Report From Malloy Seeks To Re- Frame Debate Over Changes To, Need for, State Aid

Report From Malloy Seeks To Re- Frame Debate Over Changes To, Need for, State Aid

CT News Junkie, August 25, 2017

By Christine Stewart

In an attempt to justify his budget proposal, Gov. Dannel P. Malloy released the first of two big reports regarding the $5.1 billion in state-provided aid to cities and towns.

The second report will contain information about the financial health of municipalities based on their mill rates, fund balances, bond ratings and grand list changes.

The first report released Thursday “makes clear that in recent years, municipal aid has continued to expand at the same time the state has cut billions of dollars in expenditures across state agencies, including a reduction in the number of state employees by more than 12 percent.”

The report shows, according to the Malloy administration’s narrative that “over the last five fiscal years the state’s support to towns and cities has grown by nearly $1 billion, an increase of more than 21 percent. This has taken place while the state’s population has remained largely flat and student enrollment in public schools is down.”

Connecticut’s two municipal lobbies take exception to how Malloy is framing “state aid” to communities.

Joe DeLong, executive director of the Connecticut Conference of Municipalities said the governor is putting a significant amount of spin on the issue of state aid.

There are over 1,300 state mandates on towns that dictate nearly 50 percent of municipal spending, the organization said.

“It is past time that our Governor and General Assembly leaders stop this nonsense and pass a budget that will protect property taxpayers and our local communities while getting their self imposed fiscal mess in order,” DeLong said.

Malloy said that as a former mayor and member of local boards of finance and education, and as a father of three children he knows “just how important state funding is for every city and town in Connecticut.” He said that’s why he’s protected local aid for the past six years.

“Unfortunately, holding towns harmless and even increasing aid while we make excruciating cuts across state government is not sustainable in the long-term,” Malloy said. “It’s clear that if we want to put Connecticut’s budget on stable footing, we must modernize the relationship between the state and local municipalities.”

The education funding and teacher pensions are the two primary drivers of the 21 percent increase in state aid to municipalities.

He said education funding through the Education Cost Sharing grant has outpaced transportation, corrections, and regulation and protection as functions of government.

Education costs driven by mandates back to top

But Betsy Gara, executive director of the Council of Small Towns, said that’s not a fair assessment because it ignore the fact that numerous state mandates drive increases in education costs.

“State laws such as the Minimum Budget Requirement, which hamstrings the ability of towns to reduce education spending, and binding arbitration laws, which make it difficult to negotiate meaningful savings in personnel costs, are largely to blame,” Gara said.

The Minimum Budget Requirement (MBR) has mandated municipalities to maintain their budgeted appropriation for education at no less than the level of funding from the previous year. However, without a budget in place there is no MBR.  The report points out that the MBR requirement expired on June 30, 2017.

Gara also argued it’s not fair to lump teachers’ retirement costs as a category of municipal aid.

“The Teachers Retirement system, which is state-run and state-managed, has been chronically underfunded for more than 70 years,” Gara said. “This has fueled staggering increases in the amount the state has to pay to address unfunded pension liabilities. Now, the state wants to pass those costs into the backs of already overburdened property taxpayers.”

She said the term “state aid” is a misnomer.

“What we’re really talking about is taxpayer dollars and how they should be distributed back to our communities to fund education, public safety, and local infrastructure projects,” Gara added.

Malloy has been operating the state under an executive order since July 1.