NB Politicus

Rell’s Local Aid: Placing More Burdens On Cities

Posted in city politics and government, property tax, state aid by nbpoliticus on February 27, 2009

The mayors of Bridgeport and New Britain have forged a bipartisan alliance to praise Gov. Jodi Rell’s budget package for level funding of education aid to cities and towns. All cities and towns will get the same amount for the single largest local expense item — the schools.

According to a New Britain Herald op-ed by Bill Finch (D-Bridgeport) and Tim Stewart (R-New Britain) and James Craven’s story sharing their togetherness, Rell’s proposal is a good start to the budget process for their towns. To be sure a status quo Educational Cost Sharing (ECS) for all 169 cities and towns is a good idea. It will mitigate somewhat the annual tug of war between city halls and boards of education.

But a closer look at Rell’s state aid formula shows that cities lose out in a big way compared to their suburban neighbors. At a February 19th Democratic Town Committee meeting on state aid and the federal stimulus package State Rep. Peter Tercyak (D-26) pointed out why Rell’s budget — estimated to be $2 billion out of balance in the early going — tilts against cities and their residents more than suburbia.

Cities such as New Britain have always relied on payments in lieu of taxes — PILOT funds — to offset the presence of state property, hospitals and agencies in their towns. Otherwise, taxable land is tax free when a state- or nonprofit owns it. The economically distressed cities, by and large, house the bulk of tax exempt property; the more affluent towns do not. PILOT funds, though not providing a dollar for dollar exchange back to the community, offset the presence of tax-exempt property with much needed revenue.

Rell’s budget slashes PILOT funds by double digit percentages. In Bridgeport, the Governor would cut PILOT money for colleges and hospitals from $11,200,500 to $10,041,445, a 10.35% decline. Aid for state-owned property in goes from $2,676,768 to $2,450,950, an 8.44% drop.

According to the percentage decreases, New Britain takes a bigger hit than Bridgeport on PILOT money. The current $3,561,936 for colleges and hospitals will drop down to $2,793,464, 21.57% less; payments for state-owned property go from $4,255,399 to $3,407,080, 19.94% less.

While Rell’s 0% decrease on ECS is welcome news for Bridgeport and New Britain; it’s equally welcome news for every town, rich and poor. Finch and Stewart may as well have been the mayors of New Canaan and Avon in offering praise for Rell’s budget.

The PILOT funding shows that in tough economic times Rell gives the rich towns a better deal than economically stressed cities. It’s just one more disadvantage that cities face and the long driveway towns won’t in paying for and delivering essential services.

That’s something Finch and Stewart can’t be so happy about and didn’t mention in their strong praise of Rell for level ECS funding. The Legislature now has the hard task of setting aside Rell’s fuzzy math and dealing with the most difficult budget cycle since the early 1990s.