Legislators discuss state budget with finance board

On Nov. 21, state Sen. Toni Boucher (R-26) and state Rep. Gail Lavielle (R-143) provided the Wilton Board of Finance with an update on the adopted state budget for fiscal year (FY) 2018 and its impact on the town of Wilton.

The adopted state budget is a $41.3-billion two-year plan that spares Wilton the deep cuts that had been threatened during budget battles between the governor and the legislature since February.

Boucher, Lavielle and state Rep. Tom O’Dea (R-125) all voted in favor of it.

After the budget passed in the House of Representatives, Gov. Dannel Malloy made additional cuts in state aid to municipalities to help achieve savings ordered by the General Assembly.

Municipal state aid

The legislature’s adopted FY18 budget provided $1,403,927 to Wilton in municipal state aid with unassigned savings in the overall budget — a 5% drop from FY17.

“The legislative leaders gave [Malloy] parameters [for areas in which cuts should be made], which did not include cutting municipal aid, but he cut municipal aid anyway,” Lavielle told The Bulletin on Nov. 25.

“The legislature adopted a budget and then the governor, when he made the assigned cuts he was supposed to make, instead of making them in all the areas the legislature suggested, he cut municipal aid instead, so there were cuts from the budget that Wilton wasn’t expecting.”

With the governor’s additional cuts, Wilton municipal aid funding dropped to $1,341,997.

Between the budget passed by the Senate and House and the changes made by the governor, Lavielle said, “Wilton didn’t get cut in anything except ECS [Education Cost Sharing] and … the municipal stabilization grant.”

The municipal stabilization grant, Lavielle explained, is “a temporary statutory grant that was built into the budget just for the term of this budget, which would shield towns from either losing a lot of money very quickly or gaining a lot more in, say, ECS money very quickly.”

“That particular grant [for Wilton] was designed to shield against [sudden] cuts,” said Lavielle.

The budget passed by the Senate and House appropriated $122,545 in municipal stabilization grant money to Wilton. Malloy’s action cut that down to $112,877. Wilton did not receive stabilization grant funding in FY17.

Education Cost Sharing

ECS funding for Wilton will decline 16.3% — from $462,941 in FY17 to $387,564 in FY18. Under the budget passed by the Senate in October, Wilton would have received $439,794.

Because of uncertainty, the Wilton Board of Finance did not include ECS in its FY17 budget.

“I think it’s the right way to do things — when we have some uncertainty, un-budget it and just hope it comes in, and then take it into funds to spend next year,” said Board of Finance Chair Jeff Rutishauser.

When Wilton wound up receiving ECS funding for FY17, Rutishauser said, the finance board “gladly” received it.

“Because it wasn’t budgeted, it is a positive variance to our budget,” he said, and will go into the town’s general fund.

Other funding areas

The budget does not require towns and cities to pay into the state teachers’ pension fund as the governor’s budget did.

Under grants for municipal projects, Wilton sees no change, receiving $307,058 in both FY18 and FY19 the same as it received in FY17. The town also sees no change in its Town Aid Road grant ($316,218) or Mashantucket Pequot and Mohegan Fund grant ($10,862) funding.

Lavielle noted that Wilton’s Mohegan Fund grant funding was eliminated for FY19.

The budget also allocates $206,974 in Local Capital Improvement (LoCIP) funds and $141 in adult education funding to Wilton.

State deficit

Boucher said Connecticut has been in deficit since 2008.

“We have not gotten out of that deficit,” she said. “Massachusetts has recovered 300% of its job loss. We have barely 73%.”

On top of that, Boucher said, Connecticut has a minus 0.6% GDP growth.

“By all accounts,” she said, “we’re at the bottom of many financial indicators.”

Lavielle said the legislature’s budget office’s November revenue projections show a deficit of $178 million, while the governor’s budget office projects an even larger deficit of about $202 million.

The November projections also showed a $147-million shortfall for FY19, said Lavielle.

A “large part” of the state’s revenue deficiencies came from “shortfalls in Medicaid reimbursements,” said Lavielle, but there were also “big, important shortfalls in tax revenue,” including:

  • $70 million from sales tax.

  • $34 million in income tax.

  • $18 million in taxes on public services like utilities.

Although there was a $30-million increase over what was projected in the estate tax, said Lavielle, “the first three estimated tax payments for individuals or families for 2017 fell by more than 6%.”

In recent history, Lavielle said, “shortfalls continue to occur, particularly in the April consensus revenues.”

“I would anticipate, if things remain as they have been for the last few years — and they have not gotten better — that we will see further shortfalls this year,” she said.

With the state’s FY18 budget already running a deficit, Lavielle said, state Comptroller Kevin Lembo’s early-December official report “on where the budget stands” will likely announce that a “deficit mitigation plan will be necessary.”

More work ahead

Even though it was “probably one of the longest legislative sessions since the income tax was enacted in 1991,” said Boucher, “we’re not quite through yet.”

Earlier that day, Malloy signed a bill that makes “technical budget revisions he forced through a line-item veto,” according to the CT Mirror. With this, legislative leaders were scheduled to meet the following week “to discuss whether further action on the budget is required before the General Assembly convenes its regular 2018 session in February.”

“We have gone through some of the most difficult periods in the state’s history, which started with a terrible recession that, by all accounts, most other states have recovered from,” said Boucher.

Not only has Connecticut not recovered, said Boucher, but it’s “on the verge of another recession.”

That, she said, is something “all boards of finance need to be considering going into the next year.”

Rutishauser thanked Lavielle and Boucher for “putting in a good fight” and their efforts in Hartford.

Lavielle thanked the Board of Finance for being “so careful with the funds in Wilton” and “always being very prudent about not taking a risk.”