Wallingford Mayor William W. Dickinson Jr. spoke out Friday after hearing Connecticut faces an additional $207.8 million deficit in the current fiscal year.
“I have not a lot of confidence in any figures coming out,” Dickinson said. “There’s more problems ahead. I have concerns about what we should do with our budget this year.”
Comptroller Kevin Lembo Friday projected the state is on pace for a $207.8 million deficit, a hole that requires legislative action. The budget hole was reported in his monthly letter to Gov. Dannel P. Malloy, whose budget chief projected a deficit of $202 million in his own monthly letter back on Nov. 20.
The projections exceed the 1 percent threshold that requires a deficit mitigation plan, meaning Malloy will have to submit a plan to the legislature for approval. These are the first projections since the legislature adopted its budget on Oct. 28.
Municipal leaders fear more cuts depleting already diminished budgets, especially after already seeing reductions since the budget was adopted. On Nov. 17, Malloy announced $182 million in new cuts, including $91 million to municipalities, because legislators required him to find the additional savings in the budget.
Towns such as Wallingford and Southington were hit particularly hard with $1.8 million cutbacks in state aid. The cutbacks are on top of $3 million reductions in aid in 2017.
“After finally settling on a state budget less than a month ago, municipal leaders believed they had the clarity to proceed forward on their own budgets and spending for the current fiscal year. But then, new additional cuts approaching $100 million had to be absorbed just three weeks later – through service reductions or local tax hikes – nearly halfway through the fiscal year,” said Kevin Maloney, spokesman for Connecticut Conference of Municipalities.
In addition to service cuts, supplemental tax bills are a possibility. Municipal reserve funds would be at greater risk, as would their credit rating by the bond rating agencies, which would increase borrowing costs, Maloney said.
Cheshire received a $977,966 “holdback” for 2018. Town Manager Michael Milone said because the town received $343,000, the cut amounted to a $635,000 reduction.
“It’s not quite as bad as the total value of cuts suggests,” Milone said. But like other towns leaders, Milone believes the cuts will continue and the towns will need to find ways to absorb them.
“We’ve had freezes in hiring and limited hiring,” Milone said. “We’ve buffered and will go back to the council and come up with a plan to meet the shortfall and save more in the event these cuts will continue. We’re going to hold back money. How much is enough to put aside?”
Wallingford has dipped into its reserves to cover 2017, but Dickinson worries about possible service cuts in 2018, given the state’s revenue shortfall leading to even less state aid.
“Once you spend your reserves they’re gone,” Dickinson said. “I don’t see municipalities coming up with tax increases because people can’t afford them.”
Meriden was among the large cities whose cuts were less than a percent of their allocation. The city was on track to receive $66,314,296 but city leaders agreed the state’s budgeting deficits are challenging them at budget time.
“There are so many questions right now,” said Mayor Kevin Scarpati. “We need to be looking at realistic numbers from the state so we don’t have to come up with cuts at the eleventh hour.”