Final Budget OK’d With Cut Mill Rate, Phase-In

Even in times of apparent fiscal plenty, New Haven’s needs are so great, its fixed costs so persistent, and its coffers so relatively strapped that taxes have to go up.

That argument prevailed Monday night as the Board of Alders approved a final new city budget that cuts the mill rate by over 9 percent, and then phases in new higher property values over two years instead of five.

Local legislators took that vote during a special in-person meeting of the full Board of Alders, which was held in the Aldermanic Chamber on the second floor of City Hall.

In a 25 – 2 vote of support, the alders overwhelmingly approved a $633.1 million general fund budget for Fiscal Year 2022 – 23 (FY23) that, except for a minor title change to an administrative position in the police department, was exactly the same as the one that the aldermanic Finance Committee amended and endorsed less than two weeks ago.

That means that the full board signed off on growing the general fund by around 4.42 percent from this fiscal year’s $606 million general fund budget. 

They also cut the mill rate from 43.88 down to 39.75, implemented a two-year phase-in of last year’s revaluation, increased the Board of Education budget by $4.5 million, and added 15 new positions to the general fund, including a a new chief technology officer, a new fire department mechanic, a new chief civil engineer, and two new youth department deputy directors

The alders’ vote means that, when the new budget takes effect on July 1, property taxes will be going up for many New Haveners. That’s because the mill rate dropped by over 9 percent, while underlying property values citywide will be increase by over 16 percent.

The mill rate refers to $1 in taxes owed for every $1,000 in assessed property value. The latest citywide revaluation saw the city’s grand list — or combined assessed value of all city taxable properties — increase by over 32 percent, with the steepest increases taking place among residential and commercial properties. The two-year phase ‑in means that half of that reval-induced property value increases will take effect next fiscal year, and half the following year.

The quicker phase-in and lower mill rate mean that the city’s largest landlords, including luxury developers and megalandlords, will get less of a de facto tax break than they would have under Mayor Justin Elicker’s originally proposed five-year phase-in and 42.75 mill rate, since they saw their property values increase at some of the highest rates thanks to reval. It also means that homeowners in parts of the city like Newhallville and Fair Haven who saw their property values rise at a faster rate than the city as a whole will also see steeper tax bills, who those whose property values rose less quickly will realize their tax savings sooner.

All of this comes at a time when New Haven has received a significant bump in fiscal aid from the state, Yale, and the federal government. That includes a $49 million annual increase to municipal aid through the state’s Payment in Lieu of Taxes (PILOT) program, a $10 million annual increase to Yale’s voluntary payments to the city, and a one-time jolt of over $100 million in federal pandemic-relief aid through the American Rescue Plan Act (ARPA). (Unlike with the state and Yale aid, that federal grant money comes with restrictions on how the city can use it.)

That dissonance between dramatic increases to city revenue and a coming jump in local tax bills was enough to drive two alders, East Rock’s Anna Festa and Newhallville’s Devin Avshalom-Smith, to cast the only dissenting votes against the budget Monday night. Both cited concerns that the budget amended and approved by their colleagues didn’t go far enough to protect property owners from higher tax bills.

“I do not believe that the current budget provides enough relief for the residents who are struggling the most financially,” Avshalom-Smith said from the chamber’s floor during deliberations on the part of the budget that includes the new mill rate and two year phase-in. ​“I wish another solution could have been found.”

“I look forward to finding creative solutions to ease the burden that many residents will shoulder over the two year phase-in,” he continued. But for now, he said, he had to vote no, urged on by constituents who told him that the their tax bills under the 39.75 mill rate / two year phase-in plan would still be too high.

Festa offered a similar critique.

“Our residents are suffering,” she said. Through calls, emails, in-person meet ups, they’re ​“begging us to please do more to reduce the taxes.”

Is the alders’ amended budget the best version possible? ​“No,” she concluded. ​“I think we could have done more. I think we could have done more for the benefit of our residents.”

