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Distributing State Aid to Municipalities through a Needs-Capacity Formula

State Budget

The State of Connecticut contains 169 towns with a wide range of wealth and resident need. Currently, the State of Connecticut provides financial aid to towns through a variety of statutory and non-statutory grant programs. The current town aid structure does not sufficiently address the underlying municipal fiscal disparities that are caused by the unequal costs of delivering services and the low revenue raising capacity of towns in Connecticut.

Using a needs-capacity formula to distribute aid to Connecticut’s towns is one method of addressing fiscal disparities and creating a more equitable distribution of state aid. A needs-capacity formula allocates funding to municipalities based on their projected costs of providing a common level of government service, and their capacity to raise revenue through local property taxes. The purpose of this policy briefing is to introduce and examine how Connecticut can address municipal fiscal disparities by using a needs-capacity formula to distribute town aid.

Citation

Connecticut School Finance Project. (2019). Distributing State Aid to Municipalities through a Needs-Capacity Formula. New Haven, CT: Author. Retrieved from http://ctstatefinance.org/assets/uploads/files/Needs-Capacity-Formula-for-State-Aid.pdf.


Also tagged under: State Expenditures