Federation of Connecticut Taxpayer Organizations

Governor M. Jodi Rell today announced the she is formally calling the General Assembly into special session on Monday, November 24, and is including in the scope of the special session not only her plan to eliminate the current $302 million state budget deficit but several proposals that will provide significant financial relief to Connecticut�s hard-pressed cities and towns.

On October 21 Governor Rell announced her plan to eliminate the shortfall in the state budget for the fiscal year that began July 1. The plan reflects cuts in state spending, a tax amnesty program, cancellation of planned state initiatives as well as new revenue the state expects from the federal government.�

In the formal call for the special session, the Governor also announced she intends to propose several steps to help Connecticut municipalities cope with the effects of a national downturn in the economy.

�Connecticut families are giving up many things and making sacrifices to get through these difficult economic times � and state government is going to do the same,� Governor Rell said. �But we also have to help our cities and towns as they struggle to confront these economic challenges. My proposals will give towns new tools to allow them to ease the burden on local taxpayers.

�All of the gears are going to have to mesh for this process to work,� the Governor said. �The federal government has taken a variety of steps to shore up financial markets and I continue to urge Congress to work on a second economic stimulus package.�

In her October 10 letter to Congress, Governor Rell stressed that a second stimulus package must be aimed at relieving financial pressure on states while stimulating job growth. Her recommendations included:

Replenishing unemployment insurance accounts
Financing infrastructure projects (such as roads and bridges) and �green collar� jobs
Increasing credit to small businesses

In terms of the state, Governor Rell has ordered a hiring freeze, a travel ban, made nearly $180 million in budget rescissions and directed commissioners to cease all non-essential spending. Governor Rell also created a five-step program that includes the support of the state�s community banks, to ensure businesses and residents have access to credit.

�Now we must take decisive action to shore up the financial health of our state�s cities and towns,� Governor Rell said.

Governor Rell is proposing four specific actions � as part of her call for a special session � to provide relief to cities and towns.

Allow for tax amnesty programs at the municipal level. State law does not allow towns to undertake an amnesty plan to collect overdue property taxes. As a result, towns must hire private collection agencies, which withhold a sizable percentage of any recovery. A municipal amnesty program would allow taxpayers to make overdue payments without facing other negative consequences (such as penalties), while communities would not have to pay commissions and would benefit from increased revenue.
Allow municipalities to use state purchasing power for lower costs. Currently, cities and towns can join state contracts for certain goods, allowing them to benefit from the state�s bulk purchasing leverage � but only when the state is already contracting for a given item. Governor Rell�s proposal would allow large numbers of municipalities to coordinate their purchases through the state, even if the state itself is not buying the item in question.
Tighten binding arbitration deadlines for municipalities. Cities and towns often find themselves facing sizable liabilities for retroactive pay and benefits because binding arbitration cases drag on for months and, in some cases, years. Once the cases are resolved, the accrued amounts must be paid in a lump sum, placing extra stress on municipal cash flows. Resolving cases faster would reduce the accrued amounts.
Extend Bond Anticipation Notes. Governor Rell�s proposal would extend, from eight to 10 years, the length of Bond Anticipation Notes that towns sell. Currently, many of the notes are coming due for municipalities in 2008 and 2009. An extended program would give municipalities more time to pay off these notes.

�These measures are intended to help cities and towns get through these financial difficulties without adding to the burden on Connecticut�s property taxpayers or Connecticut�s employers,� Governor Rell said. �Our cities and towns could use the help now and that is why I am urging the General Assembly to take action on these issues in a special session on November 24.�

Content Last Modified on 10/28/2008 3:09:56 PM