Moody’s: 26 CT Cities/Towns Facing Downgrades, 25 Assigned “Negative” OutlookOctober 17, 2017
The 'good' news, according to Moody's? Towns and cities can raise property taxes by "unlimited" amounts!
In an extraordinary report released on Monday, Moody’s Investors Service “placed ratings of 26 Connecticut cities/towns … under review for downgrade,” and “assigned negative outlooks to ratings of an additional 25 Connecticut cities/towns.”
The report means a full 30 percent (51 of 169) of Connecticut’s towns and cities are either facing credit downgrades or have a negative outlook from a key credit agency on Wall Street.
Moody’s cited the lack of a state budget as a major reason for the report:
Connecticut has been operating without an approved budget since the beginning of the current fiscal year on July 1. In the absence of a budget, expenditures are controlled by executive order from the governor. Under the executive order currently in effect, state funding of local governments is lower than it was in the last fiscal year by a total of $928 million. … The current budget impasse highlights the ongoing vulnerability of funding that the State of Connecticut provides to its local governments.
Gov. Dan Malloy (D-Conn.) vetoed a bipartisan budget last month.
The ‘good’ news according to Moody’s? Towns can raise property taxes however high they want to.
Positively, local governments in Connecticut have unlimited property tax flexibility giving them legal authority to make up for lost state funding with supplemental tax levies to be collected over the balance of the fiscal year.
Senate Republican President Pro Tempore Len Fasano (R-North Haven) called the news “devastating.”
This is devastating news for our state. The governor’s decision to reject the only budget that passed the legislature, along with years of failed policies, created the instability our towns and cities face today. It created chaos on top of an already damaging fiscal crisis.
Since Malloy vetoed the “only budget,” legislators have returned to work on a bipartisan budget. Malloy tried to put his fingerprint on the process on Monday with his fourth proposal for a two-year budget.
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