UPDATED: City Council Awaits Word On State Funds

Members of the New London City Council are hoping they won’t have to revisit the city’s budget, but expressed worries over possible cuts in the wake of Thursday’s special state legislative session.

Governor Dannel Malloy has called the session of the Connecticut General Assembly to determine how to close a $1.6 billion budget gap over the next two years. In figures released on Tuesday evening, Malloy is proposing a 2.4 percent reduction in municipal aid over the next two years with a cut of $54,418,969 in the 2012 fiscal year and $54,477,576 in the 2013 fiscal year.

In his proclamation calling the session, Malloy said the budget plan agreed upon with the State Employees Bargaining Agent Coalition would have eliminated the deficit and brought about a balanced budget by the end of the biennium on June 30, 2013. According to the New York Times, the budget included a tentative agreement with state workers freezing wages for two years and making concessions in pensions and health care in exchange for a guarantee of no layoffs for four years and three percent annual raises for three years after this period.

In the wake of the rejection of the plan by state unions, Malloy said up to 7,500 state employees could lose their jobs. Information released Tuesday evening put the number of layoffs at 5,466, with an additional 1,000 vacant positions eliminated.

Malloy says in his proclamation that without the anticipated savings, the expenditures will exceed anticipated revenues in June of 2013. He said this is not allowed by the state constitution and that increasing state revenues through additional taxes would be an unacceptable burden on Connecticut residents and businesses. Malloy has also said he will not draw from surplus funds.

“It was always my hope that the SEBAC Agreement would be ratified and we could move forward with the process of getting our state’s fiscal house in order and creating new jobs,” said Malloy in a statement. “But that looks increasingly unlikely. Calling both chambers into session next week is necessary to close the budget deficit that we will be facing. I am loath to make the decisions facing us at this juncture – including layoffs, programmatic and municipal aid cuts – but I am left with no choice. Working with the legislature, we will have a balanced budget and one that, while making painful cuts and difficult decisions, will be balanced honestly without tricks or gimmicks.”

About 45 percent of the city budget and 49.51 percent of the school budget come from state or federal funds. The City Council on May 31, of which $39,817,405 will go to the schools, and the budget will take effect on July 1. The council flat funded the budget to avoid a tax increase, with the mill rate retained at 25.31. Deputy Mayor John Russell said the city budget will not be sustainable if significant cuts are made to municipal aid from the state.

“I think it’s going to hurt the cities,” he said. “I think all of the cities are going to get hurt.”

Mayor Martin Olsen said the city is “heavily dependent” on state funding, and that cuts would have a negative effect. He said the City Council might begin discussions on budget changes as early as their next scheduled meeting on July 5.

“Prior to these recent negotiations, things were looking pretty stable,” he said.

“I have an upset stomach just thinking about it,” said Councilor Michael Passero. “If we don’t get the money that we counted on from Malloy’s first budget, we’re going to have to cut.”

Councilor Michael Buscetto III said he was concerned what would happen with state funding for local social services, as well as $300,000 line item for the . He said the council will have to ensure that essential services are funded adequately.

“We don’t have a surplus of funds in this budget,” he said. “Obviously there will have to be cuts.”

The councilors said they will have to evaluate what changes will be made to the budget once the special legislative session is concluded. “I’m sort of in a wait and see mode right now hoping that the governor will stick to his word and keep any cuts to the municipalities to a minimum,” said Councilor Adam Sprecace.

Dr. Nicholas Fischer, superintendent of , said the state’s educational cost sharing is the largest part of the state contribution to local schools. He said this is considered a separate area from municipal aid, but could also suffer cuts. Fischer said reductions in municipal aid would also hurt the schools due to the city’s contributions to the district.

The special legislative session will begin at 10 a.m. on Thursday.