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Rell to Cities: Drop Dead

The dizzying decline in state aid

By Andy Bromage

July 10, 2008

Waterbury's toxic cleanup will have to wait.

Avon needs new decorative lamp posts. Sharon needs a new dog pound. Deep River needs new streetscaping. Small town Connecticut got a $20 million facelift this spring, thanks to grants from the State Bond Commission. That includes $309,595 for the lamp posts, $305,000 for the dog pound and $400,000 for the streetscaping.

Waterbury Industrial Commons got nothing. For the sixth year running. Waterbury Mayor Michael Jarjura is seeking $15 million to clean up the property—a munitions factory that supplied the military in both world wars—for use as a city-owned industrial park from which City Hall can collect rents.

Jarjura could use the cash. His city is, by many measures, sliding toward economic disaster. One in five families lives on less than $21,000 a year. Nearly one in 10 residents is unemployed. Taxes are oppressively high—the second highest in Connecticut. Demand for food and heating assistance is the highest it's been in years. Families that can't afford heating oil are using space heaters because electricity's the one thing utilities can't shut off in winter.

Hartford, Bridgeport and New Haven are just as sick, or sicker. Foreclosures are tearing apart urban neighborhoods. Hartford's suffered more than 100 shootings this year. Violent street gangs are rising in New Haven. Bridgeport schools are virtual drop-out factories.

You might expect the state government to step in with extra help at a time like this, but instead it's retreated: Gov. Jodi Rell unilaterally cut $160 million from the state budget last month, slashing millions from jail diversion programs, AIDS services and grants for the homeless (see sidebar). Put simply, our cities are failing, and solutions from the Capitol are in short supply these days.

"The state of Connecticut has decided to go in a direction that is opposite what the rest of the country is doing," says Stamford Mayor Dannel Malloy. "Metro economies [are] where the growth is, and where investment needs to be made. In Connecticut, we refuse to accept that. The other 49 states must be wrong, and whoever has invested in this structure must be right."

The sprawling Waterbury Industrial Commons factory is an eyesore of broken glass and rusted metal, but it's the toxins lurking inside that account for the hefty price tag: asbestos and nickel to name just two. Jarjura's funded two rounds of preliminary studies through the city, but needs state cash for the heavy-duty cleanup. Each year, he makes the trip to Hartford seeking the money, and each year comes back empty-handed.

"They prance me around to meet with the governor's staff," he says, "and here we are again." No funding.

It wasn't always this way. Connecticut's largest cities saw unprecedented investment from the state during the administration of Gov. John Rowland. Hundreds of millions went toward rebuilding city centers, renovating theaters and erecting sports stadiums.

The last five years have been a different story. The biggest cities still get the lion's share of state bond funding reserved for municipalities, particularly for their multibillion-dollar school construction programs. Yet under Rell's administration, non-school construction-related bond funding for Connecticut's five biggest cities—Bridgeport, New Haven, Hartford, Stamford and Waterbury—has dropped dramatically, both in real dollars and as a share of the annual largesse. More money flows to municipalities each year, but the largest cities see less and less of it.

"Basically, the spigot's been shut off," Jarjura says.

State bond funding is a useful yardstick to measure the governor's priorities because it is she alone who sets the Bond Commission agenda. Appropriations bills sent through the legislature, by contrast, are a negotiation: passed by the Democrat-controlled General Assembly and signed by the Republican governor.

An Advocate review of State Bond Commission grants from 1995 through the present, obtained from the office of the state comptroller, shows what urban mayors and many observers already know: The Rowland years were far more generous to the state's largest cities than the Rell years have been.

Look at fiscal year 1996-97. The Bond Commission granted $461 million to municipalities. The Big Five took home 43 percent of it! That doesn't even count school construction money, which was another $21 million.

Look at 2001-02. The Bond Commission granted $966 million. The Big Five took home 37 percent, again excluding school building funds.

Then look at 2005-06, the second year of Rell's administration. The Bond Commission granted more than $1 billion. The Big Five took home five percent, excluding school construction money. The following year, the share fell to four percent. So far this year, it's at 1.6 percent, even as the total amount granted to cities and towns climbed above $1.1 billion.

