Will Our Towns "Get Shafted" By Gov. Malloy's Proposed Budget?

Jim Finley, executive director of the Connecticut Conference of Municipalities (CCM) didn't mince words when he testified before the Connecticut Legislature's Finance Committee on March 4. If the Governor's proposed budget is passed as is, he said, "homeowners, businesses and vital municipal services get shafted."    

CCM organized a full-court press in which would reconfigure how the state provides aid to municipalities and proposes to eliminate property taxes on vehicles assessed at $20,000 or less.

If the governor's proposal passes, CCM said, towns and cities would lose $128 million in state aid that helps fund non-education operating expenses and at least $633 million in local revenues annually from lost property taxes.

"If enacted, these bills could dismantle Connecticut’s critical local-state partnership and in doing so—raise local property taxes, cut municipal services, and cause municipal employee layoffs," said Finley. 

What Lyme, Old Lyme, and East Lyme Stand to Lose

The governor's budget eliminates funds that have previously come from the state in Payments in Lieu of Taxes, from the Mashantucket Pequot and Mohegan Fund, in funding for student transportation, municipal revenue sharing, and a hold harmless grant, among others. That money has historically gone into municipalities' general funds to be spent however towns deem necessary. 

If this proposal takes effect, local towns stand to lose the following amounts:  

• Lyme would lose $22,433
• Old Lyme would lose $68,181
• East Lyme would lose $463,982.

To "hold the towns harmless," Gov. Malloy has redirected more money toward funding for education and capital programs to make up the amount lost from those other sources. However, our towns saw little to no increase in Education Cost Sharing funds (ECS). East Lyme's ECS funds would increase by just 0.24 percent in 2013-2014. Old Lyme and Lyme would see no increase in ECS funding levels.  

"While the intent is that municipalities would be 'held harmless' – the reality is that there would be a shift in aid that impacts the use of funds and would result in a loss of at least $128 million in unrestricted, general-fund revenues to municipalities," CCM's Finley told the Finance committee. 

 "Municipal aid dollars shifted to pay for chronic state underfunding of PreK-12 public education and restricted capital purposes cannot be used to pay for police officers, firefighters, and other municipal employees and services," he added.

Projected Losses From Car Taxes 

Malloy's budget doesn't only elminate longstanding programs that have provided state funding for cities and towns. His proposal to eliminate taxes on vehicles assessed at $20,000 or less strips towns of their own ability to raise money via property taxes levied on vehicles. 

"It just means we pass it on to property tax, which has also been an issue," said Old Lyme First Selectwoman Bonnie Reemsnyder. "It's robbing from Peter to pay Paul." 

Here's what the State Office of Fiscal Analysis estimates local towns stand to lose if the Governor's property tax proposal is passed: 

• East Lyme: $2,761,610 ($2,540,631 in estimated motor vehicle levy loss plus $220,980 estimated supplemental motor vehicle levy loss).  
• Old Lyme: $1,288,184 ($1,167,890 in estimated motor vehicle levy loss plus $120,294 estimated supplemental motor vehicle levy loss).
• Lyme: $299,613 ($274,374 in estimated motor vehicle levy loss plus $25,239 estimated supplemental motor vehicle levy loss).   

Sen. Art Linares (www.senatorlinares.com) was among those supporting the town leaders, including Lyme First Selectman Ralph Eno, at a press conference held following the hearing. 

“No one likes paying the car tax and we’d all like to see it eliminated,” Sen. Linares said. “But the plan that is before the state legislature would lead to higher property taxes for everyone. The bottom line is that we simply can’t afford higher taxes. By working together and speaking with one voice, we can put this car tax plan in the breakdown lane.”