Last week, legislators in Hartford passed a $40.1 billion budget for the next two years that offers painful labor cuts and tax increases but leaves municipalities largely unscathed.
“The overriding, important component of the budget is that is keeps aid to municipalities relatively neutral,” said Naugatuck Mayor Robert Mezzo, who supports Gov. Dannel Malloy’s budget.
The budget restored a municipal reimbursement program for Manufacturing Machinery and Equipment (MME), which was originally taken out of the proposed budget. Towns will receive the same grant amount they received in 2011, which was about $274,000 in Naugatuck, $39,000 in Beacon Falls and $56,000 in Prospect.
The budget also gives a new Property Tax Relief Grant to municipalities. The grant will be funded by the increased sales tax and real estate conveyance tax. The grant is estimated to bring in about $400,000 for Naugatuck, $59,000 for Beacon Falls and $89,000 for Prospect.
“It doesn’t appear that it has affected my revenues that much. I’m still waiting for clarification for the town clerk’s fees for real estate conveyance tax,” Prospect Mayor Bob Chatfield said.
Education Cost Sharing grants, which help pays for education, will remain level for all towns.
Even though all the numbers are in, Chatfield said he wouldn’t set the mill rate until the first meeting in June.
“I do the revenue sheet very methodically. Once you say, ‘that’s it,’ that’s it. I’m very frugal and I don’t estimate things high. I want to get the exact figure,” he said.
Beacon Falls First Selectman Susan Cable said the state budget is good for municipalities.
“By getting those new revenues, we’ll be able to help lower the tax,” Cable said.
The net grant money for all three towns will go up in the coming fiscal year. Naugatuck stands to gain about $410,000, Beacon Falls $60,000, and Prospect $89,000 from state grants.
Even though the legislature passed the budget, municipal revenues aren’t guaranteed. If Malloy can’t reach an agreement with state labor unions on $1 billion in concessions, thousands of state employees could get a pink slip and municipalities would have to shoulder the rest of the burden, according to statements from Malloy.
“I think the reality is, because of the mismanagement of the state budget, someone’s going to have to pay,” Mezzo said. “It’s just a matter of whom.”
He said the money has to come either from taxes on the state or local level or enormous reductions in services. If state employees don’t agree to concessions, town employees will pay the price, Mezzo said.
“Everything about a $3.5 billion budget deficit is weird. There is no magic wand to wipe away many years of fiscal mismanagement. Only pain,” Mezzo said.
As of press time, Malloy said he would send notices to 4,742 employees after failing to negotiate a deal with the unions earlier this week. In a statement on his website, Malloy said those layoffs will result in savings of about $455 million. He is still looking to cut an additional $545 million in spending, which he said would be spread across state government programs and probably result in additional layoffs.
“I want to be clear that this is not the road I wanted to go down. I didn’t want to lay people off, and I didn’t want to make additional spending cuts beyond the $780 million in spending we’ve already cut. … But, I have no choice. I promised the people of Connecticut that I would change the way we do business in Hartford. I promised to deliver a budget that is balanced with no gimmicks, and I will,” Malloy said in the statement.
Cable said she is nervous about that possibility the state won’t reach a deal on concessions and has a few other concerns about the budget.
“Before I criticize, I want to see what happens,” Cable said.
At one point, the governor’s office projected that failure to get labor concessions on the state level would result in a loss of $10 million to Naugatuck.
“If we were forced to make up $10 million in revenue, we would not recognize the community of Naugatuck,” Mezzo said.
Mezzo said the recently passed budget will resolve this particular crisis. But, he added, the state government needs to be very conscious of sustainability.
“Fixing the walls of a home is one thing, but you also have to address the foundation,” Mezzo said. “I think the Governor is attempting to do that.”
He said it will take longer than the first four months of Malloy’s administration to do that on a long-term basis.
“I respect the governor for coming forth to propose a plan that he knows is not popular to address the mess,” Mezzo said.
Chatfield felt the Governor’s budget took a lot of courage to put forward.
“The Governor took office with his hands full. So he’s got a big job ahead of him,” Chatfield said.