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Lamont's budget keeps municipal aid stable, gives one-time boost to distressed cities and towns

Gov. Ned Lamont's budget proposal released Wednesday largely sustained aid to towns and cities, directed additional funds to distressed municipalities and kept education funding level by tapping into federal funds.

In his budget address, Lamont stressed that he was sticking to his commitment not to harm cities and towns, while he struggled to balance the two-year state budget projected to have deficits of $1 billion per year.

“The past year has been an exceptional challenge to our cities and towns,” he said. “There isn’t a single mayor who in 2019 budgeted for a pandemic in 2020, and they are struggling to build this new reality into an already tight budget for 2021 and beyond.”

Total aid to municipalities (all sources) under the governor's proposal

TownFiscal year 2021 (est.)Fiscal year 2022 (proposed)Fiscal year 2023 (proposed)
East Lyme$7,564,336$7,942,433$7,942,433
Groton$30,149,225$31,371,649$31,371,649
Ledyard$14,106,796$14,567,280$14,567,280
Lyme$277,551$277,551$277,551
Montville$16,357,680$18,638,380$16,953,631
New London$38,507,904$45,122,911$42,678,076
North Stonington$3,773,362$3,857,135$3,857,135
Norwich$44,579,200$52,352,939$48,823,959
Old Lyme$561,610$561,610$561,610
Preston$4,388,629$4,952,238$4,531,233
Salem$2,936,149$2,991,788$2,991,788
Stonington$1,838,788$2,460,410$2,460,410
Waterford$1,060,744$1,641,830$1,641,830

Education Cost Sharing grants, road aid, capital improvements grants and payments in lieu of taxes for nontaxable property remained stable in the budget, while nearly all local towns would see additional aid through federal stimulus grants. Only Lyme and Old Lyme are left out of that mix, according to state budget documents.

New London, Norwich, Montville and Preston are among 25 designated distressed municipalities that would receive a collective $100 million in one-time per-capita grants next year. Norwich would receive $3.5 million, New London, $2.4 million, and Preston, $421,000. Lamont proposed funding half of the $100 million with revenue from the Coronavirus Relief Fund, and the other half through bonding.

Starting in fiscal year 2024, half of the new tax revenue from the proposed sale of marijuana will go to municipalities, according to the governor’s proposal.

Norwich City Manager John Salomone and New London Mayor Michael Passero welcomed the additional aid but were cautious about how their cities could best use what Passero called “a one-time shot in the arm.”

Salomone said the money could not be used to offset general spending, as that would create a $3.5 million hole in operating revenue next year. He said he will ask state officials if there are any restrictions for using both the distressed municipality aid and the federal stimulus money before sending his city budget proposal to the City Council in April.

Passero said he has yet to see the kind of changes to the state payment in lieu of taxes program that are sorely needed for municipalities like New London, where there are large amounts of tax-exempt property.

“I am looking for a structural change to the PILOT system,” he said. “The burden of tax-exempt property should not be borne solely by the cities. That burden should be shared.”

Passero said the state promised last year to provide half of a 1% increase in the sales tax to municipalities, but that has since been deferred.

Montville Mayor Ron McDaniel said the state budget news “so far is positive for Montville,” but he will await action by the state legislature this spring.

Preston First Selectwoman Sandra Allyn-Gauthier said she was grateful the proposed budget kept town aid stable as promised. She said town officials will evaluate how best to use the one-time distressed municipality grant.

State Sen. Cathy Osten, D-Sprague, whose town also will receive a distressed municipality grant of $260,250, said it should be used for infrastructure improvements. “You don’t want to add staff with that money,” she said.

But Osten also was concerned that aid for distressed municipalities is projected to come from legalized recreational marijuana revenue. “I’m not certain it has enough support in the legislature to pass,” she said of recreational marijuana.

She said there are associated costs, including for drug resource enforcement officers trained in recognizing drugged driving, and other issues to be considered.

Osten said the proposed biennial budget flat-funds education grants, but Norwich has been underfunded for years and needs increased  funds. “It creates a fiscal cliff that we will have to put in hundreds of thousands of dollars in education funds just to keep up. Funding has not been there in Norwich for years," she said.

Groton is not listed as a distressed municipality, but with the added federal stimulus funding would see a 4.1% overall increase in aid totaling $31,371,649, including $1.5 million from a federal Elementary and Secondary School Emergency Relief Fund grant.

Groton this year received a one-time $300,000 Alliance District school grant, so the town's Municipal Stabilization Grant next year will drop, Town Manager John Burt said.

“Considering the pandemic, I would be thrilled if we receive the funding presented in the governor’s proposed budget,” Burt said.

East Lyme First Selectman Mark Nickerson said he is pleased town aid at least remained “steady” to avoid a potential large local property tax increase. But he, too, noted the PILOT program has never been fully funded. But he thinks PILOT funding and property tax reform are multiyear processes.

East Lyme has five state properties — including Rocky Neck State Park, where first responders frequently are called in summer, and York Correctional Institution — that he called "a huge drain."

Stonington officials were pleased to see Lamont’s budget figures Wednesday, after seeing their state aid continually decrease over the past two decades. Lamont's budget would maintain the town's education aid at the current $1,073,011 for both fiscal years 2022 and 2023.

Combined with $621,683 federal stimulus aid to cover COVID-related school costs, the town's overall aid would increase to $2,460,410 in both years from the current $1,838,788.

Board of Education Chairman Frank Todisco called the additional aid "a win for our community.”

"We're very happy we're being level funded because we expected ECS (educational cost sharing aid) would go down," First Selectwoman Danielle Chesebrough said, "But we know these numbers could significantly change, so we'll go into the budget process knowing that."

The Connecticut Council of Small Towns welcomed the news that municipal aid would not be cut amid the COVID-19 pandemic.

“Given the ongoing fiscal challenges facing municipalities and the uncertain economic impact that COVID-19 will have on property tax revenues, COST is relieved that the budget does not include any cuts to municipal aid,” Executive Director Betsy Gara said in a statement.

Gara said local aid for road and capital improvements funding will help towns with infrastructure projects important for economic recovery.

The Connecticut Conference of Municipalities also applauded the governor for protecting municipal aid, providing additional federal relief dollars for education and for helping some of the state’s hardest-hit communities.

However, in a statement issued Wednesday, CCM said predictable aid for towns and cities is needed for long-term property tax relief. Cities and towns should “have a seat at the table” in planning property tax reform.

“For that reason, we are concerned by the Governor’s proposal to delay both the Municipal Revenue Sharing Account grants and the scheduled increase in Education Cost Sharing funds, even though we appreciate the increases in one-time emergency assistance next year,” the CCM statement said.

Day Staff Writers Joe Wojtas, Sten Spinella, Erica Moser and Greg Smith contributed to this report.

c.bessette@theday.com

k.drelich@theday.com

Related stories:

Distressed Municipalities grants

Aid to distressed municipalities

The governor is proposing allocating an additional $100 million in aid to the state’s distressed municipalities in fiscal year 2022. The specific payments for the municipalities in the region are:

Montville: $1,684,749

New London: $2,444,835

Norwich: $3,528,980

Preston: $421,005

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