Photo: Scott Mullin / For Hearst Connecticut Media
The governor’s executive order severely restricting spending amid Connecticut’s prolonged fiscal crisis heads into its second quarter on Sunday, with no end in sight.
If the stalemate in the State Capitol continues to drag for more than a couple more weeks, about 80 wealthier towns will be shut out of expected levels of municipal aid and school funding.
Many are supporting Republican efforts to override Gov. Dannel P. Malloy’s veto of a predominantly GOP budget that passed two weeks ago with nominal support from a handful of Democrats. And if that fails, and they are forced to pay a portion of their teacher pensions, the small-town leaders are considering legal action.
“We’re not up here saying we don’t want any haircuts,” said Leo Paul Jr., Litchfield’s first selectman, Thursday in the Capitol, predicting that he and other local leaders might have to suddenly send tax bills of another 10 percent or more to cover the lack of state help.
“We expect there’s going to be haircuts,” said Paul, president of the Connecticut Council of Small Towns, which brought about a dozen local leaders to the Capitol, piggybacking on a podium that had just been vacated by Malloy. “But what we don’t expect and what we can’t live with is the sudden impact of 85 towns getting completely ‘zeroed out.’ That’s a direct impact to the taxes in the communities. It may not be a state tax. It may not be a tax that’s levied down from the state itself, but it is a direct tax increase.”
He said the COST board of directors unanimously supports legal action if they are forced to pay for teacher pensions, for which, historically, the state has covered the employers’ share. In February, Malloy proposed shifting $400 million in those costs to the towns and cities. More recently, in budget negotiations, he has reduced that proposal by half, phased-in over two years.
‘We’re not whining’
Ridgefield First Selectman Rudy Marconi, a one-time Democratic gubernatorial hopeful, stressed that the bonds used to pay for pensions say that towns and cities are not required to fund the obligations.
“And yet the governor is proposing that municipalities begin picking up a share without any voice in a pension (program) that needs an overhaul,” he said.
Marconi, whose town would receive none of the traditional Education Cost Sharing payments under Malloy’s executive order, said he ignored a request earlier in the year from Malloy’s budget office that asked where the Ridgefield’s fund balance stood.
“All that information is available publicly, and we’re not going to deplete our fund balance to satisfy any obligation that we don’t have a voice in,” Marconi said, stressing that if towns were forced to dip into their savings, it would result in downgrades from the bond-rating agencies, then cost them higher interest rates to pay for capital projects.
“We’re not whining,” Marconi said. “We’re not complaining we’re being cut. This will have dire consequences on our financial status. The state is a mess, but why pass it down to the municipalities?”
First Selectman Michael J. Freda of North Haven agreed that the local leaders are trying to avoid sending out supplementary tax bills, sharply reducing local government and educational services or borrowing from their fund balances.
“Anything that reverts back would cause us to do one of those three major things,” Freda said.
“The executive orders are not a budget,” Malloy said a few minutes earlier, as COST members stood nearby, behind TV cameras. “They are a temporary steps that we take to make sure that the state doesn’t spend money that it can’t reasonably predict to take in. But I’ll also tell you that if we lived by those executive orders, we could cut expenses significantly. I very much want a budget.”
Since Democratic leaders of the House and Senate oppose the override, and most legislators of the towns complaining about Malloy’s executive order are already on record supporting the two-year $40 billion Republican budget, it seems less likely that the General Assembly will be able to muster the 101 votes in the House and 24 votes in the Senate to override the governor’s veto.
$5.2 billion a year in local aid
“It’s been vetoed,” Malloy said. “Let’s get a budget. We need to have an honest conversation about moving our state forward.”
He said that the GOP budget would cut an unacceptable $300 million from the University of Connecticut, while deferring important contributions to state pension plans, and raising $800 million in new revenue.
“People are getting wrapped up in a message as opposed to reality,” Malloy said. “The reality is that for the first time in our state’s history, a governor and a majority of the Legislature is fully funding pension obligations. The reality is that in the Republicans’ budget, they refuse to do that. People have adopted a position that we can only cut everything else, that we can only impact everything else.”
Asked to comment on COST’s concerns, the governor said “I think they should tell their elected leaders to get a budget.”
He noted that the state pays about $5.2 billion a year, a quarter of the state budget, to towns and cities, including the teacher-pension payments.
“I understand that people are not comfortable not receiving the same number of dollars they did once before, but effectively we have to do that every day here in the State House, because prior legislators and prior governors did not fund the long-term obligations,” Malloy said. “We’re doing more with less.”
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