Bad State Policies Squeezing Local Budgets

As local governments debate and finalize their 2024-2025 budgets, Connecticut residents across the state are bracing for possible tax increases due to new policies enacted by the General Assembly over the past few years.  

In Middletown, for example, Mayor Ben Florsheim (D) attributed the police accountability bill, early voting, fair rent commissions and changes in school curricula as the main drivers to a proposed mill rate increase of 2.9 mills during the Common Council Budget Workshop on April 15. 

The mayor noted that these measures were either introduced without any accompanying funding or with allocations that were insufficient to effectively implement and manage these policies. As a consequence, he shared that homeowners with properties valued at $250,000 can expect their annual taxes to rise by about $500 “or a little under $42 per month.”  

He cited several issues influencing this decision, including dried-up federal Covid relief funds and local increases in costs ranging from school supplies to health insurance and construction.  

Additionally, he underscored the burden of the state’s unfunded liabilities, noting that Connecticut’s prolonged failure to make regular contributions to its retirement systems is further straining his budget. 

When the state eventually resumed these payments, it resulted in budgets that “slashed aid to towns and cities” and involved “scaling back or freezing state investment in critical social services,” according to Mayor Florsheim.  

Middletown is not the only municipality that must shoulder the burden of the bad and costly policies coming out of Hartford. Therefore, it is crucial that local officials take a proactive stance and actively encourage their state representatives to champion the interests of their communities.  

For example, the General Assembly is currently poised to approve a wage reopener for the State Employees Bargaining Agent Coalition (SEBAC) — a group that is comprised of 15 state government unions.  

The reopener was part of the five-year 2022 SEBAC agreement — costing over $1.8 billion in the first four years — and did not include wage increases for its final year. The non-partisan Office of Fiscal Analysis (OFA) projects that the cost for the contract’s last year will reach nearly $170 million, covering 4.5% raises and associated fringe benefits. 

Why does this matter?  

According to a 2024 study by the Townsend Group, Intl, LLC, the SEBAC 2022 deal is expected to increase future pension costs by $4.5 billion or 11% for the first four years alone. Given that pension costs are calculated based on wages, this figure is likely to escalate, further straining future state budgets by putting us deeper in debt — which is currently over $88 billion, with $40 billion in pension liabilities and almost $20 billion in retiree health care costs. This growing financial strain will only lead to decreased funding for municipalities and increased financial burdens on property owners. 

If the contract reopener is approved, approximately 46,000 state workers will have received a compound raise of 33% during Gov. Ned Lamont’s tenure. This figure does not account for a $3,500 pensionable bonus and pandemic pay, which resulted in payouts of up to $5,688 for eligible state employees. Local leaders should be pressing state officials to reject this deal rather than passing the financial responsibility onto residents through local taxes. 

State unions are not the only ones seeking to line their pockets. The Connecticut Education Association (CEA) — the state’s largest teachers union — is pushing for a bill that would set the minimum starting salary for certified teachers at $60,000.  

CEA President Kate Dias highlighted in her testimony that some districts currently pay teachers less than $42,000, and as of this year, only one district in Connecticut offers a starting salary above $60,000.  

While the bill would appropriate state funds to support this salary increase, it also presents challenges for local governments by limiting their ability to engage in collective bargaining for wage and benefit packages at the local level. 

Furthermore, the legislation exposes municipalities to potential spikes in educational costs, should the state fail to authorize sufficient subsidies for these salary increases in the future. 

Regarding early voting, Mayor Florsheim is not the only local official to express it as a new challenge to the budget process. According to CT Examiner, other highly populated municipalities are feeling the pain, including Manchester, Danbury and Waterbury.  Their local governments are all considering budget increases to fund additional staff, ballots and locations associated with the extra 14 days of voting before the November Presidential election. 

Early voting became a constitutional amendment in 2023 when it was approved by voters in 2022 with 60% voting in favor so that deal is done. But voters will see another ballot question in November asking voters if they want the General Assembly to draft a law about allowing for no-excuse absentee voting — also known as mail-in voting. What that law would look like is unknown.  

