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While officials from First Selectman Pat Llodra to State Senator and Newtown delegation leader Tony Hwang and resident State Representative Mitch Bolinsky are trying to be reassuring in the face of a new 2018 biennial budget proposal floated by Governor Dannel Malloy’s office May 15, the prospect of a worse-case scenario remains ominous for local taxpayers.
That scenario entails Newtown residents being positioned to make up a nearly $11 million shortfall resulting from combined revenue losses and mandated teacher pension payments, as outlined in governor’s newest budget scenario.
The drastic situation that is prompting reductions and the renewed call for local taxpayers to underwrite about one-third of each municipality’s total annual teachers pension contribution, according to the governor’s office, comes as the state tallies April tax receipts.
Those receipts are “underperforming expectations,” and triggering new cuts in General Fund expenditures totaling an additional $241 million, and other funds by $363 million in FY 2018, compared to the balanced budget proposal Gov Malloy submitted to the legislature in February.
Notably, these reductions mark a General Fund expenditure decrease over the prior year’s appropriation, the release states. By reworking the budget proposal to reflect actual revenue receipts, Gov Malloy’s office states that his administration will ensure “it enters budget negotiations with legislative leaders with a working, balanced budget proposal.”
“The state must live within its means. We cannot spend more than we take in. That’s why, when revenue came in lower than expected in April, we went back to the table to redraft our budget proposal,” Gov Malloy said. “This session, the best outcome we can achieve for the people of the state is to adopt a responsible, balanced budget that does not rely heavily on new or increased taxes.”
The updated proposal is said to be the “result of constructive conversations with various constituencies, and incorporates some proposals brought forth by the legislative caucuses.”
Newtown delegation members — all representing the minority GOP caucus — reacted strongly to Monday’s budget news.
State Representative JP Sredzinski (R-112) reacted quickly after the proposal was floated, expressing his disappointment and frustration.
“While I appreciate the governor going back to the drawing board to revise his widely panned February proposal, the budget released today is very disappointing because it proposes eliminating all education funding for more than 30 communities in Connecticut, including Monroe and Newtown,” he said.
“As upsetting as it is that municipal aid to towns is still being targeted, I am confident the legislature will not allow this to become a reality since both the Republican budget proposal that I endorsed and the scrapped appropriations budget aimed to hold municipalities harmless,” he said.
“I will be working with my colleagues on the Appropriations Committee and my party’s leadership to make sure the governor’s vision to slash town aid doesn’t become a reality and lead to massive property tax increases,” Rep Sredzinski added.
Sen Hwang (R-28) told The Newtown Bee he has serious concerns about elements of Gov Malloy’s proposal, including unfair burdens he is seeking to place upon municipalities and property taxpayers.
“We won’t let that happen,” Sen Hwang vowed.
‘An Adult Conversation’
At the same time, Sen Hwang said he appreciated the governor being open-minded by welcoming Republican efforts to stabilize the state’s Special Transportation Fund.
“There needs to be a bipartisan effort to pursue significant long-term structural changes so that we can restore confidence in our state,” he said of the apparent olive branch over the Transportation Fund issue.
Turning back to the big picture, Sen Hwang said all legislative leaders will be exchanging detailed, line-by-line budget proposals.
“We need a healthy discussion — an adult discussion. We need to approach this fiscal crisis as a chance to reinvent Connecticut government,” he said.
Sen Hwang said he was trying to view the seemingly dire situation as “an opportunity to turn our state around.”
“We can get out of this mess,” he said. “[Newtown] voters sent me to Hartford to accomplish exactly that. I will work with Democrats and Republicans to protect property taxpayers, protect education funding, and protect our most vulnerable state residents. We must never stop pushing for predictability, sustainability, and transparency. It will require discipline and difficult decisions, but we’ve got to work together to make it happen.”
Representative Will Duff (R-2) said he expects to see two more proposals unveiled in the next couple days before state budget negotiations begin in earnest.
“On the other hand, Governor Malloy’s proposal to cut all state education aid to Newtown is unacceptable and not even worthy of discussion,” Rep Duff said. “We need serious budget solutions to the state’s fiscal problems — not a plan that punishes a well-run town like Newtown and rewards fiscally irresponsible cities like Hartford, [which] is considering bankruptcy.”
The first selectman and Newtown Finance Director Robert Tait both appeared exasperated while briefly discussing Gov Malloy’s implications as they filtered into focus locally.
“We are a long way from a completed process for the state budget,” the first selectman assured. “I am certain that our legislators will work hard to try to adjust the governor’s recommendations so that Newtown is not harmed so much. The latest proposal from the governor includes reductions for Newtown that are very impactful and will rock our financial stability.”
Mrs Llodra told The Bee she understands the urgency of the financial mess the state is facing and accepts that Newtown has a role in helping right the ship.
