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Small Towns Talk Big Issues

The State of Connecticut has yet to approve its budget for the next two fiscal years, leaving towns like Guilford waiting to see what funding cuts or cost obligations might be shifted onto municipalities in the coming months. With a lot of uncertainty at the moment, leaders of shoreline towns recently met to discuss some common concerns.

Representatives from Guilford, Madison, Branford, North Branford, Durham, and Killingworth sat down with local legislators at a Connecticut Council of Small Towns (COST) meeting. First Selectman Matt Hoey said the meeting was an opportunity for town leaders to share their concerns about troubling aspects of the state budget.

Hoey said issues discussed included environmental bills, the potential elimination of car tax revenue for towns, and the proposed cost to municipal aid, particularly in the area of education. However, Hoey said the issue that dominated a significant portion of the discussion was teacher pensions.

Governor Ned Lamont’s budget proposal asks towns to start paying a portion of their teachers’ pension costs. Towns would be asked to pay what is known as the “normal cost” of the pension, which is what should be set aside each year to cover current teachers, and not the ballooning unfunded liability that resulted from decades of underfunding by the state legislature.

The total statewide pension cost over two years, to be spread across towns, comes to about $71 million, but Lamont said the system would also have wealthier towns carry a proportionally larger burden of the cost. Guilford would be asked to pick up $166,052 of the teacher pension in the first year of the budget and $342,913 in the second year.

“We spent a lot of time talking about the shift of the teacher pension cost to municipalities,” he said. “The gist of the conversation is, if in fact this is a foregone conclusion, which we don’t hold that it is, there are things that we are expecting to get in return, which is a seat at the table or [teacher pension contract] negotiations and a concern that any contributions the towns make would be limited to the normalized costs.”

The General Assembly essentially neglected to put money into the teacher pension system for decades and the state is now facing a rapidly ballooning unfunded liability. Previous governor Dannel Malloy tried pushing a third of the state’s annual pension contribution onto municipalities a few years ago, but the proposal didn’t make it into the final budget.

Hoey said towns want to support teachers, but they do not want to pay for a pension system they have no ability to control or adapt. Hoey said Guilford has done a good job of funding its town pension system and trying to move away from pensions on the whole.

“Communities like Guilford, even with the collective bargaining, we have negotiated to defined contribution plans,” he said.

Hoey said Lamont’s plan would ramp up to having towns carry 25 percent of the normalized pension cost in three years. For Guilford, it would actually work out to be about 26 percent or $498,000, because Guilford would incur a small penalty due to higher local teacher salaries.

“It has an awful lot to do with where you are in the longevity cycle for your teachers,” he said of factors contributing to higher teacher salaries. “If you have a lot of teachers who have 25 years [service], they are all going to be at the top end of the pay scale.”

There has been some talk amongst legislators that the pension proposal won’t stick this year, but State Representative Vincent Candelora (R-86) said the proposal is not dead yet.

“Even though legislators might have stripped it out of bills that came before the committees, there is always the concern that it is on the table,” he said. “And I will say, having been one of the people in the room negotiating the budget the last time around, that was one of the last sticking points that we had to work hard to take off the table, so I am cautiously concerned that we could see that proposal in a budget.”

The General Assembly’s Appropriations and Finance committees are set to present their budget proposals sometime this week and Candelora said that will provide a clearer picture as to whether pensions are still on the table. Regardless of whether the proposal survives this year, Candelora said the lack of discussion around pension reform is troubling.

“Yet again we are seeing cost shifts without appropriate reforms being put into place,” he said. “The State of Connecticut gets into trouble with bad decision making. It enters into a 10-year union contract with no layoffs knowing that we don’t have a balanced budget in the future and then our solution is, ‘Let’s defer all of these costs onto third parities whether it be taxation or a cost shift onto towns.’ Those are all policies saying, ‘You pay for our bad decisions.’”