Avshalom-Smith’s and Festa’s criticisms ultimately lost out to the contention by the majority of their colleagues that this budget was indeed the best possible compromise in a still-challenging fiscal environment for the city. They argued that fixed costs like debt service, pension payments, and employee healthcare are all on the rise; so much of the city’s grand list is owned by tax-exempt nonprofits like Yale; and city residents are experiencing such great needs in all wakes of life that city government stretches and stretches to try to meet.

The increases in state and Yale aid in particular will help ​“build a stronger foundation for years to come” for the city’s budget, Westville Alder and Finance Committee Chair Adam Marchand noted. ​“Nevertheless, increasing fixed costs and economic uncertainty mean we must mix optimism with caution.” 

Downtown/East Rock Alder Eli Sabin agreed. 

In his three years as an alder, he continued, ​“I’ve been struck every time by just how difficult it is for us to pass a budget in this city that reflects our values. We don’t have the resources to provide what we want in our city. We have so much need, so many people who are hurting in our community.”

He said that a number of his constituents have asked him how local taxes can be going up with so much new money from the state and Yale flowing in.

“The answer is: Things were so bad before that $50 million [from the state] came in that the $50 million is just plugging the huge hole that we have in our city in terms of trying to provide for our residents,” he said. ​“We’re just continuing struggling and struggling to do what we all know is right for our residents.”

One way out of this conundrum of relying is to keep pushing for increased funding from the state and Yale, he said. Another is to invest the one-time federal ARPA aid in projects that help the city grow its grand list in the long term, so that the mill rate can continue to drop.

“I think it’s clear that growth is potentially one of the only solutions that we have to prevent us from continuing to cut services and raise taxes,” Sabin said.

Board of Alders Majority Leader and Amity/Westville/Beaver Hills Alder Richard Furlow, meanwhile, took umbrage with criticism that argued that this budget could have done more to lower taxes — but then offered few to no alternatives to how that could be done. 

“This budget before us is the best that we are able to do with the financial situation that the country is in,” Furlow argued.

Everyone is struggling right now, he said. Gas prices are going up. So are interest rents and mortgages. ​“There’s not anyone in this room that doesn’t feel that.”

“We worked hard” on this amended budget, Furlow said. ​“We are residents of this city that are also affected by the decisions that we make. If anyone has a better solution than what we did, then I would love to sit down and talk to them.” 

But, he said, ​“to showboat and say ​‘no’ to everything, it’s not an answer.”

After the alders voted overwhelmingly in support of the new budget, Mayor Justin Elicker sent out an email press release praising the outcome and promising to sign the fiscal documents that are now slated to go into effect on July 1. (The budget approved by the alders is an amended version of a proposed $633.1 million budget that Elicker first introduced in March.)

“This is a budget that reflects New Haveners values and that addresses so many critical priorities for our residents from public safety to public health to public education to everyday qualify-of-life issues and services. It also funds many important programs for our children, youth, families and seniors,” Elicker wrote.

He singled out the hard-won increases in state and Yale aid as better positioning the city to ​“meet the City’s financial obligations, provide essential city services and programs, and begin to fix our long-term budget challenges like underfunded pensions and overborrowing – while also keeping taxes down.”

As for the two year phase-in, the mayor wrote, ​“While our property values and property taxes are increasing during this state-mandated property revaluation year, and the Board of Alders and I may disagree about how quickly to phase in the property tax increase — I would have preferred the more gradual five-year phase in that I proposed as opposed to the more compressed two-year phase in advanced by the Alders so that residents could have had more time to ease into the new property values and taxes — the Alders and I share the goal of balancing the City’s need to provide quality services with the taxes that residents pay.”

What's In The Final Budget?

Before the alders deliberated and voted on the final FY23 budget on Monday, Marchand detailed some of its key provisions, as amended by the Finance Committee earlier this month. Those include:

• Lowering the mill rate to 39.75. That’s 9.41 percent less than the current fiscal year’s mill rate of 43.88. It’s also a 3‑mill drop from the mayor’s originally proposed mill rate of 42.75.

