UPDATE: Spotlight Sharpens on Hartford’s Potential $$ Impact on Wilton
UPDATE, Monday, May 6: Wilton’s State Representative Gail Lavielle updated information that was released last week, clarifying that while the plan for teacher pension costs to be shared by towns is being widely discussed–and even assumed–among legislators in Hartford, there is nothing specific included in any plan or budget being put forward by the Appropriations or Finance Committees.
The mixed messaging, including in press conferences legislators have held discussing the pushdown as well as in materials prepared for towns by the Connecticut Conference of Municipalities illustrates how unknown so much of the impact of the state budget will be.
“This just goes to show you just how preliminary these budgets are,” Lavielle says.
She adds that there is a “general consensus among everyone that the teachers’ pension cost shift will definitely be in the budget–and if it’s not, it will at least be used as a huge negotiation element by somebody.”
Lavielle also notes that what Appropriations did pass was a “re-amortization” or stretching out of the term for funding the teachers’ pension from 2032 to 2049–at a total extra cost of $17 billion. However, there’s been nothing specific included on the shift of pension costs to the towns.
ORIGINAL STORY: Friday, May 3–Legislative budget action in Hartford has now moved to the Appropriations and Finance Committees, with the budget proposals in those committees being finalized. GOOD Morning Wilton reported on the news earlier this week about the implication for school regionalization. Now, there’s news about the impact such budgets could have on municipal funding and taxes in other areas.
It’s important to note that these budgets are not finalized–they’re only part of the budget negotiation process that CT’s legislature goes through with the governor in setting the state’s budget.
First up are the much-talked-about teacher pension contributions and the education aid towns get from the state each year, in the form of the Education Cost Sharing (ECS) Grant. The current budget proposal coming out of the Appropriations Committee includes asking Wilton to contribute $463,000 toward the teacher pension obligation, confirming what’s been discussed as ‘possible’ until now.
Under the Appropriations Committee proposal, which the committee approved this past Tuesday, Wilton would stand to receive $444,000 from the state in ECS funding next year.
Neither one of these figures has been included in Wilton’s current proposed FY2020 budget. While Wilton First Selectwoman Lynne Vanderslice characterizes the surety of the Hartford budget proposals as “a big if,” she notes that the numbers would leave a net shortfall of approximately $19,000 in the FY2020 budget if those numbers stay intact.
Vanderslice noted that something else is adding to the uncertainty about whether the pension pushdown figures are final–both the Appropriations Committee’s budget and the governor’s budget assume pension concessions from the teachers’ union, and the union has already said it will not make those concessions.
She reiterated her objection to the idea of the pension pushdown to towns.
“Wilton is being asked to assume ongoing financial responsibility for an employee benefit, which is both the responsibility of the state and over which the State exerts 100% control. This is the continuation of years of the State transferring costs to the municipalities. When the assumed investment rate of the plan is not achieved and when the State needs to fill another shortfall in a future budget, we will likely see an increase in the municipal burden.”
If the state forces Wilton to assume some responsibility, Vanderslice says CT should allow Wilton to make other moves in return: “The State should provide Wilton with the authority to implement the types of reforms that we have adopted for our Town employees and should provide relief from the State mandated last best offer binding arbitration process, which consistently ties the hands of the schools during contract negotiations and contributes to Wilton’s higher average teacher salary versus the state average. “
Also floated by the Finance Committee is a change from what the governor proposed with regard to a statewide car tax. The legislative proposal keeps Gov. Lamont’s proposed car tax shift from municipalities to the state–an approximate $6 million loss to Wilton revenues. To ‘make up’ for that loss, the Finance Committee has proposed changing what the town can collect in property taxes, increasing the tax assessment rate for all other property from 70% to 100%.
According to Vanderslice, that $6 million will be paid by the remaining grand list (residential and commercial real property owners and personal property owners).
“Residential homeowners will pick up approximately 80% of the $6 million shortfall and commercial property owners and businesses will pick up the remaining 20%. By eliminating the car tax and increasing the assessment rate to 100% from 70%, the mill falls to just under 21 mills. Therefore raising the assessed value hides the impact of the loss of the $6 million in car tax.”
She explains that, depending on how many cars someone owns, and their value, a residential property owner may see a small decrease in their property taxes under the new proposal versus the current method of taxing. Anyone who owns a car and doesn’t own a home or a business will see a decrease as they will no longer pay any property taxes to the Town of Wilton.
If these pass, the changes would begin with the Oct 1, 2019 grand list, which means taxpayers would see it as part of the FY2021 budget, and not next year’s FY2020, as most CT towns will set the FY2020 mill rates before the state budget is passed.
One other proposed change that Vanderslice warns is worth watching for, that’s also part of the Finance Committee proposal: SB1120, which caps the mill rate for public utilities. With Eversource-owned property in Wilton, that would translate to a revenue loss of about $165,000 based on the real property amounts.