Buy And Hire? Or Rent And Contract?

It will suddenly cost $118,000 more to lease a warehouse to store evicted people’s stuff this coming year. That number — and a few others, including the cost of outside city lawyers — prompted a broader fiscal debate about how New Haven spends its money as lawmakers scrutinized the fine print of a proposed $486.8 million city government budget.

Members of the Board of Aldermen had that unplanned debate Tuesday night as they held a workshop on the mayor’s proposed budget for the coming fiscal year, which begins July 1. They heard presentations from several city departments, including a lengthy encounter with the Mike O’Neill, the city’s acting controller.

Among the minutiae of allocations and fiscal projections, a theme connected several points of the discussion: The benefits and costs of buying and hiring versus renting and contracting.

Aldermen addressed that question most directly when O’Neill informed the committee that the annual lease for the city’s ​“eviction warehouse” is scheduled to increase by $118,000, to $242,000.

Maybe it’s cheaper to buy a building, suggested Hill Alderman Jorge Perez, the president of the board.

Is the place any bigger this year? he asked.

Nope, O’Neill responded.

“We should take this to [the] Fair Rent” Commission, Perez joked.

He said the city should put the contract out to bid again.

“You could get a heck of a building for a mortgage of $118,000,” he said. ​“You could buy a nice building and have money left over.”

East Rock Alderman Justin Elicker linked the issue to similar to cost/benefit questions the aldermen had been exploring earlier in the evening.

Perez had asked Corporation Counsel Victor Bolden how much money the city spends of contracting lawyers to defend the city in tax appeals case.

Bolden said he’d look into it.

Perez said it might be worth hiring a staff attorney.

“There can be a cost-efficiency of having people in-house,” Bolden said.

Elicker asked Bolden to do a cost/benefit analysis. ​“I imagine every law firm looks at what they spend on inside versus outside counsel.”

“It seems like smart governance,” he said.

The theme re-emerged later as aldermen discussed the cost of leasing a building versus building a new school. This kind of consideration should be a standard part of budgeting, Elicker said.

The meeting ended with an agreement to re-schedule Thursday’s budget workshop for May 1. The next budget hearing will be April 19 at the Clemente School.

Tuesday’s hearing was one of an ongoing series of public meetings and workshops being held by the aldermanic Finance Committee as it determines if and how to re-shape the mayor’s budget in advance of a budget vote by the full board at the end of May.

The committee heard testimony on the following budget items: Board of Aldermen, mayor’s office, corporation counsel, Department of Finance, assessor’s office, city/town clerk, registrar of voters, persons with disabilities, Fair Rent Commission, labor savings/vacancy savings, ​“various organizations,” non-public transportation, Grove Street Garage, debt payments, pensions, self insurance, and employee benefits.

Read on for a live-blog of the blow-by-blow of Tuesday’s budget deliberations.

Live Blog

5:55 p.m.: Aldermen are filtering in. Chairwoman Alderwoman Andrea Jackson-Brooks is here, along with Aldermen Doug Hausladen, Justin Elicker and Jessica Holmes. The gallery is nearly empty.

6:01: Jackson-Brooks calls the meeting to order. Alderwoman Migdalia Castro arrives, followed by Aldermen Jeanette Morrison and Al Paolillo.

6:03: Jackson-Brooks calls Al Lucas, head of legislative services, which staffs the Board of Aldermen. He says the only changes this year are additional funds for charter revision and consultants for redistricting. He says the office has a vacancy currently.

Alderman Ernie Santiago arrives.

6:05: Next up is the mayor’s office. Rebecca Bombero and Amy Meek sit. Chief of Staff Sean Matteson had a son last night so he’s not here, Bombero says. The baby is 22 inches long and over eight pounds.

Bombero: The budget has a decrease of $2,000. The mayor’s office has been reduced by seven positions in the last 10 years. All have been pitching in to do extra work.

No questions.

6:09: Next is registrar of voters, but the Republican registrar went home sick and the Democratic one forgot where she put the budget. They’ll be rescheduled.

6:10: Sally Brown sits for the City/Town Clerk’s Office.

She says: No increase in the budget. The office does have a vacancy.

Hausladen: You’ve had a $1,000 cut in materials last couple of years.

Brown: That’s just office supplies.

Hausladen: Not ballots?

Brown: No.

Holmes: What are the rentals and services?

Brown: Copy machines. We don’t have the water anymore…

Elicker smiles and shrugs. Everyone laughs. (His initiative did away with bottled water for City Hall.)

Brown (laughing): I wasn’t going after you.

6:14: Alexander Pullen, acting city assessor, sits for the assessor’s office.

Pullen: We did ask for an increase. Last year’s budget included $105,000 for attrition. There’s a $60,000 cost increase associated with revaluation this year. … There’s been an increase in printing costs to comply with a state requirement.

