Conn. Gov. Dannel Malloy’s state budget released last week has city officials concerned about future state funding for the Elm City.
Malloy’s proposed budget would eliminate two long-standing sources of funding to New Haven, cutting $4.7 million from the Program in Lieu of Taxes, which refunds cities for property taxes they do not collect from non-profit property owners, and $6.9 million from the Mashantucket Pequot and Mohegan Fund, a state fund distributed across 169 municipalities. Gian-Carl Casa, the undersecretary of legislative affairs in the state Office of Management and Budget, said these municipal grants are countered elsewhere in the budget to reflect the governor’s spending priorities. However, city officials, including Mayor John DeStefano Jr. and aldermen interviewed, said that the new budget will cut funding to New Haven and that the city will have to find other ways to make up lost revenue.
“It’s a reduction in state aid to the city,” said DeStefano, who added that there were “no positives” in the budget’s effect on the city. “We intend to explain to the General Assembly that raising property taxes in cities and towns is not going to promote the economic growth rate. … We are pretty much at their mercy of having our residents live with the consequences of their decision.”
Casa, however, said that the state is struggling with a $1.1 billion deficit and that the governor’s proposals demonstrate his commitment to improving education and building jobs. He added that New Haven will make up forgone state revenue through new programs. For example, money lost through the PILOT program would be given back to the city through the Education Cost Sharing Grant, and money lost through the Pequot-Mohegan Grant would come back to the city through the Local Capital Improvement Program, Casa said.
“For the proposed budget, we have changed the way in which money comes to the city, but every municipality would receive at least as much overall as they did this year,” Casa said.
Ward 7 Alderman Doug Hausladen ’04 said that it is unclear yet how fungible the funding is, and while the proposal may increase the money that the city gets for the specific purposes of education and capital projects, it also decreases the amount that the city gets for general funds. New Haven needs to have flexibility in determining how to spend its general funds, and Malloy’s funding comes with restrictions and qualifications on how it is to be spent, he said.
Ward 10 Alderman Justin Elicker FES ’10 SOM ’10 agreed and said that it is unclear whether the increased funding for New Haven can be transferred to make up for the cuts in the general fund. Additionally, it remains unclear when the city will receive the money and be able to pay out its fiscal obligations.
Another part of the proposal allows most Connecticut residents to stop paying taxes on their cars. Hausladen said that this will detract from the city’s revenue, and the city will have to make up for this lost income via property taxes and other sources of revenue.
Elicker said that he appreciates Malloy’s efforts to eliminate a regressive tax — the car tax disproportionately impacts those in places like New Haven, where property taxes are higher than in other areas — but that it will end up having impacts like decreased revenue and potentially increased taxes elsewhere.
“It’s still unclear exactly what the impacts of Malloy’s budget will be, but it’s concerning,” Elicker said. “We’re squeezed enough on our own ability to pay increasing pension and health care payments, and the loss of additional state revenue could be incredibly damaging.”
Elicker added that the state legislature still has time to amend the proposal, and that citizens can expect continuing debate and potential changes to the budget proposal.
Fred Carstensen, an economics professor at the University of Connecticut, said that the spending reductions in the budget proposal will hurt job growth in Connecticut and that many cuts will come from programs such as unemployment benefits and Medicaid. He added that cities will disproportionately feel the impact of these cuts due to the makeup of their residents.
Hausladen said that while New Haven is being impacted by this new budget, he does not think Malloy is targeting New Haven as the proposed budget affects many other state municipalities.
DeStefano’s new budget is due to the Board of Aldermen on March 1.