Connecticut's Financial Support to Municipalities (Office of Policy and Management)

In response to a request from Governor Dannel P. Malloy on August 2, 2017, this report from the Office of Policy and Management provides a look at state aid to municipalities, including expenditures from grants and funding for capital projects. The report notes that "municipal aid is the largest category of state spending within the entire General Fund, totaling nearly $5.1 billion" in fiscal year 2017.

The report also stresses that "municipal aid has continued to expand at the same time the state has cut billions of dollars in expenditures across state agencies." Additionally, according to the report, "over the last five fiscal years the state’s support to towns and cities has grown by nearly $1 billion, an increase of more than 21 percent. This has taken place while the state’s population has remained largely flat and student enrollment in public schools is down."

Examples of state municipal aid include:

• Statutory formula grants totaling more than $3 billion annually, including State Owned PILOT, College & Hospital PILOT, Mashantucket Pequot & Mohegan, Regional Performance Incentive, Grants for Municipal Projects, the Municipal Revenue Sharing Account, Adult Education, and Education Cost Sharing.
• Capital programs such as local school construction that can range between $600 million and $850 million annually, Local Capital Improvement Projects (LoCIP), Town Aid Road (TAR), and the Small Town Economic Assistance Program (STEAP) are capital programs benefitting the municipalities. Other examples of capital funding benefitting municipalities include housing, public libraries, open space land acquisition, brownfields, economic development, and clean water.
• The state’s share of contributions to the Teachers Retirement System, retiree health service cost, and debt service on the pension obligation bonds, totals just over $1.2 billion in the current year, with projected escalation in the years ahead.