April 10, 2009

Connecticut Budget Proposal Reduces Town Property Taxes

Legislative Update
Republican plan avoids tax hikes

Republican Budget
Proposal Maintains Town Aid
Finance Provides $100 Million Each
in Infrastructure Aid and Regional Grants


Republican’s New Budget Proposal Maintains State Aid Levels

The Republican Legislative leaders unveiled a new state budget proposal that, among other things, maintains state aid to towns and cities.

Republican Budget Alternative

House and Senate Republican leaders today released a “no tax increase” budget proposal that provides no cuts for towns and cities from general fund revenues (portions of grants that have been funded using state surplus fund for this fiscal year would not be funded).The Republican Plan increases State employee’s prescription payments from $3 to $10. Republicans have proposed several non-tax and non-service fee revenue initiatives to fund the plan. The Republicans have also put funding back for several public safety and public health initiative like the health district funding and bridge funding.

Bond Package

A proposed state bond package that would:

• Establish a new $100 million “municipal block grant” for FY 09-10 that would provide municipalities with$40 million according to LoCIP, $40 million according to TAR and $20 million according to unemployment rates. This block grant would be in lieu of the existing LoCIP and TAR programs. It would provide $50 for LoCIP in FY 10-11. The uses of the money would be more flexible for municipalities than under either LoCIP or TAR;
• Establish a new $50 million “regional block grant” to encourage municipal cooperation (FY 09-10). This is the Committee’s alternative to Governor Rell’s regional incentive proposals (also $50 million). See below for a related funding proposal;
• Provide $10 million in each year of the biennium for STEAP (the Governor had not funded STEAP);
• Reduce proposed bonding below levels recommended by the Governor for the following:
-- Urban Act – no funding (Governor proposed $30 million in each year of the biennium);
-- Clean Water Fund G.O. bonds (used for grants) -- $65 million in FY 09-10, $40 million
in FY 10-11.

The Governor had proposed $90 million in each year;
-- Clean Water Fund revenue bonds (used for loans)
-- $80 million in each year (Governor had proposed $175 million each year);
-- Aid for Municipal Plans of Conservation and Development—no funding
(Governor had proposed $500,000 each year).

Additional Regional Incentives

A bill (a rewritten version of HB 6561), which would dedicate $50 million from the state sales tax revenue to fund regional capital costs and services or other cost-saving programs. Combined with the bond fund described above, the Committee would thus provide $100 million in regional incentives.

Other Actions

A favorable reported on:
• HB 6559, a CCM proposal that would earmark future growth in state Indian gaming revenues for (a) PILOTsand (b) Pequot-Mohegan grants, and
• SB 1111 which authorizes school construction grants.

The Committee appears to have maintained the Governor’s provision that would limit school construction change orders to 5% of a project’s cost.


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