Mayor Calls Proposed $10.2 Million Cut In State Aid A ‘Financial Tsunami’

Mayor Calls Proposed $10.2 Million Cut In State Aid A ‘Financial Tsunami’

WALLINGFORD — Local officials say the town’s $29.2 million in financial reserves factored into the governor’s proposed $10.2 million cut in state aid to the town for the upcoming fiscal year.

Gov. Dannel P. Malloy’s budget proposal, released Wednesday, would reduce state aid to the town from $27.3 million this year to $17.1 million in fiscal year 2018, a 40 percent drop. The $10.2 million decrease is the fourth largest cut to any municipality in Malloy’s proposal.

“It’s outrageous,” said Mayor William W. Dickinson Jr., a Republican. “This is way beyond what I anticipated. It seems extremely unfair given the suddenness and size of it. This is a financial tsunami.”

A spokesman for the governor’s office said the ability of a municipality to withstand funding reductions was considered in the budget proposal. The state conducted a town-by-town analysis of mill rates, fund balances and net grand lists.

“In general, towns with greater per capita property wealth have a greater capacity to generate revenue and, in turn, a greater ability to fund the services residents demand,” Chris Collibee, a spokesman for the governor’s office, said in an email Thursday.

During a speech Wednesday, Malloy said that by “considering a given community’s ability to pay, we can adjust to what taxpayers can actually afford.”

Towns with reserves targeted back to top

Some town officials were critical of Malloy’s decision to target towns with higher reserves.

“This is an unapologetic maneuver to take the state into socialism,” said Town Council Vice Chairman Tom Laffin, a Republican.

Democratic Town Councilor Vincent Testa Jr. called the decision to balance the budget by cutting more from towns with a surplus “understandable.”

“Sometimes we’re a victim of our own success,” Testa said.

Town reserves grew to $29.2 million in the last fiscal year, according to a financial audit. Of the $29.2 million, $4.2 million was used to balance the 2016-17 budget, $2.5 million is earmarked for future projects and expenses, and $15.8 million is used to maintain the town’s credit rating. The remaining $6.6 million is undesignated.

While Wallingford has more reserves than many other towns, if a portion is spent to absorb the 2017-18 cut, there won’t be adequate reserves to offset potential cuts in future years, Laffin said.

“This isn’t a one-time cut,” Democratic Town Councilor Jason Zandri said. “This is an always and forever cut until something else changes.”

Under Malloy’s budget proposal, Wallingford’s state aid would drop from $17.1 million in 2018-19 to $16.8 million in 2019-20.

In addition to fiscal indicators, the state also looked at changes in school enrollment in determining education grant funding. Wallingford’s enrollment dropped by 415 students from 2011 to 2016. The town’s Education Cost Sharing grant goes from $21.3 million to $11.1 million in the governor’s proposal. This is partially offset by a $5.3 million increase in special education funding the town will receive due to a recent increase in special education students.

Collibee said about $5 million of Wallingford’s state aid reduction is a result of the governor’s proposal to shift one-third of the costs of teacher pension obligations onto towns.

If the current cuts stand, Dickinson said, the town would be forced to significantly raise property taxes and reduce services to balance its budget.

“That can’t be absorbed without significant reductions in what we spend,” Dickinson said. “If it stays the way it is, it will have a major effect on services.”

In addition to reductions in state aid, Dickinson said the town is also financially strained by a lack of new growth in the 2016 Grand List. The list, released last week, grew slightly by .33 percent from last year, but officials say it could ultimately drop by as much as 2 percent depending on the outcome of several pending tax appeal lawsuits.

Testa said the town will need to “get creative and think outside the box” to offset the lost revenue. He proposed bonding more capital expenses as well as using reserve funds.

In the past, town Republicans, including Dickinson, have opposed using surplus funds to offset recurring expenditures.

“It’s always controversial,” Testa said.

State Rep. Craig Fishbein, R-Wallingford, also a town councilor, said he doesn’t know of any legislator who would support approving the proposed budget, adding that it is effectively a starting point.

“It appears that in his latest budget, the governor, after recognizing the state has been bankrupt for years, is saying to the legislature, ‘you go figure it out,’ ” Fishbein said.

Pending state cuts will create uncertainty for Wallingford, Fishbein said, because the town would have to wait until after its municipal budget is due in May to learn how much aid it will receive. The state budget doesn’t need to be approved until the end of the fiscal year on June 30.