“We are prepared to be part of the solution — but the degree of this reduction is way beyond what we can accommodate,” she said. “I believe that Connecticut is worth fighting for. We are a great state with many positive attributes. Our current state financial crisis is not the making of one administration, but extends back through decades of bad policy and failed leadership. Yes, the problem must be addressed and responded to. But, to do such harm to others, such as to Newtown, just shifts the problem and guarantees that others then face a crisis of compromised financial stability.”
Mrs Llodra continued to affirm that Newtown’s elected leaders have worked “very hard and purposefully over the past eight years to establish policies and protocols that grow our grand list, grow our fund balance, reduce our debt, plan thoughtfully for future capital costs, adjust labor contracts and pensions, and more.
“For the state to target Newtown and other communities who have done what we have done to build a strong financial foundation is unfair and unwise,” Mrs Llodra said.
Revenue Cuts Detailed
Mr Tait was particularly miffed that the state initially capped the amount of property taxes Newtown could levy on motor vehicle owners, offered a reciprocal grant to make up part of the estimated losses, and then zeroed out that grant line. In a breakdown of revenue losses the finance director was hastily preparing for local officials meeting this week, he broke out the following:
*A state PILOT Grant to offset property taxation for state facilities like the Garner Correctional center, which were budgeted at $547,350, along with a combined Pequot / Mohegan grant totaling $903,200, are both rescinded.
*An already budgeted Municipal Revenue Sharing grant of $824,747 is zeroed out.
*A grant for elderly tax relief of $107,000 is rescinded.
*A promised state special education grant for $2,408,508 is eliminated.
*A budgeted $2,138,725 in Education Cost Sharing will receive no subsidy from the state — which was estimated to total $969,688.
*Depending on the outcome of legislation in process regarding the motor vehicle tax cap, Newtown could lose as much as $335,300.
*The mandated reimbursement to the state for teachers retirement in 2018 is $3,843,654.
That particular proposal Rep Bolinsky told The Bee, is “totally off the table from our perspective. And there are three to four dozen powerful Democratic legislators who agree,” he said. “That pension cost sharing concept was dead, the governor brought it back in a new document, and it will die again.”
Rep Bolinsky said that the governor’s cuts are just on paper, and it signaled something akin to starting the biennial budget process all over again.
“All he’s done is reset the bar, although it’s lower, and speaking from my caucus, we know what is important to Newtown,” he said.
Rep Bolinsky said the GOP is countering with a proposal that would, in effect, “hold Newtown and its taxpayers harmless.”
“We understand that the power of Newtown, and the strength of Connecticut is in its communities. And it’s my goal to create a retooling of this state government while holding Newtown harmless from these draconian cuts,” Rep Bolinsky said. “We know how important it is to fund education, and we’re not going to take zeroing it out. Senior services like Meals On Wheels — who in their right mind would cut that?”
True to Rep Bolinsky and Rep Duff’s projection, just a little more than 24 hours after the governor’s proposal, the state GOP leadership released a revised budget they say addresses the dramatic revenue drop reported in the most recent consensus revenues.
Senate Republican President Pro Tempore Len Fasano (R-North Haven) said tough decisions had to be made to close a devastating shortfall in the budget.
“But we are proud to offer a budget proposal that continues to protect municipalities, provide funding for core social services, support our state’s transportation needs, and increase funding for education to towns and cities across the state. We protect hospitals from being hit with more taxes and we protect taxpayers from being overburdened by new taxes or policies that would result in significant increases to property taxes,” he said.
Among the GOP measures are: increasing projected labor savings, eliminating the double appropriation for birth to 3, reducing funding for the elderly circuit breaker, reflecting savings from closing a prison, eliminating double funding for Care 4 Kids appropriated under DCF, deferring the 2017 state trooper class and replacement of state police vehicles, reducing support for the Connecticut State University System, and eliminating funding for state-funded SNAP (food stamps) for those in the country less than five years.
At the same time, The Connecticut Mirror reported that House and Senate Democrats Tuesday recommended opening a new casino, legalizing marijuana, and imposing deep cuts to municipal aid and public colleges and universities to balance the next two-year state budget.
While their plan begins the process of establishing tolls in future years, it strips transportation reserves in the short term while selling 35 acres in Hartford along the elevated Interstate 84 highway to keep the state’s transportation program afloat.
The Democratic plan consolidates several departments, retains but reduces the public financing program for state elections, and closes an unnamed prison, the Connecticut Juvenile Training School, and the Southbury Training School. Like Gov Malloy’s proposal one day earlier, the Democratic plan also relies on state employee unions to provide concessions worth $1.57 billion over the next two fiscal years combined.
Democrats recommended reducing income tax credits for middle-income households and for the working poor, while boosting cigarette taxes by 45 cents per pack. Their plan also relies on nearly $200 million in annual fee increases.