Cities and towns emerge from state budget with hefty gains
The state will give out $229 million more in municipal aid, a 9.4 percent gain — making towns and especially cities the big winners in the state budget that starts July 1.
An additional $191 million in education and noneducation funding will be distributed next year. Nearly two-thirds of that money, $123 million, goes to the state’s eight largest cities, five of which are located in Fairfield and New Haven counties.
New Haven alone sees a $52 million gain, bringing its total to $279 million, behind only Hartford.
Another $38 million of additional state transfers will go to cities and towns from another account but that money has not yet been publicly broken down by town.
Norwalk, one of the biggest benefactors, will receive a nearly 30 percent increase in state aid next year, followed by Stamford at 27 percent, New Haven at 23 percent. Bridgeport’s state aid will grow by 6 percent.
“Cities and towns are finally getting the dollars that they should’ve been getting all along,” Sen. Cathy Osten, D-Sprague, co-chair of the Appropriations Committee, said this week. “We’re finally meeting our promise.”
Wealthy suburban towns also benefit under next year’s budget. Greenwich is getting a 33.6 percent boost in state aid.
In total, municipalities will receive $2.6 billion in state aid, the majority of that for education spending. Overall school aid increases by $46.4 million under the budget with much of that funding directed at lower-income districts and where large number of students are English language learners.
All of this state spending is in addition to the federal pandemic grants to cities and towns, which total $3.04 billion.
The state budget does not redirect education dollars away from well-off communities to low-income districts as called for under the state’s school funding formula. Given local government coffers were strained by the pandemic, lawmakers reasoned that it wasn’t fair for any city or town to receive less state aid than last year and held off on instituting the formula.
“We are pleased that the budget does not include any reductions in state aid to municipalities and also insulates smaller towns from any mid-term cuts in funding,” said Betsy Gara, executive director of the Connecticut Council of Small Towns.
Why the big differences in the gains? The budget establishes a new system for dispersing payments in lieu of taxes, or PILOT, prioritizing cities with a larger percentage of tax exempt property. The state has long struggled to reimburse municipalities for this lost tax revenue, often diverting the money to pay down ballooning pension and other debts straining the state budget.
The influx of state funding will help municipalities of all sizes balance their budgets and recover from the economic turmoil caused by the pandemic. The increased aid also puts “communities in a position not raise any taxes on any residents,” said Republican House leader Vincent Candelora, of Branford.
Towns are almost completely dependent on local property tax revenue, often leaving municipal leaders with little choice but to raise taxes when times are tough. The new PILOT system will help make communities “whole,” Candelora said.
Speaking at a Thursday afternoon press briefing on the budget, Lamont said with the increased municipal aid, “I think you’re going to see holding the line or even reducing property taxes and property tax rates.”
“That’s really good news as we try to bring our towns and cities back to life,” the governor said.
Bridgeport Councilman Scott Burns, co-chair of the city’s budget committee, said a promise from lawmakers earlier in the session to boost municipal aid allowed the city to include a tax cut and add money for schools and mental health services in next year’s budget.
New Haven Mayor Justin Elicker said the increase in PILOT funding would go toward paying down the city’s pension and debt costs. The state aid overall is also crucial to avoid raising taxes or laying off employees, Elicker said.
Cities including Bridgeport and New Haven are soliciting public input for how the federal stimulus money should be invested — with an emphasis on one-time projects that bring improvements, as the state money shores up operations.
“Our focus as a city is going to be on economic development, coming backing back from the COVID-19 pandemic and investing in particular in our historically underserved communities,” Elicker said.