Malloy’s Budget: Cities and Towns

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Cities and towns would receive more money for capital improvement projects and education, but lose out on funding for other government operations under Gov. Dannel P. Malloy’s proposed budget, unveiled Wednesday.

Malloy’s budget seems to dictate how towns and cities should use state money more-so than previous budgets. For example: the proposal eliminates reimbursements to cities and towns — payments in lieu of taxes — for state-owned property that the municipalities can’t collect taxes on. The budget redistributes that money — $73.6 million — into the state’s education cost sharing program, which pays for cities’ and towns’ education initiatives.

In addition, video slot revenue from the Mashantucket Pequot and Mohegan Grant — about $56.4 million — would be redistributed to towns and cities through the local capital improvement program, to be used for road, bridge or public building construction projects.

Malloy’s proposal also doubles funding for the town aid road program, to $60 million, up from $30 million.

So while the emphasis has been put on education and capital improvement, where does that leave municipalities when it comes to general operations?

I ran into Mayor Pedro Segarra at the Capitol yesterday after Malloy’s budget speech. He said he was particularly concerned about the loss of the PILOT reimbursements for state-owned property. Fifty-one percent of properties in Hartford are tax exempt; state property makes up about half of that, he said.

City officials said the PILOT reimbursement for state-owned property in Hartford (for this current fiscal year) is $13.57 million.

“We have to be very strategic as to how … we crop the budget to balance that out,” Segarra said. “If we’re being held harmless, I would assume that money [is] being made up elsewhere.”

Malloy on Wednesday also announced a new property tax exemption that helps motor vehicle owners but would cost local governments hundreds of millions of dollars.

Residents with cars at a market value of less than $28,571 would not pay taxes on their vehicles. Under the plan, cities and towns stand to lose a large portion of the $560 million raised each year through motor vehicles taxes.

The tax exemption is optional for cities and towns in 2013, and mandatory beginning in 2014.

It’s worth noting that Malloy also made a $92.4 million cut to municipal aid by eliminating the cities’ and towns’ portion of the state sales tax and real estate conveyance tax revenues.

Ben Barnes, the governor’s budget director, said Wednesday that the municipalities were being “held harmless” and that any new money needed to go toward education.

But mayors of several cities and towns appeared to worry about how they would craft their budgets for the upcoming fiscal year with a shortage of funds for general operations.

“I can’t tell policemen and firemen I have to lay them off because the governor moved money to different pots,” Mark Boughton, the mayor of Danbury, said after the governor’s budget speech Wednesday. “Moving money from PILOT to [education cost sharing] and saying you increase our grants is insulting. It’s really, really disturbing.”

Ryan Bingham, the mayor of Torrington and president of the Connecticut Conference of Municipalities, called the budget proposal “a good attempt at a high-five — and then a punch in the gut.”

He noted that although some taxpayers were getting a break, cities and towns would likely be forced to make cuts down the road.

“I don’t see there being an ability to absorb the cuts that are going to need to be made” on the local level, Bingham said. “It’s shifting the burden from property taxes on vehicles to property taxes on homes.”

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