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Gov. Malloy Previews New Compromise Budget Proposal

Plan Contains Significant Changes to Municipal Aid Proposals

(HARTFORD, CT) – Governor Dannel P. Malloy this afternoon released an overview of guiding principles of a new, compromise biennial budget proposal that he will offer to the members of the Connecticut General Assembly tomorrow. He also previewed several areas where the administration’s new proposal makes significant adjustments and compromises to reflect both the priorities of various legislative caucuses, as well as affected constituencies, particularly in the area of town aid.

“It is imperative that leaders in state government come together and pass a biennial budget – one that continues to address Connecticut’s real fiscal challenges head on,” Governor Malloy said. “The reality is that in an extremely difficult budget year, no one is going to achieve all of their priorities. There are no easy answers left or rabbits that we can pull out of a magical hat. We have to meet one another in the middle and make difficult compromises, and we do it in a way that stabilizes the state’s finances over the long-term. That’s what my budget proposal seeks to achieve.”

The administration has been engaged in conversations with legislative leaders, as well as town officials, community providers, and others throughout the summer regarding the biennial budget.

The Governor’s updated budget proposal will be based on the following principles:

  1. Connecticut must live within its means and not spend more revenue than we take in. Our expectations need to reflect the state’s actual ability to operate and provide aid in the form of financial grants, or direct and indirect services.
  2. We must prioritize services and direct aid based on need, ensuring that residents who need help the most receive it, while also making the necessary and smart investments to grow jobs and strengthen the economy.
  3. We must arrive at a solution that addresses the state’s fiscal situation through realized labor savings, spending reductions in both state services and municipal aid, and revenue – prioritized and achieved in that order.
  4. We must make necessary and long-overdue structural reforms, recognizing that some will need to be phased in over a period of time.
  5. We must provide municipal mandate relief to empower local leaders to make necessary operational adjustments to operate local governments responsibly and efficiently in this new paradigm.

Among other specific changes aimed at achieving a compromise solution, the Governor’s budget will make the following adjustments in the area of municipal aid:

  • Accommodate an increase of more than $136.8 million in FY 18 and $89.0 million in FY 19 in various municipal aid over the Governor’s revised May 15 budget proposal and more than $897 million in FY 18 over the current Executive Order Allocation Plan.
  • Phase-in a progressive education funding formula, thereby smoothing the transition for communities that will experience a shift in aid.
  • Ask cities and towns to contribute only the employer share of educator pension payments for their current employees, and phases in those payments over a two-year period. In comparison, the Governor’s original budget proposal would have required towns to pay one-third of the full actuarially determined employer contribution, which includes the unfunded liability. Relative to the Governor’s original proposal, these changes reduce the amount to be paid by municipalities by $315.7 million in FY 2018 and $231.2 million in FY 2019.
  • Streamline several town aid grants making it simpler and more transparent and allow the state to bring more resources to bear in struggling towns and school districts.

“I have a long history of developing and negotiating budgets,” Governor Malloy said. “I understand that a budget is a reflection of multiple perspectives and priorities – it is the result of a lot of effort to find common ground and requires compromise on all sides. Such compromise will be reflected in the next proposal I put forward.”

“With that said, each of us has a bottom line,” he added. “The compromise budget I put forward will represent my bottom line on several key reforms I adamantly believe we must accomplish for the future of our state.”

Full details of the Governor’s compromise budget proposal are being finalized and will be released on Friday, September 8. The state has been functioning in the absence of a legislatively adopted budget since July 1.
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