Print

Conn. Communities' 2010 Financial Outlook Is Grim

DON STACOM

April 15, 2009

The economic nose dive is driving Connecticut communities this year to slash services, lay off employees and raise taxes.

By next spring, could these look like the good old days?

While they struggle to balance their books through the worst year in memory, municipal and school leaders are also looking ahead to 2010 — and their projections are grim.

Communities are scrambling for short-term fixes, but many of those solutions — reserve funds, stimulus money, one-time employee concessions — won't be available next time around. And next year, municipal pension plans will start showing the real damage of the Wall Street meltdown.

"Any public official who is banking on next year being better is being, well, less than honest or is suffering from severe denial," West Hartford Mayor Scott Slifka said.

"I would predict that many programs/jobs [statewide] that are 'saved' in the current year will face elimination in the next year," he said.

Unless the state suspends mandates or boosts education aid, "we are about to fall off a cliff," cautioned Bristol Superintendent Philip Streifer.

What to do? Recommendations vary, but three points win broad consensus: Huge property tax increases won't work, local government must be permanently restructured, and the state mandates that once were merely inconvenient are now flat-out unaffordable.

Last week, The Courant contacted six municipal and school leaders who were among the first to identify the severity of the economic downturn last fall. They agree that an economic recovery would sharply improve the forecast; otherwise, the state should brace for more turbulence in 2010.

The chief problem is that the easiest-to-find savings will be gone. Much like families selling their SUVs or canceling cable service, towns are grabbing all the "low-hanging fruit" this year to make ends meet. That means tougher choices next time if more cuts are needed.

Plainville Town Manager Robert Lee summed it up this way: "Most of the 'moderately difficult savings' have been wrung out of the budget."

Some examples:

•In the midst of this economic downpour, towns are raiding their rainy day funds. But if the rain is still falling next year, that money won't be available.

•Much of the federal stimulus money should be gone by then, too. Some funding extends into 2010-11, but at lower levels.

•Many city unions are reluctantly accepting wage freezes or givebacks this year; the resistance to a second round is likely to be tougher.

•Postponing vehicle replacements and building repairs now will cluster extra expenses in 2010, when another year of delays may prove impossible.

And starting in mid-2010, many communities will have to pony up big money to cover pension fund losses. Bills for pension contributions lag nearly a year, so towns now are making up for investment losses before last summer. The worst effects of the collapse will hit next winter. Slifka projects that for many towns, the impact looks to be "staggering."

Homeowners are already under strain, so big property tax increases aren't feasible, officials agree.

"The ability for taxpayers to pay their taxes is obviously in question with high unemployment," said Bristol Comptroller Glenn Klocko. "If they can't pay today's tax levels, how can they support tomorrow's levels?"

Streifer projects his schools need annual 1-mill increases for years to keep up with mandates and special education inflation, and acknowledges bluntly, "That is unsustainable."

He questioned why the General Assembly won't suspend costly state regulations.

"The state is just not interested in acting in this arena," he said.

Change at the local level is inevitable, officials agreed. Farmington Valley towns, traditionally hard-line advocates of home rule, are open to cooperation now.

"We need to use this year to look at structural changes in government that will help us get through the future difficult years, such as regional collaborative efforts, regional dispatch systems and sharing staff," Simsbury First Selectman Mary Glassman said.

Manchester has been reducing staff for years, and is doing away with defined-benefit pensions for non-union workers.

"Municipal operations are well into a permanent state of scarce resources," Manchester General Manager Scott Shanley said. "Illusion now will just prolong the crisis. I don't mean to be negative, but also don't want to be caught unaware. The challenge is, we just don't know what's ahead."

Shanley sees a positive side: The challenges of 2010 can be predicted, unlike the sudden nationwide implosion last year.

"At least for next year we have more time to plan," he said. "We are already on it."