Commentary––

Governor’s Budget Shifts Burden To Property Taxpayers – Again

By Herbert C. Rosenthal

Governor Rowland’s recent budget proposal would take away $68 million in aid from cities and towns for the 2003–2004 fiscal year. The move is supposed to help solve the state’s mounting budget deficit.

But what the cut really does is devastate our cities and towns, many of which are still coming to grips with the $64 million in midyear state aid cuts that are part of the recently enacted deficit reduction package for the current year. Put the two cuts together and you come up with a lot of money that will leave local officials scratching their heads over what they should do next.

 In reality, reduced state aid to cities and towns is nothing more than a loud commentary on the state’s unwillingness to deal with its financial problems. It places a huge part of the deficit problem on our municipalities and adds to the already crushing burden on local property taxpayers in our state. Making matters worse is the proposed budget’s exclusion of a $250,000 state program that helps towns and cities collect delinquent property taxes on motor vehicles. This move could damage one of the few revenue streams we have to fund local government operations.

According to the Connecticut Conference of Municipalities, major cuts in municipal aid proposed by the Governor for the 2003–2004 fiscal year would include:

*a $28 million reduction in the Education Cost Sharing Grant;

*a $21 million cut in the Pequot Grant;

*a $8.4 million cut in payments-in-lieu-of-taxes for property tax exemptions for new manufacturing equipment;

*a $3.5 million reduction in Town Aid Road funding.

 Newtown does not fare well under the governor’s proposal. On paper, our town would suffer a $549,263 cut in state aid for next year. But a deeper analysis shows that our state revenue fell by $1.130 million from the start of the current fiscal year last July 1. To get this figure, one must also factor in the $375,000 in state aid money cut at midyear to close the current budget deficit. Also, add $206,000 that the proposal would cut from our excess cost special education grant paid to the Board of Education. The school board, with or without the state’s support, must pay tuition for special education students who are transported to schools outside our public school district. We do this when our school system cannot accommodate a student’s needs.

It will be very difficult to close this gap. At the moment, we are planning to balance next year’s budget by reducing town operations and increasing local property taxes.

 In his budget address, the governor asserted that “Some municipal leaders have issued dire warnings that unless we continue to give them money the state doesn’t have, taxes will have to be raised at the local level. I reject that concept. I do not accept the notion that local governments cannot trim their sails the same way we have at the state level.”

Yet, the sad reality is municipal officials have years of experience at “trimming their sails,” making tough spending and taxing choices. This year alone nearly 1,500 municipal positions have been eliminated statewide. Virtually every municipality has been forced to raise already-high property taxes. Well over 100 municipalities were forced to use all or some of their fund balances last year to balance their budgets.

Municipalities cannot absorb more state aid cuts without people being hurt. Our local governments are responsible for educating children, policing neighborhoods, putting out fires, fixing streets, helping senior citizens, and much, much more. These local services are the foundation of Connecticut’s quality of life.

And it really bothers chief elected officials to have the governor and some legislative leaders say that because municipalities have fund balances –– inappropriately termed “surpluses” –– that they can cut state aid to cities and towns. The fact is that fund balances are necessary for cities and towns to ensure a favorable bond rating and fiscal stability.

Moody’s Investors Service and the Government Finance Officers Association call for maintaining an unreserved fund balance of no less than five to 15 percent of a town’s operating revenue, or no less than one to two months of regular operating expenditures.

State government is telling local governments to accept repeated state aid reductions, empty our fiscal cupboard, absorb lower bond ratings and higher borrowing costs. And in this vulnerable state, they must face whatever unforeseen and extraordinary municipal expenses that come their way.

 As local officials, we have been doing our part. We have absorbed our share of pain, cutting services, and raising local taxes. We are now asking the state legislature to stand up and proclaim that the state will no longer seek to pass the deficit buck to towns and cities.

Remember, the governor wants to shift millions of dollars in deficits from the state to municipalities –– just after the state’s midyear cuts shifted millions in tax-raising responsibilities to the local level. These shifts would devastate local property taxpayers across the state again –– both residents and businesses.

It is time for the state to stop the budget deficit game of “I don’t want it so you take it.” We need our lawmakers to stand up, take responsibility, and figure a way out of the state’s financial mess without socking it to out cities and towns. We have already endured more than our fair share of the state’s budget problems.

(Herbert C. Rosenthal is the first selectman of Newtown and secretary of the board of directors of the Connecticut Conference of Municipalities.)