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03/06/2017 11:00 PMBranford’s Board of Finance (BOF) will begin meeting in budget workshop sessions March 20 to 23 to discuss a budget that won’t have complete information on what state cuts the town must fund. That’s no different from what Branford and most municipalities face each year, but this year, huge cuts proposed by Governor Dannel P. Malloy (D) are on the line.
In a matter separate from the state budget but connected to Connecticut’s financial woes, the BOF is also grappling with whether the state will grant an anticipated $30 million for the $88.2 million Walsh Intermediate School (WIS) expansion. Branford met all deadlines to request the funding from the state, but won’t have an answer from the state bonding commission until this June.
Further complicating matters is the town’s chartered budget process, which calls for a final budget set in May with a new mill rate set no later than June 1. The state’s new budget likely won’t be set until the last day of the legislative session, June 7.
Examining the Governor’s Proposal
On Feb. 27, the BOF invited state representatives Lonnie Reed (D-102), Sean Scanlon (D- 98) and State Senator Ted Kennedy, Jr. (D-12) to give input on what Branford might have to face once the dust settles on this year’s legislative session.
“We do recognize we are early in the session and you have your challenges. We have our challenges as a board to put our budget together in the midst of this,” BOF chairman Joseph Mooney told the state legislators.
Mooney said the BOF is not only tasked with considering the short-term state uncertainties facing Branford, “but we’re also concerned about the long-term commitments; particularly with our school projects.”
In December 2016, Malloy proposed sweeping cuts to municipal and school funding to towns including Branford. Now, the governor has also proposed asking some towns, including Branford, to foot the bill for 30 percent of the annual contribution to the municipal teachers’ pension fund. That alone could add up to add up to a significant change of $2,747,784 in costs to the town. Branford is one of 138 towns out of 169 in the state that would be asked to contribute.
In a transmittal notice sent to the BOF as part of its 2017-’18 budget packaging, Branford’s Board of Education (BOE) has noted the governor’s $2.7 million pension contribution proposal, which together with the 2016 Education Cost Sharing [ECS] grant and other funding reductions of about $500,000, add up to potential additional costs of $3.2 million, a six percent increase to the proposed schools budget.
Those additional costs, however, are not included in this year’s school operating budget ask of $55.3 million, which is an annual increase of 1.96 percent. On Feb. 22, the BOE voted on to unanimously approve the proposed 2017-’18 budget and send it on for BOF review (see the story at www.zip06.com)
As part of his overview on Feb. 27, Finance Director Jim Finch noted one question people might ask is why the town doesn’t place Branford’s burden of the governor’s proposed teachers’ retirement pension costs on the town’s BOE.
“Essentially, if that was the case, there would be severe course reductions and reduced programs,” said Finch. “In addition, we would essentially be violating the state [education] minimum budget requirement. My understanding is those pension contributions do not count toward your minimum budget requirement, [so] you have to weigh the penalties of that vs money you’re saving in taxes.”
The state’s minimum budget requirement penalizes towns that spend less on education than in a previous year.
Finch said another question the could be posed would be having Branford rescind the appropriation for the $88.2 WIS project, which, after anticipated state reimbursements of $30 million, creates a $58 million bonding issue for the town.
“That’s $58 million in debt we wouldn’t issue, together with roughly $70 million in debt service costs over the next 20 years that would be avoided,” said Finch. “However, I think you can make the case that the cost for construction will rise in the future, I think you can make the case interest rates will rise in the future, and I think it’s probably fair to say...we may not get a better deal in the future [so] that’s also a concern.”
In 2016, Finch and First Selectman James B. Cosgrove (R) worked with the BOF and RTM to make some late cuts and adjustments to the budget in anticipation of possible state cuts. Due to the significant changes being proposed at the state level, Cosgrove said the Feb. 27 discussion on how state cuts could hit Branford is extremely important to this year’s budget process.
“Certainly, with the proposed budget from the governor there’s some significant structural changes, some shift being put on the local municipalities to carry. I think it’s important to have this discussion so the boards and the administration in preparing the budget can make the best-informed decision, because we don’t have the benefit of waiting until after the state budget is adopted,” said Cosgrove.
