Nearly 60 percent of Connecticut’s residents live in towns that do not have enough revenue to cover the cost of services.
The Connecticut Data Collaborative recently released an analysis of the fiscal situation of municipalities. That analysis expanded upon a report to the General Assembly’s Program Review and Investigations Committee prepared by the Federal Reserve Bank of Boston’s New England Public Policy Center (NEPPC).
A municipality’s revenue capacity is defined as a standard mill rate multiplied by the equalized net grand list of a community.
According to the Data Collaborative report, 78 towns in the state have a gap between revenue capacity and what the NEPPC calculated as the cost of their services. The NEPPC study only looked at non-educational costs.
The rest of the towns have the capacity to raise revenue greater than the cost of services. Those towns are primarily in Fairfield County, Litchfield County and the shoreline.
According to an analysis from the NEPPC, there are five cost factors strongly related to non-school per-capita spending levels:
- Unemployment rate: Towns with a higher unemployment rate must spend more on public safety and public works because the crime rate tends to increase with the unemployment rate, and the unemployed are more likely to rely on public assistance for transportation, health and welfare.
- Population density: Denser populations tend to increase the cost of fire protection. Denser housing presents a greater fire hazard than housing that is spread out.
- Private-sector wage index: Governments may need to pay more to attract municipal workers where private-sector wages are higher.
- Town maintenance road mileage
- Jobs per capita: A higher number indicates a greater number of out-of-town commuters who use more municipal services, such as roads and public safety.
Fiscal disparities occur when economic resources and public service needs are unevenly distributed across localities.
The highest costs tend to be in southwestern Connecticut and in and around Hartford.
The urban areas in Connecticut have the highest per capita costs because of high unemployment rates, dense populations, and a large number of commuters from out of town who drive up the cost of services.
The collaborative noted that property tax revenue capacity has been on the decline since at least 2011.
Overall, the Equalized Net Grand List has declined for 145 out of 169 towns since 2011, and raising revenue has become increasingly difficult for towns.
Visit ctdata.org to examine the methodology of analyzing fiscal disparity, how a town’s costs and revenue capacity are measured, and which towns have improved since the report was released.