Analyst: Minimum wage hike could cost cities, towns $24 million

Analyst: Minimum wage hike could cost cities, towns $24 million

Connecticut cities and towns could face as much as $24 million in increased costs by 2022 if lawmakers raise the minimum wage to $15 an hour, estimates from state analysts show.

The nonpartisan Office of Fiscal Analysis also warned that the wage hike could add nearly $7 million in expenses to child care providers who participate in the state’s Care4Kids program.

Meanwhile, municipal advocates cautioned that unless legislators are prepared to bolster state aid and carve out some new exceptions to the minimum wage standard, the increase would exacerbate problems for already lean local budgets.

“Municipalities only have a couple of options,” said Betsy Gara, executive director of the Connecticut Council of Small Towns. “They can increase taxes or cut services. There is no Door No. 3.”

The Labor and Public Employees Committee has approved two bills to raise the minimum wage gradually from $10.10 to $15 per hour over three years. Gov. Ned Lamont has a competing proposal to make the same jump over four years.

Nonpartisan analysts released four projections on how the minimum wage hike would affect Connecticut’s 169 cities and towns.

Large cities, with populations greater than 100,000, would face $800,000 to $1 million in added costs, whioe medium-sized cities with populations between 50,000 and 80,000 would face $400,000 to $600,000 in additional expenses.

Small cities, with populations between 30,000 and 50,000, would face $100,000 to $300,000 in added costs, and towns with less than 20,000 people would face $50,000 or less in increased expenses.

A CT Mirror analysis using OFA’s cost estimates, and population estimates from the state Office of Policy and Management found there will be an aggregate impact of the wage hike of up to $23.9 million. All of the projections are based largely on mandated wage hikes. For example, a municipal employee earning $12 per hour would have to be paid $15.

OFA also acknowledged the “wage compression” factor — employers potentially giving raising to workers already at or slightly above this threshold to avoid turnover — but its analysis does not attempt to quantify the impact.

Joe DeLong, executive director of the Connecticut Conference of Municipalities, said the $15-per-hour minimum wage requirement could harm a wide range of municipal programs — if cities and towns aren’t granted additional state aid and provided exceptions to the wage limit for some jobs.

DeLong said many programs that serve local youth, particularly during the summer, are vulnerable. This is unfortunate, he said, because they not only provide youth development, but also serve as informal day-care for parents when children aren’t in school.

If cities and towns don’t receive help to cover the added costs, “they are going to price [these programs] at a level where the people who need them the most aren’t going to be able to afford them,” DeLong said. 

Democratic leaders of the Labor and Public Employees Committee said the new estimates demonstrate the need to boost funding for municipalities.

“We have to look at this holistically,” said Sen. Julie Kushner, D-Danbury. “If we solve a problem here and create a problem there, that doesn’t work.”

Both Kushner and the committee’s other co-chairwoman, Rep. Robyn Porter, D-New Haven, said the legislature should consider raising more revenue to ensure a minimum wage hike doesn’t hurt groups in need.

Over time, Porter added, a minimum wage hike would stimulate the state’s economy. But the panel’s top House Republican noted that a minimum wage hike would translate into higher local property taxes and fewer services.

“This is going to be an enormous unfunded mandate on towns and cities across the state,” said Rep. Joe Polletta, R-Watertown. “It’s going to hit families.”

Nonpartisan analysts also warned that the minimum wage hike could pose challenges for social services.

Family child care providers in the state’s network could face up to $6.9 million in extra costs by 2022.

And while the analysts cautioned that raising the minimum wage could reduce participation in assistance programs with income eligibility limits, they did not offer a specific change in enrollment.

Some lawmakers and social services advocates have expressed fears for months that a $15-per-hour minimum wage could push some parents off HUSKY A, the Medicaid-funded program that provides health insurance for working poor adults with children, out of the program.

Many of those who’ve expressed concerns have said the solution isn’t to block a minimum wage hike, but to increase state funding for HUSKY to broaden eligibility rules.

This story originally appeared on the website of The Connecticut Mirror,