Press Releases
08/23/2017
Gov. Malloy Receives Report on the State’s Financial Support to Municipalities
Municipal Aid Has Grown by Nearly 21 Percent Over Last Five Years
(HARTFORD, CT) – Governor Dannel P. Malloy today received the first municipal aid report from the Office of Policy and Management in response to his request of August 2. This first report provides a big-picture analysis of state-provided aid to local governments, including expenditures from grants and funding for capital projects. Additionally, it contextualizes that information with other areas of state funding in recent years. An additional report will follow containing information on the financial health of the municipalities in terms of their mill rates, fund balances, bond ratings, and grand list changes.
The report makes clear that in recent years, municipal aid has continued to expand at the same time the state has cut billions of dollars in expenditures across state agencies, including a reduction in the number of state employees by more than 12 percent. In fact, over the last five fiscal years the state’s support to towns and cities has grown by nearly $1 billion, an increase of more than 21 percent. This has taken place while the state’s population has remained largely flat and student enrollment in public schools is down.
**Download: Report on Connecticut’s Financial Support to Municipalities
“As a former mayor, former member of local boards of finance and education, and as a father who raised three children here, I know just how important state funding is for every city and town in Connecticut,” Governor Malloy said. “That’s why my administration has been highly protective of municipal aid over the past six years, as this report makes clear. Unfortunately, holding towns harmless and even increasing aid while we make excruciating cuts across state government is not sustainable in the long-term. It’s clear that if we want to put Connecticut’s budget on stable footing, we must modernize the relationship between the state and local municipalities.”
Municipal aid is the largest category of state spending within the entire General Fund, totaling nearly $5.1 billion in Fiscal Year 2017. It includes:
- More than $3 billion annually in statutory formula grants, comprising of State Owned PILOT, College & Hospital PILOT, Mashantucket Pequot & Mohegan, Regional Performance Incentive, Grants for Municipal Projects, Municipal Revenue Sharing Account, Adult Education, and Education Cost Sharing (ECS).
- Capital programs such as local school construction that can range between $600 million and $850 million annually. In addition, Local Capital Improvement Projects (LoCIP), Town Aid Road (TAR), and the Small Town Economic Assistance Program (STEAP) are capital programs benefitting the municipalities. Other examples of capital funding benefitting municipalities include housing, public libraries, open space land acquisition, brownfields, economic development, and clean water.
- Over $1.2 billion in the current year for the state’s share of contributions to the Teachers Retirement System, retiree health service cost, and debt service on the pension obligation bonds. This contribution is projected to escalate considerably in the years ahead.
Over the last five fiscal years, state aid to municipalities has increased more than 21 percent, far outpacing the growth in the state’s share of spending on Medicaid, debt service, and transportation during the same period. There are two primary drivers of the increase in municipal aid costs – ECS grants and teacher pensions. The continued escalation of ECS has made education spending one of the fastest growing functions of government, far outpacing transportation, corrections, and regulation and protection as functions of government and helping explain the growth in municipal aid over the last several decades.
“It has always been my priority to shield education funding from the difficult choices we have had to make,” Governor Malloy said. “At the same time, we are forced to make nearly impossible decisions and we must now prioritize safeguarding funding to the greatest extent possible in communities with concentrated pockets of poverty and the highest student needs.”
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