A request from the state for financial information from municipalities isn’t sitting well with local leaders.
In an Aug. 2 letter to Office of Policy Management Secretary Benjamin Barnes, Gov. Dannel Malloy directed Barnes to ask municipalities for their estimated fund balance for the 2017-18 fiscal year and projected fund balance for the 2018-19 fiscal year.
“As we know, municipal aid accounts for our single largest state expenditure — more than $5 billion of our state budget,” Malloy states in the letter. “The vast majority of that funding is for educational aid, which amounts to $4.1 billion, or 81 percent, of all state funding given to local government.”
There is no state budget in place for this fiscal year as the legislature remains in a stalemate over how to address a projected budget deficit over the next two years.
On Aug. 7, Barnes sent out letters to all municipalities requesting the information.
Local leaders view the request as a precursor to cutting state aid to municipalities.
“I’m annoyed they think they are going to come in and, based on our fund balance, take away the money,” Prospect Mayor Robert Chatfield said.
Beacon Falls First Selectman Christopher Bielik called the request “inappropriate.”
“I think that it is inappropriate for the state government to be looking at raiding the coffers of even a small town like Beacon Falls,” Bielik said. “We have been doing our jobs and doing it the right way.”
Naugatuck Mayor N. Warren “Pete” Hess said Malloy is interested in “recalibrating” how state aid is given out.
“It appears Gov. Malloy wants to help needier towns,” Hess said.
However, Hess said the underlying message to the municipalities was clear.
“They want to see how hard they can hit you,” Hess said.
Malloy said in his letter that he has tried to avoid cutting municipal aid up to this point.
“We’ve reduced state services; we’ve cut funding to private providers; we’ve asked state employees to come to the table with concessions; and we’ve raised revenues. Throughout all of this, we’ve held town aid harmless. In fact, it could be said that we have sacrificed state services and raised revenues in order to shield town government from facing difficult choices required of state leaders and implementing reforms,” Malloy states in the letter.
If the state doesn’t do anything, Malloy continues in the letter, it could harm communities that need help.
“We risk not investing in the communities that should be our assets in attracting economic development, young professionals, and families,” Malloy states in the letter.
Although they dislike the request, all three town leaders said they would comply with it.
Chatfield said the letter reads as if municipalities are being punished for being fiscally responsible and managing their budgets well.
“Bonding houses want you to have a fund balance of 5 percent or more. It helps keep the towns financially stable,” Chatfield said.
Bielik said Beacon Falls’ bond rating stands at AA, which is the second highest rating, in part due to its fund balance.
“We have been operating in an extremely fiscally prudent manner in the last four years,” Bielik said.
Bielik said the money the state would take away from the town would have a significant impact on Beacon Falls, but little impact on the state’s overall budget problem.
“If they are going to try to take a couple hundred thousand dollars from the town of Beacon Falls, that is not going to have any impact on the Connecticut budget deficit,” Bielik said. “Obviously, they are looking for bigger fish than us. But I think the entire process of doing that is inappropriate.”
Chatfield said municipal leaders work hard to create the best budget for their town.
“All my brother and sister town leaders burn out their right hand to keep their budgets balanced. Just because the state has a problem doesn’t mean it should be passed on to the towns,” Chatfield said.