Latest Malloy budget proposal points to more money leaving Darien
Governor Dannel Malloy unveiled adjustments and changes this week to the budget he originally proposed in February. The changes are driven primarily by the startling low tax receipts, and the changes would not only eliminate aid to Darien, but put the town in the position where it owes the state money this year.
Income tax receipts in Connecticut have been so far below the projections that it has created an additional $1.5 billion shortfall for the coming biennium, raising the total to about $5 billion. As the situation becomes more dire, the Governor has had to turn to more solutions that will no doubt prove to be very unpopular in the legislature and with the people of the state. The dire fiscal situation led to Connecticut’s bond rating being lowered by Moody’s.
The proposed changes from Monday include adding $80 million in annual tax increases. This could impact Darien significantly, as a large portion of this comes from increasing the real estate conveyance tax. At present, the tax rate on the sale of a house over $800,000 is 1.25%. Malloy has proposed raising that number to 2%, which projects to raise revenue of about $100 million over the biennium. Some have already called this the “mansion tax”.
According to Zillow, the average home price in Darien is $1,429,000.
Malloy also proposed removing the sales tax exemption for non prescription drugs. In addition to these two new proposals, Malloy stay committed to the original proposal to reduce the income tax credit for poor families, increasing tobacco taxes, and removing the $200 property tax credit.
Malloy furthered his redistribution of state aid, sending even more to the most impoverished cities and towns in Connecticut. Included in his proposal was the pushing of teacher pension payments off to cities and towns, a concept rejected by both parties in the legislature following the original proposal from the governor. The reduction of aid to Darien, however, is still quite significant. For some cities and towns, the reduction of aid and the addition of costs, such as teacher pensions, is so severe the the town would have to send the state the difference.
In the case of Darien, this adds up to $3,951,595 that the town would have to send to Hartford to pay teacher pensions and other new costs.
Malloy’s proposal also takes 70% of all state education aid and sends it to the 30 lowest performing districts. There is no official word or statement yet as to whether or not those districts will be forced actually spend all that money on schools, as in the past that has not been the case. The new proposal has 31 districts in the state receiving no aid for education whatsoever, up from 22 districts in the original February proposed budget. Under the Monday proposal, Darien would receive a total of $101,641 in state aid for education. The redistribution of aid from Monday’s proposal has allowed Malloy to create an aid package for the city of Hartford totalling $57 million. Hartford Mayor Luke Bronin has said the city will need at least $40 million to keep from going bankrupt.
This proposal will, as the February proposal from Malloy, receive very little support in the legislature. Democrats have already come forth with a plan that does not increase income tax, sales tax, or taxes on businesses. In order to achieve this, the plan calls for a third casino, the legalization of marijuana, and the beginning of the process to add tolls to the roads. The Democrats plan did not clearly spell out just how local aid would be cut, but the plan did lay out about $200 million in cuts to local aid. Republicans in the House and Senate were initially split about an approach to the budget, but have put forward a plan of their own. The plan calls for another $650 million in concessions from state workers on top of the $1.5 billion in concessions already sought from Malloy. Malloy has already served layoff notices to over 100 state workers, with most in the Department of Social Services, which could be a signal that talks towards those concessions are not going well. The total number of layoffs could be over 4,000 if concessions are not made. The GOP plan also calls for the closing of a state prison and the elimination of the sales tax revenue sharing program. The Earned Income Tax Credit, which benefits poorer taxpayers in the state, would also be reduced by the GOP plan. The plan also cuts $20 million in spending on magnet schools.
State Representative Terrie Wood spoke about Malloy’s plan, saying, “While he does ask concessions of state unions, the balance of his budget defunds 30 municipalities which in turn forces them to raise taxes on the local level to preserve current services.” Wood also spoke to the combative nature of the two parties as they try to come up with a solution, saying, “While much of our legislative work is bipartisan and warmly collegial, Republicans and Democrats part company on how best to handle our state finances. It is well known that the Democrats are totally loyal to the state unions. With a Democrat running the state for the last six years, what the unions want, the unions get. Connecticut state unions enjoy the highest salaries and benefits in our country. This is simply not sustainable and needs to be modified.”
Wood spoke to the GOP budget plan effort to address the salaries and benefits of union workers, saying, “The Republican budget once again specifies the modifications we would make with regard to union salaries/benefits. We respect the work they do, but want to see their salaries/benefits more in line with other states and the private sector.”
First Selectman Jayme Stevenson wrote to Darien elected representatives this week as well, saying, “News regarding the Governor’s revised budget was disconcerting for me and the residents of Darien.”
“While we are grateful the Governor continues to allocate a small amount of funding to Town Aid Road and LoCIP, the loss of all Education funding, including Special Education reimbursement, coupled with pension sharing will have a dramatic impact on our conservatively managed town and will require the issuance of a Supplemental Tax Bill to cover unbudgeted expenditures,” she wrote.
Stevenson also asked leaders for any “substantive information” they might be able to offer regarding the potential restoration of some of the eliminated education and other funding. The RTM passed the town budget on May 8, and that budget accounted for large cuts in state aid, but the latest proposal from Malloy goes beyond even what was accounted for by a conservative budget process.
Senate majority leader Bob Duff, Sen. Carlo Leone, and State Rep. William Tong, all Democrats who represent part of Darien, did not respond to requests for comment.
This budget season is proving to be increasingly difficult. More than the fiscal health of the state being incredibly poor, it is beginning to appear that partisan politics are creating even more hurdles for the budget to climb. The Senate is evenly split, and the Democrats have a three seat advantage in the house, meaning that aisle crossing will have to occur for any budget to be passed. At present, both sides seem guilty of simply pointing the finger at the other, as the $5 billion deficit for a biennium remains unaddressed.