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Malloy Says Budget Will Include Municipal Review Board

by | Feb 2, 2017 5:50pm
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Posted to: State Budget, Taxes, Waterbury

Jack Kramer photo

Gov. Dannel P. Malloy and Waterbury Mayor Neil O’Leary

WATERBURY, CT — Gov. Dannel P. Malloy will propose creating a review board to help the state’s poorest cities and towns confront fiscal challenges.

At a press conference at Waterbury City Hall Thursday, the governor said the board, which will be part of his budget proposal next week, would likely help “north of 20 and south of 25” municipalities in the state.

Malloy is proposing a tiered system of accountability under which municipalities would be subject to increasing levels of review and intervention based on their fiscal condition and the amount of state aid that they receive.

Malloy said his proposed legislation will create a Municipal Accountability Review Board (MARB) that will be empowered to review municipal finances and place towns and cities into an accountability framework based on factors such as bond rating, fund balance, and state aid as a percent of budget. 

The board will be set up “to engage on a regular basis with municipalities to take steps to prevent a town or city from falling into fiscal crisis,” Malloy said.

The tiered framework will determine the scope of the board’s powers and support, including technical assistance for municipalities to put them on a path to fiscal health, Malloy added.

He said the board would have four tiers, with the first tier being municipalities experiencing minor fiscal difficulties to the fourth tier — cities in the worst fiscal shape, such as the Hartford, which according to many recent reports is on the verge of bankruptcy without a state bailout.

“Our towns and cities are the foundation of a strong and prosperous state,” Malloy said. “Healthy, vibrant communities — and thriving urban centers in particular — are essential for our success in this global economy.”

Making the announcement at Waterbury City Hall with the Democratic Mayor Neil O’Leary by his side wasn’t a coincidence.

Sixteen years ago the state of Connecticut bailed out Waterbury when it was roughly $50 million in debt. At the time, in 2001, a oversight panel similar to the one Malloy is now proposing, took over control of Waterbury’s finances.

“Waterbury is a survivor in 2017 because of the great work of the oversight board in 2001 to 2006, albeit a painful process for all of us during that time,” O’Leary said.

Jack Kramer photo

Gov. Dannel P. Malloy and Waterbury Mayor Neil O’Leary

He said while Waterbury’s finances are in better shape today, he “looks forward to working close with any oversight committee now.”

Joe DeLong, executive director of the Connecticut Conference of Municipalities said he was appreciative that Malloy continues to focus on municipal challenges. ”

“CCM has absolutely no issue with appropriate measures of accountability and oversight being put into effect in order to insure the long-term stability and viability of all our communities,” DeLong said. “However, this accountability must be accompanied with the appropriate structural changes necessary in order for our urban centers to succeed.”

Last week, CCM proposed allowing cities and towns to levy and collect a 1 percent sales tax. They also proposed changes to how municipalities bargain with their local unions.

“Oversight without the necessary structural changes, only insures that we will recognize an impending train wreck more quickly. It does not prevent the wreck,” DeLong added.

Earlier this week  Malloy gave municipal leaders a carrot to go along with what some will consider a stick of state oversight.

Malloy proposed getting rid of the 2.5 percent municipal spending cap for distribution of the state funds raised through a half-percent of the sales tax. He’s also proposing to increase the antique car assessment cap to $1,000 for vehicles less than 30 years old and giving towns flexibility with their assessment rates to allow them to collect a larger percentage of the value of property, subject to approval by the Office of Policy and Management.

Several other proposals would change the relationship between municipal leaders and their local labor unions. For example, any increase in state funding in 2017 could not be considered by arbiters being asked to assess a community’s ability to afford employee raises. Malloy would also allow towns to negotiate employee contributions under the Municipal Employees Retirement System.

In addition, Malloy would also change the prevailing wage law for the first time in 25 years. He’s proposing increasing the threshold to $1 million for new construction and $500,000 for remodeling. That means projects valued under those amounts won’t be subject to the prevailing wage.

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