"This governor, I don't think, has an urban focus," says state Rep. Cameron Staples (D-New Haven), who as co-chair of the legislature's Finance, Revenue and Bonding Committee also sits on the State Bond Commission. "I don't think she's hostile. I just don't think she has a particular interest in urban redevelopment or trying to assist the cities. I think she reflects the general attitude among a lot of my Republican colleagues, which is that cities have gotten too much and it's time for their towns to get more.

"But we all have an investment in making sure the cities thrive," Staples continues, "and if you look around the state, how many successful cities are left? There aren't many. I really worry that all the major cities are going to go the way of Hartford and Bridgeport, which is to lose their middle class and to have oppressive tax rates, high crime and not much economic activity. It's a pretty sad picture."

Education's gotten a massive injection of funds under Rell—$3 billion for K-12 and billions more for school building. With her direction, the State Bond Commission paid out huge sums to reimburse cities and towns for school construction programs—$1.6 billion to the Big Five—and committed roughly $100 million a year each to projects at UConn, the state university system and community and technical colleges.

Money for operations is another story. Rell's budget cuts slash over $15 million from UConn, the state universities and community colleges. That's worrisome, says Bill Cibes, the former chancellor of the Connecticut State University system and the secretary of the Office of Policy and Management under Gov. Lowell Weicker.

"The campuses have been transformed, but bricks and mortar don't make an education," Cibes says in a phone interview. "If you have [$15 million] cut for next year, that's essential state support. Tuition and fees will have to be raised to make up for that. I don't know what the trustees will do, but the consequence is the folks who have the greatest difficulty paying fees now will be further disadvantaged."

There are obvious limitations to reading the bond allocation figures the way we've done it. The comptroller's bond allocation database organizes grant recipients by seven categories: state, universities, municipalities, for-profits, non-profits, other and multiple recipients. Grants going toward city-led development projects, for example, or for local school district programming, would fall under "municipalities." However, something like the $230 million relocation of Gateway Community College to downtown New Haven, a project that obviously benefits the city and is a key development priority of its mayor, would fall under "universities." Still, the largest chunk of bond money goes to "municipalities," making a useful, if imperfect, barometer.

Bond funding is only part of the picture. Payment in lieu of taxes (PILOT), which reimburses towns for hosting tax-exempt property, has been woefully underfunded during the Rell years. The biggest losers are the biggest cities, which host the hospitals, colleges and state job centers that serve the region but don't pay local property taxes.

State law requires cities be reimbursed for 77 percent of the taxable value of private colleges and hospitals' real estate, and 45 percent of the value of state-owned real estate. The reality? Cities are short-changed by millions, forcing tax hikes and service cuts that are straining families and homeowners in neighborhoods that can least afford it.

Numbers provided by the state Office of Fiscal Analysis show the staggering level to which the governor and legislature have stiffed our largest cities. In five years' time, the state has shortchanged the Big Five out of almost $151 million. That's $150,967,263 that state law demands the cities get paid, but which the state has failed to pay. The result is central cities with the most oppressive tax rates in the state.

New Haven has by the far the largest unpaid PILOT tab: $53 million for colleges and hospitals during the Rell years, and $6.6 million for state-owned property. Unpaid PILOT afflicts smaller towns too—Mansfield, which hosts the University of Connecticut, is losing more than $2 million a year in owed PILOT payments, and Suffield, the host of McDougal-Walker prison, is losing around $1 million. But the cities take the biggest blow by far. Look how much the state's shorting the Big Five in the budget year that started July 1: Stamford, $1.3 million; Waterbury, $4 million; Bridgeport, $4.5 million; Hartford, $11 million; and New Haven, $13.7 million. What is Rell doing about it? The governor says she "absolutely" believes PILOT should be funded. Next session, which will be 2009.

