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Just before the scheduled June 5 close of this legislative session, the Connecticut General Assembly passed the new $43.4 billion biennial budget. The budget does not include some hotly debated items like tolls or a shift in teacher pensions and Governor Ned Lamont is expected to sign soon.
Unlike the last state budget, legislators were not touting bipartisan support this time around. On June 3, the House voted 86-65 and on June 4 the Senate voted 20-16, largely along party lines, to pass the budget. Democrats have had the edge in both houses for many years but managed to strengthen their numbers in the November 2018 midterm election.
The approved budget includes increases in education aid to some municipalities, avoids pushing a portion of teacher pension costs onto cities and towns, averts a looming deficit without increasing income tax rates, and makes no provision for the legalization and taxation of marijuana or the implementation of tolls.
However, the budget does rely on millions in labor savings and shifting billions of pension debt onto future taxpayers, and diverts revenue expected to go toward transportation into the General Fund.
The budget does avoid an income tax hike, but several other smaller taxes are introduced or increased. The budget broadens the sales tax by eliminating exemptions on things like parking, dry cleaning, and safety apparel, adds a new tax on plastic bags and e-cigarettes, and increases the alcoholic beverage tax. Small businesses are also being asked to carry a larger tax burden and the budget cancels some previously approved tax cuts for retired teachers and college graduates with student loan debt before those cuts could go into affect.
For shoreline towns, most of which have already approved their local budgets for the coming fiscal year, this state budget should come as a relief as far as municipal aid goes. When Lamont offered his budget proposal in February, his plan would have resulted in deep cuts to education aid in the region.
The legislature opted to distance itself from Lamont on local aid, particularly on Education Cost Sharing (ECS), the state’s primary education grant. The approved budget includes more than $2 billion for ECS and another $290 million for non-education grants in each year.
The Outcome for Madison
In recent years, Madison has worked to make sure the town budget does not live or die by the total state aid allocation. In the local municipal budget approved in May, the local Board of Finance (BOF) assumed roughly $430,000 in state aid when calculating the mill rate.
That number was a conservative estimate based on the prior year’s allocation, excluding ECS. A few years ago, when faced with a sudden $1 million ECS cut, the Board of Education (BOE), under the direction of then-chair and current BOF Chair Jean Fitzgerald, opted to eliminate all dependence on ECS funding. Any ECS dollars the town has received since have been put toward long-term projects or investments.
The total municipal aid for Madison listed in the state budget for the coming fiscal year is $881,922, a reduction of $10,406 from the prior fiscal year (including ECS, which this year is $407,115). While there had been talk at the state level of significantly reducing the ECS allocation to towns like Madison, State Senator Christine Cohen (D-12) said she was pleased with the final numbers.
“By far and away there are two outcomes we really pushed for in the biennium budget and one was fulfilling funding the bipartisan ECS formula that we had agreed upon in the last budget,” she said.
The total municipal aid allocation to Madison is sweetened by the lack of a mandated local teacher pension contribution, which was discussed earlier in the legislative session. However, State Representative Noreen Kokoruda (R-101) said there is no guarantee this issue won’t come up again soon.
“I am happy that the state didn’t attack municipalities this time, but I am not confident going forward because the state didn’t do anything to fix the main problems, so that is why I am concerned,” she said.
Outside of direct municipal aid, local legislators disagreed on the effect certain taxes approved in the budget would have on the local economy and small businesses.
“I was a little bit disappointed with certain things and obviously you have to take some bad with all of the good that came out of this,” said Cohen. “I was really happy to see an elimination of the business entity tax, which is something I talked about a lot and it is one of those annoying encumbrances that businesses experience. I am also happy that we have several job creation and workforce development programs that are in there.”
However, Kokoruda said the list of taxes imposed on businesses and consumers in this budget will be damaging.
“It was a big tax increase on the middle class and on small businesses—actually that budget was an attack on small businesses,” she said. “I don’t know how anyone could ever campaign on supporting small businesses and then vote for that budget. It just doesn’t make sense to me.”
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