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Municipal Officials Fear Info Sought By Malloy Could Lead To Slashed Aid

Municipal Officials Fear Info Sought By Malloy Could Lead To Slashed Aid

Hartford Courant, August 9, 2017

By Daniela Altimari

Municipal officials fear that information requested by Gov. Dannel P. Malloy could be used to sharply cut municipal aid, especially in wealthy communities that have successfully managed their finances.

“It’s worrisome,’’ said Kevin Maloney, spokesman for the Connecticut Conference of Municipalities. “We would reinforce the notion that adequate state aid is what has maintained the fiscal stability of towns in Connecticut.”

Malloy directed his chief budget adviser, Ben Barnes, to compile a detailed report analyzing municipal aid, local property tax rates, long-term trends and other financial information related to the state’s 169 cities and towns.

The state is facing a deficit estimated to top $3.5 billion over the next two years and, one month into a new fiscal year, lawmakers have been unable to pass a budget.

Municipal aid accounts is the state’s single largest expenditure, accounting for more than $5 billion of the state’s budget, with $4.1 billion of the total earmarked for education.

“As our state struggles to finalize a biennial budget, how we fund our single largest expenditure must be on the table for discussion with the General Assembly and the public,” Malloy wrote in the letter, which his office released on Thursday.

Malloy, who is in Aspen, Colo. for the Democratic Governors Association summer policy conference, said he has long made preserving municipal aid a fiscal priority, even at the expense of other worthy state programs. “We’ve reduced state services, we’ve cut funding to private [social service] providers, we’ve asked state employees to come to the table with concessions and we’ve raised revenue,’’ he wrote. “Throughout all of this, we’ve held town aid harmless. In fact, it could be said that we have sacrificed state services and raised revenue in order to shield town government from facing difficult choices.”

Current system for state aid back to top

Malloy said the current system of disbursing local aid reinforces income inequality in a state that has long struggled with the problems associated with a deep divide between its poor cities and its wealthy suburbs. “If we fail to recalibrate aid based on shifting local demographics, economies and need, we risk perpetuating an inequitable distribution of burden among our communities,’’ Malloy wrote.

The Democratic governor’s suggestion that municipal aid could be subject to a realignment, with some communities facing deeper cuts, received a cool reception from some legislative leaders.

“There is bipartisan consensus among Democrats and Republicans in the legislature to mitigate cuts to municipal aid that the governor originally proposed, and is now further looking at,’’ said House Speaker Joe Aresimowicz, a Democrat from Berlin. “Agreeing on exactly how to do this is the challenge we are all working on, and will require compromise by all parties, but when a budget is finalized I believe we will not see these cuts at the level of the governor’s plan.”

Len Fasano, the Senate Republican Leader, agreed with Aresimowicz. “If a municipality has shown fiscal responsibility and been successful in making tough decisions to achieve a positive financial outlook that town or city should not be penalized simply for their smart budgeting,’’ he said. “Perhaps Gov. Malloy should have learned from these municipalities when he crafted budgets for our state. It’s illogical to implement policies that discourage towns from being fiscally responsible.”

Instead of punishing towns that manage their finances successfully, Fasano said the legislature ought to focus on creating stability and predictability “and avoid actions that will result in property tax increases and more burdens on businesses and residents throughout Connecticut.”

Susan Bransfield, the longtime Democratic first selectwoman in Portland, questioned the timing of the governor’s move. “The last time I checked the calendar, it was Aug. 3 and the fiscal year has already begun,’’ she said. “The time for this kind of dialogue is not when you’ve started the fiscal year.’’

Earlier this year, Malloy recommended cutting more hundreds of millions of dollars in state aid for cities and towns. He also wanted to require municipalities to pay $400 million for teacher pension costs. Legislators dismissed the pension proposal and have repeatedly rejected the idea of cutting state aid to cities and towns.

The Connecticut Conference of Municipalities is proposing to increase the state sales tax to help fund local aid, an idea backed by House Democrats. In late June, Aresimowicz and his fellow Democrats in the House unveiled their own plan to bolstering cash-strapped cities and towns.

The proposal would increase the state sales tax to 6.99 percent, with the additional revenue funneled to local communities. In addition, cities and towns would have the option to approve an additional 1 percent tax on the sale of food and drink at restaurants and bars, money that would be given back to the municipalities.