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11/07/2017 11:00 PMNearly 11 months after the first budget proposal was released, Governor Dannel Malloy put pen to paper and signed the majority of the bipartisan budget into law on Oct. 31. While the bipartisan budget came as a victory and a relief to many, local legislators and leaders are keeping an eye on the cuts and possible future cuts within the new budget.
The State House and Senate passed the budget with sweeping, veto-proof majorities on Oct. 26. Once the budget hit the governor’s desk, Malloy signed most of the budget into law, but used his line-item veto to reject a new tax arrangement on hospitals.
Shoreline legislators praised the bipartisan nature of the budget that brought an end to the 123-day budget impasse. While members of both parties said certain issues required compromise, this budget includes cuts of five percent or less to the Education Cost Sharing (ECS) grant, an increased tax on cigarettes and hospitals, and revisions to prevailing wage and binding arbitration laws, and preserves the senior property tax credit while cutting funding to higher education and social services. While municipalities will not pay into teacher pensions as originally proposed, contributions from teachers will increase from six percent to seven percent of their salaries.
For Madison the numbers look good. The town budgeted $1,685,557 in revenue in the town-approved budget and in the signed state budget, the town receives $1,579,919 in revenue—a loss of $105,638, but a far cry from earlier budget proposals that would have nearly, if not completely, zeroed out state revenue to the town.
State Representative Noreen Kokoruda (R-101) said there is more to this budget than just the municipal aid.
“There is such good stuff in this budget, but it is not perfect,” she said. “The problem is what is wrong with our state is not going to turn around in 24 months, so what I am excited about is a lot of the reforms that are in the budget. We knew no matter what budget was, we were going to see some deficits almost immediately because revenue numbers are that fluid.”
While the numbers look good now, State Comptroller Kevin Lembo recently came out and said the state is looking at a $93 million deficit this fiscal year. Municipalities like Madison are familiar with the concept of mid-year cuts to municipalities to help close the deficit and Kokoruda said that could be the case again this year.
“I think everyone is breathing a sigh of relief, but we all know that there have been times where the governor has made cuts during the year and it could happen again,” she said. “He does have that ability to cut a budget. We will be working on fixing this budget and the one for the next year again in February. We always have to make adjustments to the two-year budget, so I would expect to do that.”
In a surprising turn of events, Madison received ECS money—$424,171—in this budget. Town officials had pretty much written off receiving education aid after a few years of heavy cuts and the Board of Education (BOE) had gone as far as reducing teaching positions this year to accommodate for the loss of revenue.
Superintendent of Schools Tom Scarice said while receiving ECS money is always a good thing, it may be a bit early to celebrate.
“There have been mid-year cuts to ECS funding, so until that money actually hits the accounts of the town, we probably should remain cautious,” he said. “The BOE went above and beyond in reductions last year to minimize the impacts of an ECS cut and we will stay with our budget and with our staffing. We did this anticipating a cut and now the town has, for this year, about $420,000 of revenue that was unexpected from ECS.”
In addition to the money, Kokoruda said this budget brought through changes to binding arbitration (a process towns go through each year to settle compensation for unionized employees) and prevailing wage. Prevailing wage refers to the hourly wage set by the Department of Labor in government contracting. For Madison, prevailing wage comes into play when the town hires outside contractors for a construction project that receives state funding, but exceeds a certain spending threshold (currently $100,000 for renovation projects and $400,000 for new projects). Under the mandate, if a contractor or sub-contractor is non-union and pays a lower-than-union wage, the contractor must pay the prevailing wage to qualify for the project. Now, under the new budget, the prevailing wage threshold for new projects jumps to $1 million.
“Prevailing wage and binding arbitration are reforms that impact towns,” she said. “When they talk about unfunded mandates, those are always the first two and it is a direct cost to towns and the prevailing wage formulas have not been changed in 30 years…As a town that is looked at as wealthier, reform on some of these mandates is really going to help offset any losses that we have long term.”
First Selectman Tom Banisch said while the numbers look good now, he agrees that caution may be the best way forward.
“I think if we get the revenue they are talking about giving us then we will be in the position we expected to be in without having to supplement it ourselves,” he said. “However, I think there is still a question mark as to if we are going to get that money. They cut us mid-year before and I don’t see why the governor doesn’t have the ability to do that again…I am not going to expect the worst. I am hoping for the best, but this budget didn’t address a lot of the problems that the state faces. Last year when the state was facing problems, they tried to fix them by cutting money that we were anticipating.”