ROCKY HILL, Conn. — Leaders of small Connecticut communities are nervously awaiting Democratic Gov. Dannel P. Malloy's impending budget proposal, which is expected to include major changes in state aid that could hurt their bottom lines.

Betsy Gara, executive director of the Connecticut Council of Small Towns, said Wednesday her members have seen years of flat or reduced state funding for education and local government while the cost of delivering services has increased. She said they're now "very worried" about what that aid will look like, considering Connecticut faces an estimated $1.5 billion budget deficit in the new fiscal year.

The typical general fund budget is roughly $18 billion.

"It's really going to be very challenging for towns to be able to craft local budgets in a way that enables them to continue to deliver critical services and hold the line on property taxes," she said. Malloy's recent call to redistribute state aid for local education is causing anxiety among small town leaders, she said.

The Council of Small Towns now plans to have a stepped-up presence at the state Capitol during this year's legislative session. The organization has launched a "small town coalition," which will include meetings between local leaders and state lawmakers throughout the state.

During his State of the State address last week, Malloy suggested changing the state's complicated education funding formula and instead distribute aid based on a community's local property tax burden, student need and student enrollment — a move that likely would benefit the cities. Malloy said less-affluent communities would be held to "substantially higher standards and greater accountability."

Appearing Wednesday at the council's Connecticut Town Meeting 2017, Malloy reminded local leaders of the challenge he faces this year in continuing to provide state aid to local communities at the same level, jokingly offering to give them "a portion of my $1.5 billion issue." Malloy noted how the state now spends $5.1 billion each year on municipal aid, which includes $4.1 billion in education funding. He said Connecticut should re-examine the role the state plays in helping municipalities, without offering specifics.

"We have to make reductions in expenditures. We will make reductions in expenditures. Exactly how that plays itself out is being worked on, on a daily basis," the governor said. "There are a lot of hard choices we have to make."

Malloy, a former mayor of Stamford, hinted there may be some proposals in his budget to reduce state mandates on cities and towns that local leaders will appreciate. Local leaders often complain that the state requires them to provide certain services or perform certain tasks without providing funding.

"I'm looking for ways to bring some forms of relief to communities," Malloy said.

The governor is tentatively scheduled to unveil his budget Feb. 8.