State budget battle could leave towns strapped for cash
While Gov. Dannel Malloy and the legislators up in Hartford are wrestling with the state budget, local elected officials are trying to put together their municipal budgets.
Malloy’s proposed two-year, $39.9 billion budget relies heavily on receiving $2 billion in concessions from state employee unions yet to be negotiated. If unions do not agree to the cuts, municipal grants could be on the chopping block to the tune of $2.8 billion a year.
Although Malloy does not intend to make such drastic cuts to local governments, his budget office prepared estimates of how $1 billion worth of cuts in municipal aid would affect each town next year.
Under this worst-case scenario, Beacon Falls could stand to lose about $1.5 million, Prospect would lose nearly $2 million, much of which would surely hit the Region 16 school district. Naugatuck could see nearly $11 million in cuts to state grants.
“It would be catastrophic,” said Prospect Mayor Bob Chatfield, who estimated such cuts would increase the mill rate by 2.3. “The Prospect Town Council and myself would have to sit down with the regional Board of Education.”
Prospect’s proposed budget is $6.3 million, so $1.9 million in cuts wouldn’t leave very much for the town, Chatfield said.
With most municipal budgets due for vote before the state budget is expected to pass in May, it’s tough to predict whether they’ll be able to count on revenue from the state to balance the budget.
“This is on my mind all the time, but I want to wait and see what the final results are. I haven’t hit the panic button yet,” Chatfield said.
Chatfield said he wished state legislators would ignore other bills until they pass the state budget, but he acknowledged that was unlikely.
He said the town’s budget is based on estimated revenues from when the Malloy presented his budget in February. The Governor’s budget office gives towns hints as to what grants they may get, but they don’t know for sure until the legislature adopts the budget, according to Chatfield.
Once they get those numbers, if the mill rate hasn’t been set, it can be increased. Otherwise, the town can take money out of its rainy day fund or surplus account to make up the difference.
Chatfield said he didn’t know what state grants would be affected.
“Everything’s on the chopping block,” he said.
Chatfield said state cuts can’t be can’t be on his shoulders or the town’s shoulders.
“I know the Governor’s doing the best he can, and I like some of the things he’s doing, but I don’t think he can solve several years of problems in one year,” Chatfield said.
Naugatuck’s Mayor Bob Mezzo said he couldn’t conceive how the town would account for a $10.9 million loss in revenue from the state.
“Our community would be unrecognizable at that point,” Mezzo said. “If that were the case, we would be forced to drastically reduce base level services, lay off more employees than I could imagine, and likely still not have enough to balance our budget.”
Mezzo said he supports Malloy’s budget, even though people can criticize various portions.
“The reality is he’s the only person there who’s put a plan on the table,” Mezzo said.
In Naugatuck, the joint boards of finance and burgesses are hearing budget requests from various departments every Monday. They have not yet discussed the revenue side of the budget. Mezzo said he hopes to get some final figures from Hartford before tackling that side of the equation.
“I think everything is fluid at this point,” Mezzo said.
Mezzo said that even if the town budget remains even, there will be some loss of state revenue.
Under Malloy’s proposed budget, MME PILOT grants, which reimburse manufacturers for new machinery and equipment, would be eliminated. Last year, Naugatuck received about $274,000 from MME grants. Prospect received about $70,000 in MME grants, and Beacon Falls received about $77,000.
Beacon Falls First Selectman Susan Cable said she hoped the state would come through with at least a portion of those grants. The Beacon Falls Board of Finance budgeted $39,000 in revenues from the reimbursement program. If the state eliminates the program, it will impact the mill rate, Cable said.
Mezzo said he hoped state employee unions would reach a compromise with the state.
“I do think that everyone, including our state employees, realize the severity of the situation,” Mezzo said.
With 55 education positions eliminated last year, Naugatuck officials are hoping they won’t have to repeat that loss.
You have to make those decisions on the local level, but in Hartford, tough decisions have not been made, Mezzo said.
Although the Beacon Falls Board of Finance has carefully planned the budget using conservative revenues, losses not currently in Malloy’s proposed budget would be difficult to handle, according to Cable.
“He is going to take our ECS money (the state’s contribution to education costs) and that’s going to hurt us,” Cable said.
She said if Beacon Falls has to bear the burden of the additional cuts Malloy proposed, it would be over a 2 mill increase. She said the town would have to raise taxes, cut services and employees, and greatly impact the schools.
Cable said she hoped Malloy made the statement about municipal cuts in frustration, to bring unions to the negotiating table.
“Malloy promised he would not impact us,” she said.
She said she would be very disappointed if he broke his promise.