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Town, City Officials Ask Legislators Not To Cut State Aid

DON STACOM

March 15, 2009

Concerned about fallout from Connecticut's ever-deepening deficit, a coalition of municipal leaders made a pitch recently to hold state aid steady and perhaps authorize towns and cities to levy new taxes.

"As you make the toughest budget decisions in your legislative careers, please don't balance the state budget on the backs of local property taxpayers," Old Lyme First Selectman Tim Griswold told the General Assembly's appropriations committee.

Sounding alternately frustrated, worried and occasionally angry, a series of town and city leaders said they've been slashing local services and cutting jobs but still face the need to raise taxes on cash-strapped property owners. They pleaded with lawmakers not to dig into the approximately $2.8 billion of municipal aid in next year's budget, a move they said would just force even more cutbacks in local communities already reeling from plunging revenue from permit fees, real estate sales taxes and investment income.

"We've moved to close swimming pools, eliminate police officers' positions, reduce fire shifts, reduce programs for senior citizens, our school budget [increase] is at 1 percent," Manchester General Manager Scott Shanley said. "The list goes on and on. But I still have to recommend a 2 1/2 percent tax increase."

Since Gov M. Jodi Rell has already proposed keeping municipal aid and Education Cost Sharing grants intact next year, the municipal leaders' presentation was mostly a defensive move to keep the Democrat-controlled legislature from cutting aid if the state deficit widens this spring. Speakers from the Connecticut Conference of Municipalities and the Council of Small Towns also encouraged lawmakers to grant towns and cities the power to levy new taxes to relieve the pressure on homeowners.

"There has to be diversity of the revenue base. We can't continue to survive on the property tax alone," New Haven Mayor John DeStefano said.

His city is cutting 250 teachers and city workers this year as it tries to offset a crisis in home foreclosures and an unemployment level that's closing in on 11 percent. Connecticut's big cities are historically under financial pressure, but this year the demands of serving huge concentrations of the state's low-income residents — and a disproportionate share of prison parolees — with a limited tax base is becoming unworkable, he said.

For decades, Connecticut has financed local government and education primarily through the property tax, a system that's not adaptable to an economy in which homeowners are losing jobs or accepting pay freezes, speakers said. They recommended the General Assembly authorize towns to levy taxes on hotel rooms, meals or even create local sales taxes.

CCM estimates that a 4 percent hotel tax would generate $4 million a year statewide, while a 1 percent tax on food and beverages would raise about $42 million. Speakers said those revenues could be divided regionally so that small towns would share the income of big cities with concentrations of restaurants and hotels. CCM also estimated that if every town were allowed to levy a 1 percent sales tax, the revenue would be $550 million to $600 million.