Fasano: State needs to “hold the line” on aid to towns [JI]

Journal Inquirer

Gov. Dannel P. Malloy and top lawmakers told a gathering of small-town leaders Wednesday that they will try to maintain municipal aid at current levels, but made it clear that nothing is certain.

House Speaker J. Brendan Sharkey warned the crowd at the Council of Small Towns annual meeting in Cromwell that the state will need to control spending as it deals with a “new normal” of stagnant income.

“It’s evident that we’re living in a new world right now where growth in state revenues is not going to be increasing at the rate is usually does as we come out of recessions,” he said.

The state is looking at projected budget deficits of $1.096 billion in the 2016 fiscal year and $1.033 billion the following year, according to Malloy’s Office of Policy and Management.

The legislature’s nonpartisan Office of Fiscal Analysis has projected the deficit to be higher.

Malloy told members of the council, which represents towns with populations less than 30,000, that he is “doing my utmost” to maintain municipal aid, but also said that state income will severely limit what the state can do.

“Don’t make any new commitments, I’ll tell you that,” Malloy said. “There won’t be any new money.”

He also said towns would compete with other priorities, most notably efforts to continue funding the state’s pension system and his call for a transportation overhaul.

But he also said he wouldn’t know for sure until he and his staff finalize his budget proposal, which is due to the legislature Feb. 18. OPM and OFA are slated to release their revised consensus revenue update today.

Sharkey and other legislative leaders echoed Malloy’s comments, making flat funding for municipal aid appear to be a best-case scenario.

“The governor made it pretty clear in his statement that this is once again a tough year for a state budget that in the last four years has been holding cities and towns harmless as best we can,” Sharkey said.

Senate Republican Minority Leader Leonard Fasano said the state’s needs to “hold the line” on aid to towns, but also said the state and municipalities need to focus on saving money.

House Republican Minority Leader Themis Klarides also said the General Assembly needs to find ways to reduce costs for towns, giving local officials more freedom to spend the money they get from the state.

Council President and Coventry Town Manager John Elsesser said many in attendance at Wednesday’s meeting are now concerned about the amount of funding they will get.

“The statements yesterday hinted at reductions, which is troubling,” Elsesser said, adding officials never expected “new pots of money.”

Lawmakers pledged to find ways to help towns reduce their costs, including changes in the way the state helps towns with special education expenses and lost revenue from tax-exempt properties.

Senate Majority Leader Martin M. Looney suggested a new Payment in Lieu of Taxes, or PILOT, program, which gives aid to towns for certain types of tax-exempt properties, such as prisons, universities, and hospitals.

Looney said the state should consider a tiered system that would offer higher reimbursement rates to towns where tax-exempt properties make up a higher portion of their grand lists.

But Fasano said the state currently doesn’t fund the PILOT program fully, and switching the payment structure without adequate funding won’t solve the problem.

Sharkey, meanwhile, said the state should take over funding special education costs, a move that would allow for “tremendous efficiencies” at a regional or state level.

But he also questioned if the legislature could fund such a move, given the current budget situation.

Klarides said the switch is “not a crazy idea,” as one of the problems small towns face is the unpredictability of special education. She said special education costs would be far less volatile at the state level.

Elsesser said today that he wants to see the state ease up on the mandates it places on towns, something Fasano and Klarides also said they wanted to see.

Elsesser said small town leaders often find themselves battling with the state to reduce mandates, distracting them from finding efficiencies.

“You can’t play defense and offense at the same time,” he said.