It applies only to new state aid and does not prevent towns in any way from spending however much money they see fit. These reforms will bring stability and sustainability to our state and our municipalities, and most importantly, property tax relief for taxpayers across Connecticut."

Senate GOP Leader Len Fasano called it a "bad bill Republicans opposed."

"The municipal cap implemented by Democrats ignored the concerns of our town and city officials," Fasano said. "Had they listened, they would have realized that such a cap could actually lead to more borrowing and poor financial habits."

Susan Bransfield, the Portland first selectwoman and CCM's incoming president, said, "The spending cap proposal is unworkable … and something that we're totally opposed to."

The original plan called for the towns to receive money from the state's sales tax, but mayors and first selectmen are traditionally nervous that their funds might get cut off during a state budget crisis. Currently, fiscal analysts say the state is looking at projected deficits of $1.4 billion in the next fiscal year and $1.6 billion in the second year of the biennium.

In addition to the mayors, representatives of the Connecticut Association of Boards of Education and the Connecticut Association of Public School Superintendents also have concerns about the cap.

"The cap is a solution to a problem that doesn't exist," said Joseph Cirasuolo, executive director of the Connecticut Association of Public School Superintendents. "We'd like to see a straight repeal of the cap."

During the 2016 legislative session, the mayors were unable to get the cap repealed. But with the imposition coming closer next July, they believe the pressure will be increased in the coming months for the legislature to take action.

Rep. Joe Aresimowicz, who is expected to be the next House Speaker, said "there is certainly time to take a second look before it takes effect if enough legislators believe it will negatively hamstring their towns."