As we prepare for a major state budget debate in February, cities and towns already are jockeying to protect their interests.
Municipalities don’t want their current state funding levels cut, and they want more relief from special education spending, which collectively costs them $1.8 billion annually. The state’s 169 towns and cities are battling the Department of Energy & Environmental Protection over a new proposed storm water permit that municipal leaders say will require $100 million in investment to comply with.
Municipalities were spared from state budget cuts four years ago, but they may not be a protected class this year, as Gov. Dannel P. Malloy and legislative leaders try to tackle billion-dollar deficits for each of the next two fiscal years.
Normally, we’d chide any special interest group seeking to protect all of their state aid during a budget crisis, but any funding cuts to cities and towns likely serves as a stealth tax increase on businesses and individuals. We oppose that.
Municipalities, of course, derive most of their revenue from property taxes, which is the business community’s least favorite tax. In 2011, towns and cities raked in $9.5 billion from levies on residential and commercial properties as well as automobiles, according to the state Department of Revenue Services. That was almost double the $5.8 billion generated by the state income tax. The state corporation tax only brought in $436 million that year.
Lawmakers have long called for reforms to Connecticut’s property tax system, which was rated as the most burdensome in the country in 2012 by the conservative-leaning Tax Foundation. Not much has changed since then.
Malloy wants this legislative session to focus on transportation, but we also need a comprehensive discussion, and legislative action, on the role of municipal governments. This will require a hard look out at how we fund city and town budgets, the impact of the property tax on Connecticut’s economic competitiveness, and services and programs provided by municipalities.
We aren’t advocating for increased funding to cities or towns. We aren’t saying they should be completely shielded from budget cuts either, but with limited options to raise new revenue, slashing state aid to municipalities will likely result in property tax increases in many communities.
At the same time, municipalities have been their own worst enemy. For too long, cities and towns have been allowed to operate as individual fiefdoms, driving up costs to local taxpayers. A hesitancy to share more resources and services has led to slow progress in the state’s efforts to regionalize local governments, which could derive real long-term cost savings to Connecticut.
House Speaker Brendan Sharkey (D-Hamden) deserves some credit for his efforts to tackle the issue. He’s taken a leadership role in the Municipal Opportunities & Regional Efficiencies (MORE) Commission to develop recommendations for local districts to save money on services and develop economies of scale.
There is also a panel taking a comprehensive look at Connecticut’s tax structure including its overreliance on the property tax.
Efforts like these are commendable, but we need to move beyond reports by panels and commissions to real legislative actions that require municipalities to change the way they operate. It certainly won’t be an easy task, as many cities and towns will repel efforts to cede full control over their communities. But Malloy, a former mayor himself, has shown a willingness to tackle tough policy issues. He must lead the way on these efforts.
And if municipalities fail to come to the regionalism table in any meaningful way, their pleas for state funding should fall on deaf ears.