• Phasing in the new 2021 revaluation property values over the next two years, rather than over the next five years, as the mayor had initially proposed. Since the latest citywide revaluation saw property values skyrocket by over 32 percent, the quicker two-year phase-in — even at a lower mill rate of 39.75 — would result in an increase in revenue from local property taxes by $4,969,049 above what the mayor had proposed collecting next fiscal year, according to the committee. 

Under the Board of Alders-approved plan, a property owner who saw their property rise in assessed value by $50,000 during revaluation, for example, would owe property taxes next fiscal year as if their property had increased in value by $25,000, and off of a mill rate of 39.75. The remaining $25,000 reval-induced bump to their underlying assessed property value would then take effect the following fiscal year. That’s different from the mayor’s initially proposed five-year phase-in plan, which would have seen that same property taxed next fiscal year as if its value had increased by $10,000, off of a mill rate of 42.75. The mayor had argued that his five-year version of the phase-in plan would have been most beneficial to homeowners in areas like Newhallville and Fair Haven who saw their property values increase at a much steeper rate than the city average. An Independent analysis found that the biggest winners of that five-year phase-in would have been luxury developers and megalandlords. (Click here, here, here and here for previous Independent articles about the phase-in plan.)

• Decreasing the contribution of federal American Rescue Plan Act (ARPA) aid to the general fund budget from the mayor’s proposal of $10 million to an alder-approved total of $5 million. That frees up $5 million of pandemic-relief ARPA aid for a future non-general-fund-balancing use. 

• Removing or cutting funding for 10 of the 25 new city jobs that the mayor had proposed including in the FY23 general fund budget. The new positions that the Finance Committee recommended axing include two new Livable City Initiative (LCI) neighborhood specialists, two new public health nurses, three new fire department captains, one new fire department lieutenant, a library technology supervisor, and a library personal computer technician. The alders OK’d leaving in the budget a new chief technology officer, a new fire department mechanic, two new deputy directors for the Youth and Recreation Department, and a new chief civil engineer.

• Cutting the mayor’s proposed $5 million increase to the Board of Education budget by $500,000, bringing the general fund bump to the school system down to $4.5 million in total. The Board of Ed had originally requested a $9 million increase next fiscal year.

• Adding over $1.2 million to the city’s catch-all ​“expenditure reserve” budget line.

• Increasing the library’s budget by $140,000 to allow for Sunday hours at all branches.

During Monday night’s deliberations, Prospect Hill/Newhallville/Dixwell Alder Steve Winter backed the two year phase in and 39.75 mill rate as ​“a better path forward for the city than a five-year phase-in.”

That’s because ​“some of the largest beneficiaries” of the mayor’s five-year phase-in plan would have been the city’s ​“largest real estate property owners,” he said. After all, the city’s commercial real estate grand list grew by roughly 55 percent during reval, while residential real estate grew on average by closer to 38 percent.

Will those landlords of commercial properties (that is, properties with five or more apartments) have held off on raising rents on their tenants under a slower, five-year phase-in?

“Some of them might, but many, but many of them won’t,” Winter predicted. He said those landlords are likely concerned about vacancies and turnover in their apartments now. They may have already raised rents on their tenants knowing what their new post-reval property values will be — regardless of how quickly or slowly those values are phased in.

“At the same time,” Winter said, ​“we have many smaller property owners that are going to have to grapple with a two-year phase-in. I think this two-year phase-in does provide some relief,” not least because it reduces the city budget’s reliance on federal ARPA aid from $10 million to $5 million. Those funds can later on be used to ​“make productive investments in the kind of community that we want to be.”

New Youth Deputies Debated

The only specific proposed, cut to the city budget that the alders debated in detail on Monday night came from Alder Festa. 

She put forward a motion that sought to remove one of the new deputy director positions from the city’s Youth and Recreation Department (YARD). If successful, that motion would have redirected roughly $100,000 from that to-be-scrapped new position and towards the city’s employee healthcare expenditure budget line.

Festa noted that the alders had already signed off on cutting other new positions that had been included in the mayor’s originally proposed FY23 budget. She called for her aldermanic colleagues to use federal ARPA aid, rather than general fund dollars, to fund a second new youth services deputy position for a limited time.

