Governor’s plan to shift pension funding gives pause to local officials
Updated 11:25 am, Wednesday, March 15, 2017
DARIEN — First Selectman Jayme Stevenson was in Hartford testifying against proposed legislation for the second time in a week last Thursday.
Stevenson spoke out against H.B. 7050 — An act concerning enhancements to municipal finance and responsibility — in front of the state’s Revenue, Finance and Bonding Committee on March 9. She was in Hartford just two days earlier opposing a bill that would force municipalities to form regional health departments.
In early February, Malloy proposed a two-year $40 billion budget that cut state aid to all but 31 of the state’s 169 towns and cities. The municipal finance bill would shift one-third of the burden of paying for teacher’s pensions from the state-run Teachers’ Retirement Fund to individual municipalities. In Darien’s case, the bill would mean a $4.5 million contributed from the town in Fiscal Year 2017-2018.
Currently, the state pays 100 percent of the employer pension costs.
“While the bill’s language defines the proposed municipal contribution as a “reimbursement to the state” the objective is clear...to bail out the state’s chronic, decades-long, bi-partisan underfunding and mismanagement of the Teachers’ Retirement Fund,” Stevenson said in her prepared statement. “This proposal is inconsistent with state statute, breaks the state’s statutory commitment to our hard working teachers and undermines the fiscal stability of towns like Darien who pride ourselves on conservative spending, investment and reserves policies earning us the highest available bond rating.”
As a punishment for its fiscal responsibility, Stevenson said, Darien would be strapped with a roughly $8 million bill from the state, including other state cuts, which would put undue responsibility on residents.
“Without gutting town services, the likely impact will be the third largest tax increase in the state’s history as a result of these state mandates,” Stevenson said.
Stevenson also invoked the Connecticut Coalition for Justice in Education Funding (CCJEF) v. Jodi Rell case, which is currently in the Connecticut Supreme Court with a late summer decision anticipated, in which the CCJEF alleged that the state’s inability to equally fund its public schools harmed students.
In New Canaan, the town would find itself owing $4.1 million should the legislation be passed.
While First Selectman Robert Mallozzi III said the state’s plans to cut funding are a “game changer,” he and the Board of Finance in New Canaan see it as more of a problem for next budget season, as opposed to the current Fiscal Year 2017-2018 budget.
“There’s a long legal challenge ahead. There’s more to come before the state can assign to us any fiduciary responsibility,” Mallozzi said.
Still, he said that increased uncertainty at the state level has had an impact on the ways in which towns are approaching their budgets.
“I think having this kind of uncertainty as towns are preparing their budgets gives a lot of pause to decision making. My guess is towns like New Canaan and others are not as aggressive in wanting to take on debt and increase their budgets because of the fiscal condition of the state,” Mallozzi said.
The legislature will make recommendations by the end of April to close a projected $1.7 billion state deficit. The legislative session ends on June 7, and the governor’s office would like to have a set budget by then.