Local leaders need to insist that state officials provide details on what they project this will cost so voters know there will be a fiscal impact to their towns. This transparency is crucial to ensure that residents are not caught off guard during local budget debates, and that these state-level decisions are responsible for tax increases. 

Connecticut voters may soon consider another ballot question, asking whether the state constitution should recognize the right to clean water and air — often referred to as the “Green Amendment.” If passed, this amendment would grant residents the legal authority to sue the government should their environmental rights be violated. 

“Climate lawsuits are on the rise,” said Susan Eastwood, Chair of the Ashford Clean Energy Task Force and the Chapter Chair of Sierra Club Connecticut, in her written testimony in support of this resolution.  

Emphasizing that “Around the country (and the world), more and more lawsuits are being brought to demand redress for an unhealthy environment.” Eastwood finds the most compelling ones “are those brought by the youth whose futures are threatened by the climate crisis.” She believes that the lawsuits most likely to move forward are ones “in states that have already enshrined environmental rights in their Constitutions.” 

While having a clean and healthy environment is important, these lawsuits can be very expensive to local governments. According to Betsy Gara, Executive Director of the Connecticut Council of Small Towns, if the resolution manages to pass it will “grant individuals new, unfettered environmental rights with automatic legal standing to pursue litigation against the state, municipalities, and political subdivisions.” 

She warns that this will “Subject municipalities to protracted and costly litigation based on undefined standards which could be used to halt local housing, economic development, and infrastructure projects.” 

Furthermore, she said, “That by allowing environmental rights to be defined by the courts on a case-by -case basis will create turmoil on the local level, leaving municipalities vulnerable to costly litigation and jeopardizing the approval or completion of critical local projects.” 

For this resolution to appear on the 2024 ballot it will require approval from 75% of the legislature. If it fails, it will be referred to the 2025 session of the legislature. If it passes in that session by a majority of each house, it will appear on the 2026 general election ballot. If the majority of voters approve the amendment in the general election, the amendment will become part of the state constitution. 

Local leaders play a crucial role in advocating for their communities at the state level, especially when it comes to mitigating potential tax burdens.  

They are often in a unique position, as they regularly appear alongside state officials at community events and photo opportunities, providing them with direct access to influential decision makers. This proximity allows them to ensure that the unique needs and concerns of their municipalities are represented and considered in broader legislative decisions.  

Being vocal and involved in state issues is essential because state policies often have direct impacts on local funding, public services and tax rates. Without strong representation, communities may face unfavorable policies that lead to increased financial strain on residents through higher taxes.  

Moreover, local leaders who actively communicate with state representatives can help shape policies that are more aligned with the fiscal realities and priorities of their communities, potentially securing better funding and support while avoiding the imposition of one-size-fits-all solutions that may not be suitable for their specific circumstances. 

This Week on Yankee’s Podcast Y CT Matters  

How to Make Energy More Affordable with Paul Bachman 

Connecticut’s people suffer from some of the highest electricity rates in the nation. Why is that? The issue stems from the Renewable Portfolio Standard (RPS) rules.

Passed by the legislature in 1998, the RPS severely restricts the ability of utilities to find the cleanest and most efficient means of providing electricity to Connecticut’s residents and businesses, creating higher electric bills as a consequence. Paul Bachman, Adjunct Scholar at the Beacon Hill Institute (BHI) and co-author of Yankee Institute’s latest study, Re-Energize Connecticut: Toward Affordable Electricity for All, explains how to make energy more affordable.

More on our guest…

Bachman was formerly the Director of Research at BHI and managed the institute’s research projects, including developing and deploying the STAMP model. He has authored research papers on state and national tax policy and state labor policy, and produced the institute’s state revenue forecasts for the Massachusetts legislature. He holds a Master of Science in International Economics from Suffolk University.

Read Yankee Institute’s latest study here.

To Listen click here. 

Are you coming to our Champions of Freedom Gala on April 27 at the Woodway Country Club in Darien? 

It’s a wonderful opportunity to have a great time AND support Yankee Institute — so we’re ready to push back on government overreach, serve as government watchdogs, and offer educational opportunity and access to low-income children across our state!

But tickets are running out! And we would hate for you to miss out on the event of the season!