The Perspective from Hartford
The biggest number Branford is concerned about being burdened with is the $2.7 million teachers’ pension funding. Rep. Reed told the BOF she felt that cost, at least for this year’s session, will be “dead on arrival,” especially as it would affect 138 of 169 towns in the state, with no legislators likely to vote for the state to be “so suddenly handing off” the proposed teachers’ pension costs municipalities.
“What you’re seeing is just the beginning,” Reed added. “The governor is laying it down there to really get everyone’s attention. This is serious stuff and we can’t tax our way out anymore, we can’t bond our way out of it anymore.”
One of the points the legislators have been working with town leaders to make in Hartford is that the state shouldn’t bunch Branford in with those affluent shoreline towns with “deep pockets,” said Reed.
“We are not Madison and yet we get kind of thrown into the same pot,” said Reed, adding there’s still some state thinking that “we can afford to give up a big part of our ECS funding, when we’ve never had [a large amount of] ECS funding. We’ve gotten more over the years,” due to factors such as Branford’s now 27 percent of students eligible for free and reduced school meals.
Scanlon said the state is very early in the process and he felt there would be good legislative support to ensure the budget that comes out in June will likely look a lot different than what is being proposed by Gov. Malloy.
“We are very, very early on in the process. The numbers out and being bandied about are the opinion of one man: the governor,” said Scanlon. “There are 180 of us in the House and Senate that are going to be voting.”
Scanlon said the state looks at five options to find money to close the deficit, include raising taxes, cutting spending from the 20 percent of discretionary dollars in the budget, getting concessions from labor (which are not obligated to give concessions until 2022), and asking municipal governments to bear a higher burden.
“Where I really think this is going is some combination of these things,” said Scanlon, adding it’s incumbent on the legislators to “keep dialoguing with all of you and get feedback [and] to make sure it doesn’t get any worse.”
Kennedy said the Senate will have a new dynamic this year, which could help.
“Now that the Senate is tied for the first time in the Senate, the Republicans will be in the room, so they have a say on how the budget is formulated,” said Kennedy, adding, “I do not see, with the exception of a handful of legislators, a big appetite in raising taxes at this point.”
While some cuts to municipal aid will likely be part of the state funding solution mix, “Our message is explaining to our colleagues that Branford has a lot of people in need in our town. People have this impression [we] don’t have any hungry people, no people with mental problems, our seniors are happy and living fine, and that’s not the case,” said Kennedy.
Kennedy added Branford’s leaders should continue to “help us come back with concrete facts [so] we can rebut comments made every day about our town. Branford and other towns are being singled out by our so-called ability to pay based on income level [and] Grand List.”
He added legislators and the governor are looking for “practical suggestions in exchange for simply passing on costs, such as pension payments, to municipalities,” and that Malloy is “talking about mandate relief. He realizes localities have been saddled over years with rules that are costly.”
RTM Members Speak
Two RTM members, Marc Ricco (R-6) and Jim Stepanek (R-4) took up Mooney’s offer for some brief public comments on Feb. 27.
Ricco said of the proposed state cuts, “I don’t think it’s fair to this town,” saying Branford has worked hard to be fiscally responsible and adding that now, just as the private sector is starting to improve, “The public sector is coming to us and saying, ‘bail us out.’”
Riccio also asked for help in answering a question he’s been getting about what would happen if the state didn’t find the needed funds for the teachers’ pensions.
“I think the consequences...would be catestrophic for the future of the state,” answered Scanlon. “I think that the debt that we have, if we did just segment a part of that and say we’re done, I think all the rest of the debt we have would just skyrocket because of the obligations we have.”
Scanlon said he felt its important not to “renege on promise that we made” to people, adding he felt the state will move toward stabilizing the problem as younger employees who retire are contributing more, while older (more costly) pensioners will pass away.
Stepanek said he felt the discussion on Feb. 27 added up to “a very discouraging meeting.”
“The gigantic hole that’s been created by Hartford is going to be solved in only one way,” said Stepanek. “We all know that you have to first ring the alarm bell, then you have to have a plan, then you have to execute a plan, [and] I don’t see that happening. We’re still kicking the can down the road, [and] placing the tax upon Branford is just an example of how we haven’t even reached the alarm stage yet.”
Mooney thanked the legislators for meeting with the town leaders on Feb. 27, saying, “I think that from what we heard from them tonight that they know what our issues are, they see it on a broad spectrum across the state, and they’re going to try to hopefully be a part of the solution, and I’m sure that they will be.”