That doesn't help New Haven this year, which is cutting money for homeless shelters and facing layoffs if City Hall and its unions can't broker a cost-saving deal. New Haven Mayor John DeStefano's not fuming about PILOT funding, though. He sees no inequity on bond allocations either. The city's received more in state grants than any town in Connecticut, he says.

What fries DeStefano is how the state saw fit to cut the gas tax but left an early reading success program unfunded.

"It helped kids read earlier, better. It had proven results," DeStefano says in an interview in his City Hall office. "It was a $21 million program statewide. Twenty districts get it. And yet they found the will to cut $25 million to cut this damn gas tax, that consumers aren't going to see a penny of."

Rell and the legislature agreed on the gas tax cut, but couldn't agree on a host of other problems facing the state, so they left the second year of the two-year budget unchanged. The casualties cut across town lines, but again, cities were some of the hardest hit: Hartford, which has the highest black-white achievement gap in the state, lost $2.1 million in state funding to open a new Achievement First charter school, which arguably runs the most successful inner-city schools in Connecticut. Hundreds of kids were signed up to attend the school in September, but are now looking elsewhere.

Bridgeport, like New Haven, suffers from having vast amounts of tax-exempt property and a PILOT program that fails to compensate. Bridgeport Mayor Bill Finch calls it "unconstitutional and un-American. It's a system designed to fail and it has been failing" from the beginning.

PILOT cuts have affected "everything," Finch says. Bridgeport faces a $16 million budget deficit and one scenario looks at closing three library branches and laying off up to 68 workers because libraries are "not essential services."

"Bridgeport is dying of a thousand cuts," Finch says. "There's the state not funding PILOT, unfunded mandates and a tax base of modest means. The system's set us up to fail. And this is one of the richest places on Earth. It is an absolute shame."

The Rell administration utterly rejects this version of its stewardship. Robert Genuario, Rell's secretary of policy and management, first notes that Rell proposed, and the legislature signed, the largest increase in school funding in a decade—$3 billion for public education that will help inner-city schools tremendously. Large cities received large increases to their Education Cost Sharing grants too, Genuario says. Hartford alone got $17 million more than last year.

As for capital projects, the state now spends 10 percent of its budget paying down debt from past projects—like Adriaen's Landing in Hartford and the Harbor Yard sports complex in Bridgeport. Too much, Genuario says.

"Is Gov. Rell trying to monitor the borrowing of taxpayer dollars for private entities more strictly than some of her predecessors?" Genuario asks. "You bet she is. And that's nothing we apologize for because, frankly, if our debt service was [2.5 percent less] we'd have $450 million more to spend on [social service] programs.

"We've borrowed a lot of money," Genuario continues. "More than we should have. That's a source of tension. People are used to getting borrowed money. More than they should have."

When it comes to big projects, Genuario suggests the state should "budget for it, don't borrow for it."

"Budget $500 million for urban infrastructure improvements. Then you don't have to pay the debt service cost, which triples the cost of the program," he says. Would the governor sign such a bill? Genuario demurs. "It was probably a little cavalier for me to throw out a number. But I think the answer is that we need to budget for these things year in and year out and agree to standards."

On PILOT, Genuario blames the legislature for not fully funding the program, even though the governor must sign the bills they pass. As for full funding: That's a goal, he says, not a promise.

On patching the budget using the "rainy day" fund—the $1.4 billion reserve the state keeps for emergencies—as some have suggested, Genuario says that amounts to "an ostrich, putting [its] head in the sand." The state's facing a $150 million shortfall now. It could swell to $500 million in a year and a half. "If we wait, the reductions could become much more draconian," he says.

Genuario paints a bleak picture of Connecticut's economy, which makes projects like Waterbury Industrial Commons that much more urgent. Waterbury's a post-industrial city that's run out of buildable land. Bringing business in depends on redeveloping old factories. After striking out in Hartford, Jarjura, the Waterbury mayor, recently turned to Washington for help. He and Congressman Chris Murphy (D-5) are seeking cleanup money from the Pentagon using a little tested approach: The Defense Department funded production of the ammunition; it should fund the cleanup.

It might be a long-shot, but it beats the alternative.