State cuts funds to towns and cities

NORTHWEST CORNER —  On Thursday, Dec. 29, the state announced $50 million in cuts to aid to municipalities through its Local Capital Improvement Program (LoCIP) and Educational Cost Sharing Program (ECS).

The cuts were announced via two separate letters written by Benjamin Barnes, Secretary of the state’s Office of Policy and Management (OPM).

ECS cuts

According to the state’s website at www.cga.ct.gov/2012/rpt/2012-R-0101.htm, ECS is the major form of state education aid to municipalities.

The ECS program intends to “equalize state education funding to towns by taking into account a town’s wealth and ability to raise property taxes to pay for education. Poor towns receive more aid per student; affluent towns receive less aid per student.”

In his letter announcing cuts to ECS payments, Barnes wrote to legislative leaders that the cuts are necessary in order to offset $20 million in savings previously identified by the Municipal Opportunities and Regional Efficiencies (MORE) Commission.

The commission was created by House Speaker J. Brendan Sharkey (D-88) in 2010.

“The reductions [to ECS payments] will be applied to the January 2017 and April 2017 payments,” Barnes wrote in his letter. “These reductions will be made in a needs-directed manner, whereby the ECS grant is reduced between 25 percent and 90 percent for the 25 wealthiest communities. The 68 poorest communities in the state will lose only one percent or less of their ECS grant. OPM will consider the release of these holdbacks later in the fiscal year if a surplus is likely, but cannot commit to such reconsideration before release of the April consensus revenue projections.”

The original ECS estimates were made in August.

For Winsted, the original ECS estimate of $8,080,090 has been reduced by 0.7 percent, $55,133.

The town is now expected to receive $8,024,957 in ECS funds.

In New Hartford, the original ECS estimate of $3,155,693 has been reduced by 1.3 percent, $42,524.

The town is now scheduled to receive $3,113,169 in ECS funds.

For Barkhamsted, the original ECS estimate of $1,656,181 has been reduced by 1.4 percent, $22,495.

The town is now scheduled to receive $1,633,686 in ECS funds.

For Colebrook, the original ECS estimate of $501,314 has been reduced by 2 percent, $9,926.

The town is now scheduled to receive $491,388 in ECS funds.

For Norfolk, the original ECS estimate of $39,910 has been reduced by 35.3 percent, $14,095.

The town is now scheduled to receive $25,815 in funds.

The total amount of ECS funds reduced by the state to towns in the Northwest Corner is $144,173.

LoCIP aid reduction

In a separate letter to legislators, Barnes outlined the reasoning for a reduction of funding for LoCIP program grants.

According to the state’s website, the LoCIP program distributes funds to towns and cities “to reimburse the cost of eligible local capital improvement projects such as road, bridge or public building construction activities.”

“As of July 1, 2016, the amount of bonding authorized for LoCIP is $825 million,” Barnes wrote in his letter. “However, as of March 2016 towns have been credited $860 million in aggregate LoCIP entitlements. This difference dates back to 2004 when the General Assembly passed Public Act 04-1, entitling towns to be credited an additional $30 million in the LoCIP program for each year of the fiscal 2004-2005 biennium, without increasing the aggregate bond authorization to fund this entitlement. In addition, the General Assembly decreased the aggregate bond authorization by $5 million in fiscal 2005. At this time, the situation has reached an inevitable breaking point as the amount of approved LoCIP projects has reached the $825 million bond authorization, which is all of the funding that is lawfully available to reimburse towns and cities.”

Barnes wrote that OPM “would not credit towns with an additional entitlement in March 2017.”

“Furthermore, OPM will not be accepting or approving any new project authorization requests beyond those that were approved as of Dec. 22, 2016,” Barnes wrote. “Reimbursement requests for projects approved of Dec. 22, 2016 will be accepted and processed within available resources.”

Rep. Case, town officials respond

In response to the cuts, State Rep. Jay Case (R-63) issued a press release where he expressed disappointment.

“With the start of [the legislative session] a week away, I wanted to stress the importance of making structural changes to the state’s budget process,” Case wrote in the press release. “Today, it has become clearer than ever that we need to take a more in-depth look at the way the legislature manages the state’s finances. I received two letters to my office which both explained the state does not have adequate resources to pay our municipalities dollars that had originally been promised for local improvement projects and education funding. It is reckless to pass the financial buck to the cities and towns that already have a set budget. In difficult financial times, throwing our local communities a curve ball at this point in the fiscal year is purely irresponsible.”

In an interview with The Winsted Journal, Case said he has been trying to find out about potential budget cuts from the state for some time.

“I met with state officials a few months ago and asked them when they would tell us about possible cuts,” Case said. “The officials told me ‘you will find out when we are ready [to tell you].’ Budgets for these towns and municipalities are tight as it is. It will be a scramble for towns who planned on receiving state funding and not have it come through.”

Case said that the legislature cannot rescind the cuts.

“It is all within Governor Dannel Malloy’s allowable powers,” Case said. “It’s too bad that this not only happened in the midway point of the fiscal year, but also that this happened one month after the election.”

Case said that projects in the Northwest Corner that have previously been approved for state funds, including the Holabird Avenue bridge repair project and Northwest Connecticut Community College’s Allied Health building, are still scheduled to be funded by the state.

Town officials interviewed by The Winsted Journal all said they are troubled by the state cuts, including Winsted Mayor Candy Perez.

“Any cuts in state aid in the middle of a fiscal year are troubling for a municipality as budgets were created based on receiving these revenues,” Perez wrote via email. “Every town is affected, some more than others. Having said that, our town manager and finance director prepared a budget knowing that the state finances were worrisome. Our staff will look at the impact over the next few days and make recommendations to close the gap.”

In an email to the Winsted Journal, Norfolk First Selectman Susan Dyer wrote that the state had already cut $340,000 in ECS funds to the town for fiscal 2016-2017.

“Losing an additional $14,095 doesn’t exactly put a smile on anyone’s face,” Dyer wrote. “We did not have a LoCIP project for this fiscal year. We did have one for fiscal 2015-2016, and we did receive our reimbursement from the state. We’ll just have to wait and see what the legislature has in store for the future of the LoCIP program.”

Barkhamsted First Selectman Don Stein wrote in an email that “While we are not happy about municipal grant budgets being cut in the middle of a fiscal year, Barkhamsted did not get hurt too badly.”

“We lost roughly $23,000 in ECS funding, which we think we can compensate for in our expenditure rate, especially if our special education costs come in lower than projected,” Stein wrote. “We ‘temporarily’ lost a little over $36,000 in LoCIP funds for fiscal 2016-2017 and the same amount will not yet be allocated for fiscal 2017-2018. I say ‘temporarily’ because my conversation with a senior individual at OPM indicated that they will likely be raising the LoCIP spending cap during the legislative session. That would allow towns to spend their fiscal 2015-2016 funds and possibly receive their fiscal 2016-2017 funds. We were planning to use our current LoCIP grant for some modest, but optional improvements at Town Hall. That will have to wait for availability of the LoCIP allocations.”

Colebrook First Selectman Thomas McKeon and New Hartford First Selectman Daniel Jerram did not return calls for comment for this story.