The mayor is proposing an increase in property taxes in the next fiscal year. Just how much taxes will rise is the subject of his new choose-your-own-adventure budget.
Except we don’t get to choose. The state does.
That picture emerged Thursday night in City Hall as Mayor John DeStefano gave aldermen a sneak peak at his proposed $503 million budget for the coming fiscal year, which he will officially unveil on Friday. The fiscal year starts July 1.
This year DeStefano (pictured above at left) actually introduced three budgets: Three options to choose from, depending on what happens with the state budget.
Gov. Dannel Malloy has presented a variety of state budget changes that — if they all go through — could mean a revenue loss of $27.7 million for the city, DeStefano said.
But the state budget is still very much in flux as legislators vow to change Malloy’s plan. With so much uncertainty about what may happen, DeStefano said, he decided to present three different budget options. Each would require an increase in the mill rate — the property tax rate, which now stands at 38.88 mills.
The mill rate would go up by 2.09 mills under Option 1, 4.43 mills under Option 2, and 7.35 mills under Option 3.
For a homeowner with a property value of $150,000, that translates to a tax increase of either $314, $665, or $1,103.
On Friday, the mayor will officially submit his budget to the Board of Aldermen, which will spend several months scrutinizing it, make any changes it sees fit, and then vote on it this spring.
Board President Jorge Perez Thursday night called any tax increase unacceptable. He said he looks forward to seeing the full budget and finding cost savings.
East Rock Alderman Justin Elicker, who is a candidate for mayor, said it’s to early to draw any conclusion about the budget without seeing the full document. He said it’s “difficult to say at this point” whether a tax increase can be avoided.
Thomas MacMillan Photo
On Thursday night, Elicker and Perez were two of about a dozen aldermen who gathered in a second floor meeting room in City Hall for the mayor’s PowerPoint presentation.
The general fund budget would rise under DeStefano’s plan from $486.4 million in the current year to $503 million in the coming year, an increase of 3.45 percent. The capital budget, however, would be about half the size it is now, down from $124 million to $63 million.
DeStefano said his budget options are designed around three priorities: schools, public safety, and economic growth.
In schools spending, the city would contribute $3 million more to the Board of Ed than it did last year, meeting the Board of Ed’s requested increase in its proposed budget.
The city would spend almost $2 million more on public safety. That includes salary increases as a result of the recently settled police contract, 40 new cops, and 40 new firefighters.
Mayor DeStefano ticked off a number of ways the city is saving money or taking in new revenues. Grand list growth accounts for $2.6 million more in property tax revenue, without any mill rate increase. The police contract represents a savings of $2.7 million in pension costs. Medical benefits costs are flat, due to contract settlements.
The budget includes no one-time revenue sources — like the sale of buildings — which have been criticized in the past. Nor does it include any expected savings from contract settlements, although those may occur, the mayor said. He called it “a conservative approach to budgeting this year.”
Next, the bad news from the state. The mayor said the state budget will affect New Haven in three ways: through the elimination of grants, through the shifting of money from the general fund budget to the capital budget, and through the proposed elimination of the car tax. All told, it could amount to $27.7 million less from the state, DeStefano said. More than half of that would be a result of the car tax elimination, he said. (Legislators have vowed to keep the car tax.)
DeStefano decried these proposed state budget changes one by one, referring to them as a “shell game” that could ultimately make cities in Connecticut more dependent on property taxes than ever.
With all the uncertainty in the state budget, DeStefano said he found himself wondering, “What do I send the Board of Aldermen?”
His answer: Three budget options.
The spending plans for each are essentially the same. They call for increases in spending on public safety, general government, debt service, and pensions. The differences are in how much the city would charge in property taxes, to make up for varying amounts of funding from the state.
Option 1 assumes no changes in state funding from the current fiscal year. That option would still require a mill rate increase of 2.07 mills.
Option 2 assumes all the proposed state budget changes go through, except for the car tax elimination. Under Option 2, which DeStefano called the “not too hot, not too cold option,” the mill rate would go up by 4.43 mills.
Option 3, the worst case scenario, assumes that all the proposed state budget changes go through, including the car tax elimination. Property taxes would go up by 7.35 mills.
The mayor is officially submitting Option 2 to the Board of Aldermen, but all three options will be in the budget document. “I picked the middle course,” DeStefano said.
DeStefano predicted the budget battle will play out on two fields: Across the hall in the Aldermanic Chamber, and 40 miles north in Hartford.