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Local Officials Continue To Worry About Budget Stalemate As Oct. 1 Nears

Local Officials Continue To Worry About Budget Stalemate As Oct. 1 Nears
Meriden Record-Journal, September 21, 2017
By Michael Savino

Lawmakers warned that a failure to adopt the budget before Oct. 1 would leave towns crippled by cuts under Gov. Dannel P. Malloy’s executive order, but statutes provide some flexibility.

The first 25 percent of Education Cost Sharing grants, for example, aren’t legally due until the end of the month. The ECS grants are the single largest form of municipal aid, with two other installments in January and April.

Municipal officials, however, said continued delays in passing a state budget are only making planning more difficult.

“Nobody likes bad news,” Cheshire Town Manager Michael A. Milone said Tuesday. “But if you’re going to get bad news, the earlier the better.”

Malloy has said that he will veto the $39.4 billion Republican budget passed over the weekend, forcing lawmakers back into negotiations on a spending plan that will close a projected $3.5-billion deficit over two years.

That also means the state continues to operate under an executive order that cuts funding to all towns, including the elimination of ECS funds to 85. An additional 54 towns would see deep cuts to ECS, while cities with the neediest school districts, like Meriden, would see education funding preserved in exchange for cuts elsewhere.

Grants for revenues lost on tax-exempt properties, or payments in lieu of taxes, are due Sept. 30.

“Everybody’s situation is a little different,” Milone said. He said his biggest concern is the potential for a $1.5-million cut in PILOT funds, which normally come because Cheshire Correctional Institution is tax-exempt.

Some towns are more focused on the potential ECS cuts, including some that have warned they won’t be able to hold-out much longer without their expected state aid.

Hartford, which is considering filing for bankruptcy, has borrowed funds while it waits for budget. The town of Scotland has also warned that the executive order would force it into insolvency.

Towns feeling very uneasy back to top

Malloy told reporters Monday that he is no longer in favor of a short-term budget that could buy more time for a full, two-year plan. He also said municipal aid under the executive order is dictated by constitutional requirements for education funding and a desire to avoid adding to the deficit.

“My job is to protect the state of Connecticut, to honor the constitution of the state of Connecticut, and to … in the absence of a budget, limit the expenditures of the state of Connecticut,” he said.

Connecticut Conference of Municipalities spokesman Kevin Maloney said municipalities “are feeling very uneasy.”

“These are unprecedented times,” he said. “We’ve never gone this far into a fiscal year without certainty ... regarding state aid.”

Other elements of the budget also have deadlines — a proposal to raise the hospital tax by 2 percent must go in place by Oct. 1 in order to reap the full benefit.

Under an agreement among Democrats, Malloy, and the Connecticut Hospital Association — and adopted by Republicans in their plan— the budget would include assurances that the state would reimburse hospitals for their tax payments.

Connecticut could then receive more federal funding, which it would split with the hospitals. The plan would net $550 million in revenues to the hospitals, and $349 million in tax income to the state.

The tax change needs to be adopted by Oct. 1, though, in order for the state to claim reimbursements back to July 1. Failure to adopt the budget in time would result in $75 million less in federal aid.