Budget Critics Warn Against Reliance On Struggling State

Weeks before the city has to finalize and approve a new fiscal year budget, a handful of government watchdogs expressed their deep concerns that the proposed budget relies too much on expected aid from a state on the brink of financial disaster.

Such was the prevailing sentiment at an hour-long public budget hearing held by the Finance Committee of the Board of Alders at City Hall on Monday night.

Although the aldermanic chambers were crowded with city employees waiting for a closed-door executive session meeting later in the evening about union negotiations, only a half-dozen citizens testified before the committee, which has spent the past few months holding hearings on the mayor’s proposed $554.5 million operating budget for Fiscal Year 2017 – 18. The Board of Alders must approve a final city budget by the end of the month.

Nearly every speaker Monday night expressed concern over the dissonance between the proposed budget’s expectations and the likely realities of aid from the state of Connecticut. The mayor’s budget expects an increase of $31 million in state aid next year, while the state itself recently announced that it is staring down a $5 billion budget hole over the next two years, which will could result in layoffs, givebacks, and drastic cuts to municipal aid.

“It’s critical that you study the mayor’s budget requests very carefully and spend wisely within the city’s means,” said Abigail Roth, a former downtown alder who’s running for her old seat again. ​“I believe the mayor’s budget is overly optimistic about the funding that we will receive from the state.”

Earlier this month, state financial analysts announced that income tax revenues are down $413 million this fiscal year, and are expected to be down nearly $1.5 billion over the next two years. Much of that shortfall comes from significantly lower tax collections from the state’s top 100 taxpayers, reported CT NewsJunkie.

“While we have a strong delegation in Hartford, a political breakdown at the state is closer than it’s been in years,” Roth continued. ​“We have to be really conservative about how much we think we’re going to get from Hartford, and, given the state of play at the federal level, we can’t rely on significant amounts of money flowing from Washington D.C.”

Local activist and philanthropist Wendy Hamilton agreed, interspersing her calls on the city to levy more taxes on Yale University with frequent references to the state’s budget crisis.

“The AP wrote another article yesterday about how Connecticut is broke and they’re going to have to fire 1,000 workers or more” she said, ​“and that Governor Malloy is seeking $700 million in givebacks from state employees. Good luck with that.”

Budget watchdog Ken Joyner called the proposed budget’s reliance on dramatically increased state aid negligent, wishful thinking.

“Today the mayor announced that we should pass Plan A, which is this current budget that overestimates revenue from the state by at least $12 million,” he said. ​“And then we should plan for Plan B, in the event that the state does not come through with the expected aid. We reject this approach.”

The governor’s initial budget that was announced earlier this year pledged $245 million in state aid to New Haven, while the mayor’s budget expects $257 million from the state.

Joyner called on the alders to pass a continuing resolution to extend this year’s budget for an additional 30 days, so that the city could wait until the state finalizes its own budget by the end of June before committing to any more state aid projections.

He also expressed concern over rising city personnel costs, and cautioned against laying too much credit or blame for the city’s financial status at the feet of struggling state coffers.

“Whatever the final aid package may be,” he concluded, ​“it is apparent from past performances that the city will plan to spend every dime it receives on recurrent personnel cost. It will defund the rainy day fund. It will continue to over-spend and over-borrow its budgets. And it will blame the state of Connecticut for its shortfall.”