Local School Budgets Increasingly Dependent on the Property Tax, Connecticut's Slowest Growing Revenue Source
The cumulative effect of a decade's worth of budget decision-making has made local schools more dependent on the property tax, the slowest growing of the three taxes that generate the bulk of revenue for state and local spending. Statewide property tax revenues grew by 45% from 1993 to 2003 while sales tax revenues grew by 55% and state income tax revenues increased by 101%.
While all state aid to towns and cities (largely but not only for education) grew by 39% from 1993 to 2003, local school spending increased by 56% during the same period. This resulted in a decline in the percentage that state aid contributed to the municipal budgets in 115 of the state's 169 municipalities (see map).
Because both property tax revenues and state aid increased at a slower rate than education spending, municipalities most often made up the difference by slowing the growth rate of all other local spending. In fact, spending on local government functions other than education and debt service (for example, streets, libraries, recreation) grew 26%, slightly less than the rate of inflation. During the same period, state spending grew by 65%.
Revenue Growth Rates from 1993 to 2003
| State Income Tax Revenues | 101% | | State Sales and Use Tax Revenues | 55% | | Local Property Tax Revenues | 45% | | State Aid to Local Governments | 39% |
Spending Growth Rates from 1993 to 2003
| State General Fund | 65% | | Local Education | 56% | | Inflation Rate (CPI) | 27% | | Other Local Spending | 26% |
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