Staff: The mayor has cut your budget…

Pullen: It will impact us greatly. We have to be in state compliance, which requires a lot of reports by a lot of deadlines. … When the office is fully staffed we can focus on revenue-generating initiatives. … Continued grand list growth is contingent on hiring more people. … We’ve sent people out in the field to do business checks to pick up new businesses and pick up out of state motor vehicles that were previously undeclared. Cranes, for example. We need to people to be able to go out and document presence so that our claims can stand up in court. … Salaries are the main line item that has been cut. There are two positions open now, one of which has to be filled by charter requirement. The other is budgeted at only $1.

6:22: Alderman Jorge Perez, who arrived a little while ago, asks about printing costs.

Pullen: We have to send out personal property declarations and income and expense forms. We’re required by state statute. … The state can fine us if we don’t print ​“books” from previous years. [I’m not sure what he means by ​“books.” Grand lists?] They are available on CD-ROM.

Perez: What would the fine be?

Pullen promises to look into it.

Pullen says he wishes he knew when the city was planning to hire a permanent assessor. ​“It’s a tough job.” Apparently people aren’t applying.

6:29: Elicker: If we had no one in the assessor’s office, we’d get no tax revenue. If we had a 100 people, that’d probably be too many. What’s the ​“sweet spot”?

Pullen says he will find an answer based on historical staffing levels.

Alderman Al Paolillo, who arrived a little while ago, asks what the assessor’s office will not be able to do if the contractual services budget is cut.

Pullen: We don’t want to skimp on lawyers to defend us, especially in this year when people are seeing a big increase and will file appeals. A cut would also limit the office’s ability to go out and inspect property firsthand, like those cranes.

Paolillo asks about personal property, which was a problematic area last year for the assessor’s office. Taxpayers accused the office of arbitrary and enormous increases in personal property tax.

Pullen: ​“We’ve learned our lesson with personal property.” We’re going to err on the side of the taxpayer. We don’t currently have the resources to go out to all businesses.

6:34: Alderman Adam Marchand has arrived.

Pullen: The city will have an online data entry tool that will be the first of its kind in Connecticut. It would help the office deal with declarations from taxpayers.

Holmes asks about pay for board of assessment appeals members: $60 per meeting. What would constitute a meeting?

Pullen promises to look into it.

6:39: Paolillo asks about ​“better customer service.” ​“Is any of that in jeopardy?”

Pullen: We’ve got a new phone system that records. We’ve got video. ​“I don’t care how much you guys cut the budget by, we’re not going to treat people rudely. … We’ve stayed out of the paper lately and I aim to keep it that way.”

6:43: Jackson-Brooks calls corporation counsel. Victor Bolden sits with Paula Pernell.

Bolden: We’re requesting essentially the same amount of funding as last year. The department has shrunk by about 40 percent over the last 10 years. There have been a lot of cuts, but the amount of work has not decreased.

Perez: How much money do we spend on outside attorney’s fees on tax appeals cases?

Bolden: I’ll have to look into that.

Perez: Maybe it’s worth hiring a staffer for this.

Bolden: There can be cost efficiency of having people in-house.

Perez: It’s possible to be penny wise and pound foolish.

Elicker: Do you do an analysis of cost and benefit? Can you do it this year? I imagine every law firm looks at what they spend on inside vs. outside counsel.

Bolden: We can look into that.

Elicker: ​“It seems like smart governance.” We just heard from assessor’s office that they need staff but didn’t have answers on how much it would bring in to have another staff. It would be helpful to have that analysis.

Perez: Whatever happened to Innovation Based Budgeting? I remember ​“a grandiose idea without a lot of substance behind it.”

6:51: Disability services is next. Michelle Duprey wheels up.

Duprey: No increase in budget. … It’s just me in the office now. … We’ve had to refer people out to outside agencies rather than doing things in house than we used to do. Even the voicemail message on my phone has a list of other places to call. ​“It’s not necessarily worse. It’s just different.” … 26 percent of New Haveners have a disability. We get hundreds of calls a year. … It can take up to two weeks to get an interpreter for American Sigh Language. … Only one person in the entire state interprets European Sign Language.

7:00: Fair Rent Commission’s Otis Johnson is ill. Next up is Department of Finance. Michael O’Neill, acting comptroller, sits, with another staffer (whose name I didn’t catch.)

O’Neill: Department of Finance, 61 employees, about $10 million. A 1 percent increase over last year. We’re asking for funding for two positions: a treasury analyst position, and an IT position — $51,000 for a ​“help desk” person. … The lease for the eviction warehouse, now $242,000, has increased $172,000 over last year.

Perez: Maybe it’s be cheaper to buy a building?

O’Neill: The net increase is actually $118,000. The lease includes management services, which means the elimination of a $55,000 DPW warehouse super.

Perez: Are we getting more space?

O’Neill: Same building.

