The state budget signed into law Tuesday increases state funding for cities and towns by $23.5 million in the 2015-16 fiscal year, which begins today. 

Middletown will see its funding increase most with an additional $3.9 million; eight other communities will get a more than $1 million boost in state aid.

Several municipalities will get a small cut in state aid, though state funding for Hartford is reduced by $1.7 million and New Haven by $612,000, the nonpartisan Office of Fiscal Analysis reports. 

Overall, Connecticut's cities and towns will receive $2.5 billion next year from the state, a major source of revenue that affects property tax rates and services provided in many cities and towns. 

The primary sources of state aid to towns are:

•PILOT grants: There are two kinds of grants to reimburse towns for some lost tax revenue from tax-exempt property, one for state property and the other for property owned by nonprofits, such as hospitals and colleges. PILOT is an acronym for Payment in Lieu of Taxes.

• Pequot Grants: The state shares with municipalities a portion of the revenue it receives from slot machines at the tribal casinos.

• School grants: The state helps towns pay for school transportation and adult education.

• Education Cost Sharing: This is the principal grant the state provides to help towns run their school systems. It is by far the largest grant towns receive, accounting for $2.06 billion of the $2.52 billion in local aid.

• Town Aid Road grants: This grant helps pay for maintenance and snow removal on local roads.

• Local Capital Improvement Program (LOCIP): This helps towns pay for capital improvements, such as sidewalks and bridges.

• Municipal Projects: This is a catch-all category for local construction projects.

 Jacqueline Rabe Thomas and Andrew Ba Tran are reporters for The Connecticut Mirror (www.ctmirror.org). Copyright 2015 © The Connecticut Mirror.