After a few years, she said, the alders could revisit the position, see how it’s working out, and then decide whether or not to continue funding it by moving it over to the general fund.

“At this time, to add more deputy director positions may not be the answer” for how to make this department work the best for city youth, she said, let alone the best for city taxpayers.

“This isn’t to compromise our youth,” Festa said. ​“We have to remember that, as the legislative branch, we are also responsible for the residents in our city, and to be financially responsible in all areas in all departments.”

That argument failed to convince most of her colleagues, who said they did see in Festa’s motion an attack on youth services.

Dixwell Alder Jeanette Morrison called Festa’s motion ​“just deplorable.” She said the youth department needs ​“permanent staff,” not staff who are funded for only a few years at a time. ​“Our children are dying in the streets. We have a responsibility to make sure that our children have guidance, have somewhere to go, things to do.” 

Newhallville/Prospect Hill Alder Kimberly Edwards agreed: ​“When we were home meeting on Zoom, [youth department workers] were out in the streets.” Though these new positions may bear the title of deputy director, she said, ​“they’re not pencil pushers. They’re people pushers. … They need to be staffed appropriately. We need to make sure that we’re supporting this department.”

Winter said that the number-one comment he hears from his constituents is that young people need more support from city government, that they need ​“more opportunities to keep our [young] residents busy in good ways.” He suggested that the new deputy positions might help with departmental oversight of of the large bucket of ​“other contractual services” funds assigned to the YARD budget for its summer youth work program.

Furlow pointed to how a teenager named Anthony Strother was recently shot and killed on the far west side of town. ​“How much does incarceration cost? How much do funerals cost?” he asked. ​“If we don’t invest in our children’s future, we’re going to pay millions for it now. Not just in money, but in heartbreak.”

The only one of Festa’s colleagues to support her youth deputy-cutting amendment was Avshalom-Smith.

“I’m a staunch advocate of services for our youth,” he said. ​“I’m also a staunch advocate of being measured with our approach to providing services and cautionary of adding top heavy positions. I do not look at this as any type of disinvestment in our youth, or any type of attack or disinvestment in their safety. I only seek that we be measured in our approach to give ourselves the opportunity to provide even more beneficial services to our children in the future.”

Westville Alder Darryl Brackeen responded that the city’s youth department has ​“gone above and beyond” time and again during recent years to help young New Haveners. Funding this new deputy position furthers the alders’, the Elicker Administration’s, and city residents’ broader goals of making sure that the youth have safe, productive, and fulfilling ways to spend their time. 

“We don’t have a choice,” he said. ​“The residents and constituents are asking to ensure we equip youth” for a better future. ​“There’s no way that we can cut anything short.”

Ultimately, Festa’s amendment failed in a 25 – 2 vote in opposition. 

The amended $633.1 million general fund budget then passed in a 25 – 2 vote, with Festa and Avshalom-Smith voting against. And the 39.75 mill rate and two year reval phase-in then passed also with a 25 – 2 vote, with Festa and Avshalom-Smith voting against.

"Alder Devin, Vote: 'No'"

After Monday night’s budget votes, the Independent asked Avshalom-Smith, a first-term alder from Ward 20 going through his first city budget process, how he thought the alders could have found more savings and reduced tax bills.

Avshalom-Smith said that that there were some ​“administrative positions” in multiple departments that he thought could be cut. He didn’t identify any specific positions, though he did say he thought that the alders could have provided less money to the new Department of Community Resilience.

He also said that during the months-long budget review and amendment process, he broached the idea of making tax billing quarterly rather than twice a year. ​“I thought that might ease the burden for residents instead of seeing bills in two chunks.” He said that city financial staff ultimately nixed that idea because it would have affected the city’s cash flow and would have impaired city government’s ability to pay its bills.

Avshalom-Smith said he also touched on — and plans to pursue — a proposed ​“poor people’s fund” that would provide direct financial aid to low- and middle-income New Haveners to help defray the costs of household repairs, rent, and utilities. 

Why didn’t he propose that from the floor Monday night, or during the months of aldermanic review of the FY23 budget?

