Several heads of municipalities expressed alarm Thursday that reductions in municipal aid and a 25 percent contribution to the state teachers’ pension fund included in the governor’s budget could decrease local budgets by hundreds of thousands of dollars over the next three years.
“This is the most discussed topic right now,” North Haven First Selectman Michael Freda said. “It’s a three-year phase in — what is the multiplication factor? It’s an unbudgeted amount and we don’t know where it ends.”
The Connecticut Conference of Municipalities and the Connecticut Council of Small Towns met with a representative of Gov. Ned Lamont’s office Thursday morning in Hartford to discuss the proposed budget’s impact on municipalities.
Overall, state Education Cost Sharing aid would increase by $17.6 million in the fiscal year that begins July 1, which is a nearly 1 percent increase
Lamont is also asking municipalities to contribute at least 25 percent for teacher retirement costs. Under the proposal, municipalities that offer teacher salaries above the statewide median would be asked to pay a share equal to each percentage point they exceed that threshold.
Distressed municipalities would be required to contribute only 5 percent of their normal costs.
“We are very concerned that the governor’s proposal to shift teachers’ pension costs to towns will overwhelm property taxpayers in many small towns throughout Connecticut,” said Betsy Gara, executive director of the Connecticut Council of Small Towns. “Requiring towns to pick up millions of dollars in teachers’ pension costs without giving towns any opportunity to manage these costs
going forward is simply unfair.”
Gara said managing the pension system investments and negotiating benefits or contributions have not been in the towns’ hands for more than 10 years. She added that town’s are limited by binding arbitration laws.
“While we understand that Connecticut must tackle its pension obligations, towns must be given the tools to manage local costs and hold down property taxes,” Gara said.
A spokesman for Lamont couldn’t be reached for comment Thursday, but he has said towns do have some influence on pensions through negotiations of salaries, which are used to calculate pensions. He also said that towns willing to pay higher salaries for teachers should also pay more into the pension system, resulting in the additional payment from towns above the median.
In Wallingford, overall state aid is reduced from $24.4 million to $23.4 million, with the town’s contribution to teachers’ pensions at $395,021 in fiscal year 2020 and increasing to $815,756 in 2021. Education Cost Sharing is the largest form of aid, but others include payments in lieu of taxes for properties exempt by state law, road construction aid, and several other grants.
“It’s a concern,” said Wallingford Mayor William W. Dickinson Jr. “It affects the local taxation rate and how much we can afford. We will make our concerns to legislators.”
Dickinson said the state needs to reduce spending instead of constantly looking for increased revenues.
“The state economy is vulnerable,” he said. “The reality is there has to be less money spent.”
Freda said the pension contribution is an “added expense that’s not budgeted for.” He questions the methodology used to determine the bills to the individual towns because after 25 percent in years one and two, the numbers for year three aren’t listed.
“The year three will be a different number and we don’t know what that is,” Freda said.
While there are elements of Lamont’s budget that the Connecticut Conference of Municipalities agrees with, funding teachers’ pensions is not one of them.
CCM spokesman Kevin Maloney said the proposal would shift the funding mechanism from the income tax to the property tax.
“If the governor wants municipalities to have some skin in this game, to have a role in this funding, there also needs to be more holistic, accompanying reforms regarding local revenue diversification, local cost containment through mandate relief, and regionalization of back-office town hall and education services that would help towns and their property taxpayers absorb additional costs from the state,” he stated in a press release.
“Right now, towns have very limited resources to handle any major cost-shifting from the state.”
Cheshire Town Manager Seth Kimball also wants more details on the contribution to the teachers’ pensions.
“We’re glad to see the flat funding on ECS and we’re seeking clarity on whether it’s an expenditure item,” he said. “It’s a good starting point, we’ll see how it evolves. Even flat or moderate decreases are seen as a positive.”
Meriden faces only a 5 percent pension contribution in the governor’s proposal because it would classify as a distressed municipality.
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