Municipalities Struggle Without Budget Deal In Place
HARTFORD, CT — Nearly half the 61 towns and cities that participated in a Connecticut Conference of Municipalities survey have imposed some kind of spending freeze during the first quarter of the current fiscal year.
The fiscal constraints, CCM officials said, are in large part because the municipalities had to begin the 2018 fiscal year without any indication regarding state aid.
“These survey results present a snapshot of the stresses on local government as they attempt to start their fiscal year, with little or no direction from the state regarding the level of state aid they will receive, never mind the level of state aid they need,” CCM Executive Director Joe DeLong, said.
According to the survey, many of its municipalities had frozen capital budget spending, stopped purchasing of new equipment including police cars, implemented hiring freezes, eliminating summer youth programs, cutting parks and recreation and library services, and postponed road work among many steps to try to save money.
“As you can see, with the looming state budget crisis this spring and summer, towns and cities moved to cut spending and limit tax hikes as they feared a significant reduction in municipal aid,” DeLong added.
CCM asked municipalities how much their budgets increased over last year. Of the 59 responding municipalities, CCM said the average percentage increase in spending was 1.52 percent. The average mill rate increase among that same group was 2.86 percent.
But DeLong added there is “the specter of towns and cities needing to reopen their local budgets to adjust for significant cuts in state aid that could result from a final state budget agreement.” He said this uncertainty has “created an unprecedented local-budget situation among municipal leaders — who pride themselves on responsible fiscal management and balanced local budgets year in and year out.”
The same CCM survey also queried municipal leaders about education budgets, which generally make up half or more of the cost of a town’s spending program.
Of the 52 municipalities who responded to questions about education spending, 37 communities said their education budget increased; nine said the budgets were relatively flat; and seven said their education budget was less than last year.
The average increase in education budgets in the 52 municipalities was 1.3 percent.
The CCM survey also asked municipal leaders whether they supported or opposed removing the mill rate tax cap on automobiles.
Of the 49 towns and cities that responded, 38 supported removing the car tax cap and 11 opposed removing it; of that 11, three said they would be willing to raise the mill rate car-tax cap above the current 37 mills level. The three who said they would be okay with raising it said a rate of 40 to 42 mills would be acceptable.
State lawmakers have tried unsuccessfully, many times over the years, to eliminate or at least fix Connecticut’s unpopular local car tax, criticized as unfair because the same vehicle can be taxed at wildly different rates depending on where the owner lives.
There is currently a cap for a few dozen municipalities, but not all.
State lawmakers were unable to say Monday whether they would have a two-year budget in place by the end of July.
House Speaker Joe Aresimowicz, D-Berlin, said he was optimistic.
House Minority Leader Themis Klarides, R-Derby, said there were no votes in her caucus for any budget that increases revenue through higher taxes.
The House Democratic caucus has proposed allowing towns to increase sales taxes on restaurant food and beverages by 1 percent. That one percent would then go back to the municipalities.
There is also a proposal to increase the overall state sales tax from 6.35 percent to 6.99 percent.
There have been no formal budget talks between legislative leaders and Malloy since last month.