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Lack Of State Budget Brings Uncertainty To Cities, Towns

Lack Of State Budget Brings Uncertainty To Cities, Towns

Associated Press, June 14, 2017

With Connecticut's state budget in limbo, many cities and towns have blindly set their local tax rates for the new fiscal year beginning July 1, hoping they won't need to send out refunds or supplemental property tax bills to cover any gaps in anticipated state aid.

Harwinton First Selectman Michael Criss said his small, northwestern Connecticut community already passed a local budget that maintains the same tax rate. With the state budget unsettled, Criss said he's worried what could be in store for Harwinton, which typically receives more than $2 million in state aid to supplement its $18 million school budget and more than $200,000 in state road funds annually.

"I'm very nervous for my community and I can guarantee you, I will not be silent. I'm a small community with a big mouth," said the Republican, who has led Harwinton for six years. "If there's a tax increase, it's solely from the state, and it could be devastating for our community."

The General Assembly adjourned June 7 without passing a new state budget that covers a projected two-year, $5 billion deficit. The state's budget is typically about $20 billion a year. While lawmakers have said they hope to pass a new tax-and-spending plan before the fiscal year ends on June 30, it's questionable whether that will happen.

Democratic Gov. Dannel P. Malloy met Tuesday with legislative leaders on the budget for the first time since the regular session adjourned. He said his administration is preparing for the possibility he'll have to issue stop-gap budgets after July 1. Malloy plans to release "principles" next week that will guide how he expects to fund state operations on an interim basis.

Following the hour-long, closed-door meeting, Senate Republican Leader Len Fasano said his "gut reaction" is that a budget deal won't be reached by June 30.

Supplemental bills? back to top

While there have been several times when lawmakers did not pass a state budget before the new fiscal year, Betsy Gara, executive director of the Connecticut Council of Small Towns, said this year is different because so much is up in the air.

"In the past, we had early indications of what municipal aid levels would be," she said. "This is the first time there have been large fluctuations in the different proposals and how they may impact municipalities."

Gara said COST has asked its law firm to provide guidance to towns if supplemental tax notices become necessary.

Many cities and towns are anxiously waiting to see how the state plans to revamp its main education grant for public education, parts of which have been ruled as unconstitutional. Early proposals showed lawmakers might shift funds from small communities to larger ones. There are also concerns about whether a final budget agreement might include Malloy's controversial proposal requiring municipalities to pay a share of teacher pension costs. Gara said many communities chose to craft local budgets that don't account for the pension costs, in hopes the new expense won't be part of a final state budget deal.

"The town of Litchfield is not sitting back, waiting for the state to react before we move forward," said Leo Paul Jr., the town's first selectman and president of COST. He said Litchfield adopted a budget that anticipated a 25 percent across-the-board cut in state aid.

"We're not sure whether that's going to be sufficient enough," he said. "But we're hoping it is."

Kevin Maloney, spokesman for the Connecticut Conference of Municipalities, said city and town leaders will also need the General Assembly to pass legislation that will allow them to override local charters and send out supplemental bills, if required.

"Many, many, many towns may have to reopen their budgets and send out supplemental tax bills," he said. "It's an unprecedented situation."