Tie state aid cuts to mandate relief

If someone gives you lemons, make lemonade, the old adage wisely recommends. Perhaps towns and cities have the chance to make lemonade with the proposed 3 percent cut in municipal aid that Gov. M. Jodi Rell is recommending to help close a $467 million budget gap.

The governor will fill a $130 million piece of the budget hole by eliminating the planned Jan. 1 reduction in the sales tax from 6 percent to 5.5 percent on Jan. 1. The state budget director, Robert Genuario, said taxpayers could say goodbye to the tax break that never was because tax revenues are not meeting projections. The bill approving the tax cut made it contingent on meeting revenue goals.

Gov. Rell also proposes cutting cultural and tourism grants, reducing some Medicaid provider rates, grabbing unspent funds and requiring state departments to further tighten up on spending.

But the proposed cut in municipal aid, to save a projected $84 million, could create the most political conflict. Local leaders cried foul, saying they already passed their municipal budgets based on the state's prior budget projections. There are warnings of service cuts and property tax increases.

Yet Mr. Genuario makes some valid points. Before the deep recession led to a dramatic drop in state tax revenues and the resulting budget crisis - town and cities had enjoyed increases in state aid, particularly education. It is only fair, he argues, that they now share in the burden of getting spending back in line with revenues.

Of course, the General Assembly should have made the necessary cuts, including in municipal aid, when it passed the 2010 fiscal year budget. It chose instead to pass a budget filled with imaginary savings, rosy revenue projections and borrowing to meet on-going expenses. Now the state is scrambling once again, and asking towns and cities to join in.

But the lemonade may come in the form of Gov. Rell's suggestion to form a panel of lawmakers, representatives of the governor's office and six municipal leaders to look at potential mandate relief. Town and city elected leaders have howled for years over state legislative mandates that they contend drive up the cost of municipal services.

Municipal leaders may be able to leverage any cuts in state aid with an agreement by the legislature to lift or mitigate some of these mandates. That, in turn, could mean long-term savings.

High on the hit list are "prevailing wage" mandates that require companies doing business with municipalities to pay wages and benefits based on a state Department of Labor formula, effectively tied to union wage scales. A 1995 study by the Connecticut Advisory Commission on Intergovernmental Relations concluded prevailing wage requirements increased construction costs for towns and cities as much as 21 percent annually.

School boards chafe under a long list of state-issued education requirements that leave little room for local approaches to educating, and which some complain give teacher unions unfair advantage in contract negotiations.

There are many others - fees towns must collect for the state, a requirement to store items left from evictions, and property revaluation frequency.

The point is, if it is fair to ask municipalities to do with less it is also fair to consider amending, suspending or removing some of these mandates.