Mansfield stands to lose $2.5 million in state aid under Governor Dannel Malloy's proposed budget.
With the $2 million projected loss, Mansfield would receive $18,573,381 total in state aid for the next fiscal year.
The decrease comes amid a more than $1 billion state budget deficit, as other municipalities across the state are facing large decreases in state aid. Groton must deal with the largest decrease losing $14,172,510 and Waterbury gets the greatest increase, gaining $40,786,947 in aid.
“We’re [Mansfield] unique in that the value of state property exceeds the value of property in town… So we’re very reliant on the state revenue,” Town Manager Matthew Hart said.
More than 52 percent of land in Mansfield is state-owned, including the University of Connecticut, Eastern Connecticut State University and the former Bergin Correctional Institute.
In the 2016-17 fiscal year, Mansfield saw a $3.3 million increase in state funding from the previous year, largely due to the $2.6 million it received in a “select pilot” account established by a General Assembly bill passed in February. The bill granted certain municipalities with additional PILOT funding, payment in lieu of taxes.
“When the base PILOT goes down, those cities and towns like Mansfield that host a majority of state property, they’re protected to some extent under the select payment,” Hart said.
The Governor’s proposed budget shows Mansfield’s PILOT funding going down by $455,372 and its select PILOT aid increasing by $114,116.
Now that Malloy’s budget is proposed, Hart and other Mansfield officials will have specific numbers to take into account when making the town’s own budget.
The main challenge facing municipal CEOs is submitting proposed town budgets in advance of the General Assembly officially adopting the state budget.
“I’m wrestling, do I use the governor’s numbers in their entirety, or do I some sort of combination… I might very well issue a proposed budget with a number of contingencies put in,” Hart said.
Mansfield plans the town budget using conservative projections. This comes from practice in the last fiscal year, 2016, when Connecticut Gov. Malloy proposed an unexpected second budget, causing towns to re-evaluate their own budgets.
“We’ll need to reduce expenditures, which will require reductions in services or we’ll need to increase revenues, which would mean increasing property taxes and arguably, property taxes are a more regressive form of taxation than state income taxes,” Hart said.
Despite projected loss in aid, town officials are thankful for the downtown Storrs Center development to alleviate the need for extreme cuts.
“We are fortunate though, unlike many other towns around the state, we’re seeing some Grand List growth. Due to Storrs Center, our Grand List is going up, 2.47 percent in new tax revenue. So that will offset some of these reductions,” Hart said.
The downtown area is estimated to generate $2.9 million of revenue in the current fiscal year.
“Real estate alone has increased $28,589,430, or 3.19 percent, primarily due to the growth at Storrs Center,” Hart wrote in May budget documents.
Though revenue from Storrs Center has steadily increased since it began construction in 2011, Mayor Paul Shapiro said revenue could see a halt in coming years.
Developers in the downtown area have entered a tax abatement program with the town in which they pay a reduced rate on property taxes in the first seven years upon initial development. The abatement rate incrementally decreases over seven years. Shapiro said the change in abatements has, in part, caused fluctuations seen in the town's tax revenue.
“Once the taxes are fully phased in... The revenue will be stable and not growing; it will be part of our revenue base” Shapiro said.
Even with the help of revenue from Storrs Center, Mansfield will have to consider how to manage a smaller state aid.
While Hart said the cut was sort of expected, the magnitude of the cuts and expenses is what municipalities will really struggle with.
“In particular the proposal… that city’s and town’s pick up a third of the teacher’s contribution to the retirement plan... That’s not something we had anticipated,” Hart said. “If the state is looking for cities and towns to share in that burden, that should be something that at a minimum we look to phase in in a period of time.”
“Obviously it’s a proposal and there’s a long way to go,” Hart said.
Hart will propose a budget on March 27 and the council will review it and make adjustments during the month of April.
CORRECTION: The original story included a quote attributed to "Board of Education Chair Randall Walikonis." Walikonis is no longer Chair of the Board of Education.
Bailey Wright is managing editor at The Daily Campus. She can be reached via email at firstname.lastname@example.org.