Perez: I think we should put it out to bid again. $118,000 increase. ​“We should take this to fair rent.” (“I realizes that’s residential.”) ​“I really would like this to go out to bud again. ​“You could get a heck of a building for a mortgage of $118,000.” ​“You could buy a nice building and have money left over, in my opinion.” … ​“I could think off the top of my head of a couple of light industrial buildings that have a lot of space.

Elicker: Seems like a similar thing. We should to a cost/benefit analysis.

Questioned about it, O’Neill says he’s ​“still acting,” that is, not the permanent controller. Like Acting Assessor Pullen.

7:18: O’Neill: We sent letters to all banks looking for accounts that might not be under oversight of the city, but should be. Like school activity funds. … We also did a payroll audit. A ​“test for fictitious employees.” A staffer from finance department hands out checks. There were no checks left over. But there there were a substantial number of former employees who were still on the payroll, had not been deactivated. [Does this mean they were still getting paid? I don’t think so, but it’s not clear.] … We’re looking for efficiencies.

7:24: Holmes: I see that there’s an increase of $3 million in health benefits. ​“I’m curious to know where that number came from.”

O’Neill: We’re looking at ​“Department 805.” $64 million is the request to the medical fund from the general fund. Which is $3 million more than last year. The hope is that employee cost share will increase as well with collective bargaining agreements. … We’re expecting a significant increase. ​“Through the end of February we’re 12.5 percent ahead of where we were last year.” There were 11 cases of claims of over $125,000 last year. There were 18 this year.

Holmes: Have we implemented cost savings through plan management, other than cost sharing?

O’Neill: We have a wellness program. But in the coming year we’d open it up to look at all that. … ​“My office has not done an analysis of the fund itself.”

Holmes: More active management of the plan? Consideration of brokerage fees?

O’Neill: I can look into that.

Holmes: How about offering better plan management for the people are using the most of the services, to ​“manage those catastrophic costs”?

O’Neill: We have a wellness program. We know high blood pressure is an issue. … I’m not the best person to be answering these questions. I’ll get more information.

Holmes: I’d like to see evidence of internal management of the plan, rather than just cost sharing.

7:40: O’Neill: ​“Shall we move to debt service?”

He hands out two sheets of information, including comparisons of debt service and budget with other cities.

O’Neill: $65.7 million is the budget request for this item. [For debt payments.] $1.2 million of that is new debt service. That represents six months interest at 4.5 percent on $51 million in new debt. That $51 million includes $15.5 million to help pay for three new schools. … We’ve earned a premium on recent bonds, which is essentially ​“extra money.” The interest rate on the bonds is higher than the market rate, essentially. ​“The rates are so low that there are certain ways … to price the bonds at certain interest rates … what ends up happening is, we sell $44.5 million worth of bonds, we get $46 million.” This year’s bond premium of $1.7 million goes right into the general fund. … ​“Any questions?”

7:55: Holmes: I’m looking for the page that says what we’ll eventually pay for our debt over the course of the bonding.

O’Neil promises to get it.

Elicker and O’Neill talk about the reliability of long-term predictions.

8:03: Conversation turns to debt service as a percentage of general fund. O’Neill says there’s no set ideal percentage. … Paolillo asks about interest rates. …

Projections. … Mill rates. … ​“Macroanalysis.” …

8:14: Perez: We’ve had two public hearings and not many people have shown up, but people are worried about capital costs. Can we get more and better figures about the cost effectiveness of lease payments and bonding, etc.?

O’Neill: ​“Yeah, we can do that.”

Perez: That way we can have an effective cost/benefit analysis.

8:18: Elicker: Back to what Perez had asked for. We shouldn’t just have an example of the cost of building a new school building. ​“I think this is how we should do budgeting.” There needs to be better comparison of alternatives.

Perez: I realize some stuff cannot be quantified. But it’d be better to have more information.

8:23: O’Neill: Two more sections — pensions and health insurance. Start with pensions.

Hausladen: What about Grove Street parking?

O’Neill: That lease has expired.

Perez: It was a subsidy.

O’Neill: Pensions. $16.3 million to City Employment Retirement Fund. $24.5 million to police and fire. This is just the city’s share. … There’s a 50 percent increase in required contributions that may be the result of the 2008 downturn in the economy. … A ​“plug” CERF won a national award last week for being the best small public plan of the year.

8:33: O’Neill: On to self-insurance. The self-insurance fund has a $17 million deficit. The real portion is $12 million, the rest is just a projection of anticipated pay-outs. … So far this year we’ve paid $4.2 million, including $2 million for the Ricci case.

8:38: Hausladen and O’Neill talk fund balance and debt.

Hausladen: Should we be bonding for the full $12 million?

O’Neill: ​“That’s a reasonable line of thinking.”

8:46: Finance department is all done. And so is the meeting.