Towns and cities might paint a different picture, but a new report issued by Moody’s says most Connecticut municipalities are going to be able to weather the state’s significant financial challenges.
Moody’s Investor Services said in a report most municipalities in Connecticut will not be materially impacted by the state’s financial and economic challenges, at least over the next 12 to 24 months. Any future multi-year erosion in state aid, however, would pressure Connecticut cities and towns.
The municipalities that are most at risk of being negatively impacted by the state’s budget woes are Bridgeport, New Haven and Hartford because they derive large portions of their revenues from the government. Most municipalities fare better because they have steadier streams of income from property tax.
The report said wage growth has slowed in Connecticut, but the median family income remains very high at 130.5 percent of the U.S. median. The state’s high-income and wealth levels afford communities some flexibility in raising property tax rates, according to the report, to adjust for any declines in state aid, especially given that there is no legal cap on property taxes as there are in other states.