“It seemed like it was unworkable with the funds that we had available to us,” he said. He then promised to keep pushing for the creation of just such a fund in upcoming aldermanic deliberations and votes around how to spend federal ARPA [pandemic-relief] dollars.

Avshalom-Smith said he understands the implications of voting ​“no” to the budget on Monday night. If the alders had rejected the amended version of the budget, then the document that would have gone in place on July 1 would have been the mayor’s originally proposed budget from March.

But, he continued, ​“my residents in Ward 20 were most likely to be affected the most because our property valuations went up by 60, 70 percent.”

“I can’t tell you how many people have called me, have showed up to my house, and who I see just walking around the neighborhood who told me, who looked me in the eyes and said: ​‘Alder Devin, vote: ​‘No.’ ” All because of their soon-to-rise tax bills.”

“I promised them that I would come here and represent their voice,” he concluded. ​“If standing up for the poorest people among us is showboating, and if honoring my word at the request of my constituents to vote against taxes being raised is showboating, then give me two oars and I’ll row that boat to the promised land where poor people do not have to shoulder a disproportionate amount of the financial burden in the city.”

Blatteau: Students, Educators, Classrooms "Deserve More"

An hour before Monday’s Board of Alders meeting started, several dozen city employees, municipal union leaders, and immigrant rights activists from Unidad Latina en Accion held a protest outside City Hall in which they called on the local legislature to fully fund the schools budget. 

They waved signs and called for hazard pay and other favorable terms in upcoming negotiations between the Elicker Administration and a number of city unions represented by the American Federation of State, County and Municipal Employees (AFSCME). Many of those same protesters, wearing bright green AFSCME shirts, then moved into City Hall and sat in on the alders’ budget deliberations and votes in the Aldermanic Chamber.

Below are the full remarks delivered at that protest by local teachers union president Leslie Blatteau.

In about an hour, the New Haven Board of Alders will vote on a city budget that includes a substantial increase to the budget for our public schools.

If approved, this $4.5 million dollar increase will be the largest increase to the school budget in many years. And while on average over the last 6 years, the Alders have funded 51% of what the mayor proposed, this year they decided to fund 90% of the $5 million increase requested by the mayor. In fact, this is only the second time in recent years that Alders have funded the school budget at more than 50% of what the Mayor proposed.

And tonight we are here to recognize the hard work of union members and community members who came together to fight for this fair funding. We marched, we testified at public hearings, and we called our fellow union members, New Haven residents, and our alders to demand a fully and fairly funded school budget.

And while we are inspired to see this renewed commitment to our students and our public schools, and we urge the alders to draft an amendment to fund the full $5 million the mayor requested, we are also here to remind our local and state leaders that even with this proposed budget increase, our schools are still poised to be operating at a deficit. And we must do better. Let’s talk about what a deficit means for our school communities.

• A deficit means it will be harder to fill the teacher vacancies that disrupt the education of New Haven students. Too many schools lack special education teachers, library media specialists, bilingual educators, science teachers, and English teachers. Our students deserve a certified teacher in each and every class.

• A deficit also means there will be less funding to support necessary initiatives that prioritize social and emotional wellbeing, outdoor education, field trips, healthy school meals, and increased access to mental health services.

• And a deficit means teachers, paraprofessionals, custodians, nurses, cafeteria workers, principals, family members and most importantly students, will continue to have to do more with less.

At a time when Yale University’s endowment exceeds $40 billion dollars and when the state of Connecticut’s rainy day fund exceeds $3 billion, it is hard to believe that urban districts like New Haven have to fight tooth and nail for the resources that our students deserve. The $5 million budget deficit is one-hundredth of one percent of Yale’s total endowment. What makes or breaks the education of 20,000 children in our city, amounts to an accounting or rounding error for our local university. It doesn’t have to be this way.

And that is why we are here to call on the city, the state, and Yale University and remind them that even with this budget increase, we are still facing a deficit. We are making progress but our leaders have not yet fulfilled their responsibility. Our students and families, our educators, our classrooms, and our schools, deserve more.