By Keith M. Phaneuf

Increasing taxes on the wealthy — a solution in several state budget crises — seemed off the table this year.

But the discussion may not be over yet.

With the state budget standoff about to enter its third month — and with towns about to lose hundreds of millions of dollars more in state aid — at least one moderate Democrat wary of taxing the rich is taking a second look.

And sources say other moderates that still oppose raising taxes on the wealthiest households — a nonstarter for Gov. Dannel P. Malloy — have approached legislative leadership to discuss the option.

By Keith M. Phaneuf

Gov. Dannel P. Malloy’s administration is polling cities and towns to determine how many will run out of operating cash by this spring — or earlier — if the state budget standoff continues.

Office of Policy and Management Secretary Ben Barnes, Malloy’s budget chief, wrote to municipal leaders today asking them to provide information.

“I know that many towns would face solvency issues next spring if January and April ECS (Education Cost Sharing grant) payments continue at the executive order level,” Barnes wrote. “… I encourage any municipality that believes it will lack cash on hand to pay bills in 2017 to contact my office.”

In the absence of a state budget, Malloy has been running state finances by executive order since the new fiscal year began on July 1. With income and other tax receipts declining and retirement benefit and other fixed debt costs surging, the administration has said it has no choice but to dramatically reduce funds for municipal aid.

By Keith M. Phaneuf

Municipal leaders today pushed back against Gov. Dannel P. Malloy’s proposals to shift costs onto cities and towns.

During a news conference at the Capitol, the Connecticut Conference of Municipalities also contested a Malloy report earlier this month that aid to communities has surged 21 percent during his tenure.

“It’s naive to say that a cut in local government isn’t a property tax increase,” Coventry Town Manager John Elsesser said. “The plan that’s on the table is a major property tax increase.”

The governor’s plan to help close projected deficits of $1.6 billion this fiscal year and $1.9 billion in 2018-19 includes reducing major statutory grants to cities and towns by about $320 million per year.

Keith M. Phaneuf

Gov. Dannel P. Malloy today tried to defend his efforts to shift more costs onto cities and towns, releasing a report asserting that municipal aid has grown 21 percent over the last five years.

The administration also said it would release a follow-up analysis soon on the financial health of Connecticut’s 169 cities and towns, including information on mill rates, budget reserves, bond ratings and the value of taxable property.

“As a former mayor, former member of local boards of finance and education, and as a father who raised three children here, I know just how important state funding is for every city and town in Connecticut,” said Malloy, who was mayor of Stamford from 1995 through 2009. “That’s why my administration has been highly protective of municipal aid over the past six years, as this report makes clear.”

Keeping a promise he made during the 2010 gubernatorial campaign, Malloy refused to cut municipal aid — as his counterparts in New York and New Jersey did — during his first year in office in 2011 as the region climbed out of the Great Recession.

Keith M. Phaneuf and Jacqueline Rabe Thomas

Majority House Democrats today unveiled a new budget that matches the town aid proposed by Gov. Dannel P. Malloy while redistributing education funds more modestly from wealthy and middle-income towns and into poorer communities.

But the House Democratic plan, which still features a sales tax increase and surcharges on restaurant and hotel transactions, avoids taxing hospitals and billing cities and towns for teacher pension costs as proposed by the governor.

The caucus proposal also would reduce income tax credits for middle-income families and for the working poor, and defer a third consecutive income tax break for retired teachers.

Democrats, who hold a 79-72 edge in the House, say their plan would reduce overall municipal aid in the budget by 5 percent to help close major projected deficits in each of the next two fiscal years.