Thursday, February 5, 2009

State cuts will hurt Middletown

Governor Rell's budget proposed no decrease in the Educational Cost Sharing grant to Middletown, which provides over half of the money from the state to Middletown ($16.6M, a quarter of Middletown's education budget). However, Rell was not so generous with other components which Middletown depends on. The city stands to lose $981,000 of PILOT (payments in lieu of taxes) funding for tax-exempt colleges and hospital property, $385,000 of PILOT funding for state-owned property, $147,000 from the Mashantucket, Pequot and Mohegan fund, and a total of $146,000 from the other state funding sources. The biggest cut by percentage was in the road aid fund, although this represents a very small portion of Middletown's state aid.

Governor Rell stated that she "flat-funded" state education funds so that municipalities would not be forced to raise property taxes. This is a little misleading, for two reasons. First, the Middletown education budget (like that of all other munipalities) faces large and unavoidable increases in costs of health insurance, transportation, and contracted wages. Thus, a flat contribution from the state requires cuts in services or increases in taxes (or both). Second, PILOT funds go into the city's general fund, in the same way as taxes from private sector property owners. This in turn funds the schools and everything else the city provides. Thus, although the schools and the city can celebrate the lack of cuts in state funds targeted to education, Governor Rell's cuts to PILOT funding are just as likely to force cuts in education or increases in property taxes (or both) as if she had taken the same amount of money from the education grants.

(All graphs from readily available Municipal Aid numbers in Governor Rell's budget)

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