Tax Phase-In Freeze Pitched

Two weeks after hundreds of New Haveners stormed City H all to decry a planned tax hike, Budget Director Larry Rusconi proposed a familiar idea: delay a property revaluation phase-in that would shift taxes from businesses to homeowners.

Rusconi unveiled that plan at Wednesday night’s meeting of the Board of Aldermen’s Finance Committee. It was the latest in a series of committee meetings in which aldermen consider the mayor’s proposed $476 million budget, which has proved to be a controversial document.

The budget includes a proposed property tax phase-in that will raise residential taxes by an average of 8.8 percent. That doesn’t sit well with many taxpayers. Hundreds of them showed up two weeks ago to protest the proposed tax hike.

Under the new phase-in delay plan put forward by Rusconi on Wednesday night, the average tax increase for homeowners would be 6.97 percent instead of 8.8 percent. It’s a total of $3.5 million in savings for residential taxpayers, Rusconi said.

The plan is similar to last year’s freeze of the property revaluation phase-in. However, the mill rate would have to increase this year to 45.15 to produce the same amount of revenue the budget calls for. Under the proposed new plan, the city as a whole would pay the same amount of taxes, but homeowners would pay a smaller portion than they would under the mayor’s current proposed budget. The burden would shift to businesses.

City attorneys are working on a resolution that would make the new tax plan a reality. Once the resolution is drawn up, it will need the approval of the Board of Aldermen. At least one aldermen, East Rock’s Roland Lemar, called it ​“a great idea.”

But for the budget watchdogs of the New Haven Citizens Action Network, the phase-in freeze is simply ​“gimmickry.” That was the description of NHCAN’s Harry David (with hand raised in top photo), who lingered after the meeting to speak with Yusuf Shah, chair of the Finance Committee (at right in photo).

David said the city budget department is wasting its time on ​“engineering” the budget, instead of overhauling it. The new tax plan doesn’t change the tax picture in New Haven; it just moves the burden from one group to another, David said.

David encouraged Shah to send the budget back to the mayor to be completely reworked, not simply try to trim it around the edges.

“I see your point,” said Shah. He said he had to go, to catch his ride home.

After Shah left, David continued. The new tax plan is ​“playing games with numbers,” with the parking meter deal, for instance, he said. The mayor can shift the taxes to businesses because ​“they don’t squawk as loud” as homeowners, he said.

Later, Lemar agreed with one of David’s points. ​“It’s not fundamental tax reform,” he said. But delaying the phase-in another year will allow time for another revaluation, in 2011. That revaluation will be more accurate than moving forward using property values that were last calculated in 2006 and are therefore ​“artificially” high, Lemar said.

Brevity

Wednesday’s Finance Committee clocked in at around 45 minutes, a short session compared with recent meetings, which have stretched several hours. According to two aldermen, the brevity was due to the fact that budget deliberations are ongoing outside of the committee. Numbers are being crunched and possibilities considered in advance of next Tuesday’s Finance Committee meeting, when cost cutting ideas will be unveiled.

The working groups formed last week are coming up with cuts, said Hill Alderman Jorge Perez. Rusconi is still looking at options in the parking meter monetization plan. More firm data is needed before the committee can discuss cuts in detail, Perez said.

Members of the working groups have been putting in ​“countless hours” over the last week and a half, talking with city staff about budget options, Lemar said. The analysis has been line by line, as aldermen look at ​“doing stuff that’s going to hurt,” Lemar said. Lawmakers are looking at possible cuts to ​“everything that’s not core to the budget,” he said.

Lemar said he has already identified one part of the budget that he can’t support: the parking meter monetization plan. It’s not ​“long term responsible budgeting,” he said. Lemar acknowledged that vetoing the parking meter plan might result in cuts in city services.

Backdrop

Like the previous week’s session, Wednesday’s Finance Committee meeting was preceded by maneuvering on both sides of the budget battle. Mayor John DeStefano called municipal union leaders in for a City Hall meeting MOnday, hoping to gain their support for holding the line on the budget. But at least one union leader refused to lobby her members against budget critics on the board or the citizen-watchdog New Haven Citizen’s Action Network. NHCAN sent out a letter to all city employees, urging them to resist the mayor’s overtures.

With that backdrop to Wednesday’s meeting, live-blogging commences below. (Note: only text inside quotation marks is directly quoted; the rest is paraphrasing. Observations and comments are generally in brackets.)

6:59 p.m. Aldermen are taking their seats.

7:02: Chairman Yusuf Shah calls the meeting to order. He’s reading the agenda. Shah is joined by Aldermen Maureen O’Sullivan-Best, Jorge Perez, Migdalia Castro, Bitsie Clark, Carl Goldfield, Stephanie Bauer, Justin Elicker, Greg Morehead, and Andrea-Jackson Brooks. There are about a dozen observers here in the aldermanic chamber, including a few aldermen who are not on the committee.

7:05: Shah says all of the agenda items are ​“being skipped over” for now. [Shah’s cellphone just went off and was confiscated by aldermanic staff.] He says he’d like instead to talk about the ​“sub-meetings that we’ve had.” He’s referring to the working groups that were put together before the mayor’s appearance at the last meeting. The mayor proposed six areas to look at in the budget, and six corresponding working groups were formed. They’ve been meeting over the last week to find ways to trim the budget.

7:09: Budget Director Larry Rusconi steps forward. He says: The working group meetings have been going well. Some suggestions are being ​“costed out.” Project delays in the capital budget are being considered. On the non-tax revenue side there are a couple of ideas that ​“may improve the picture somewhat.” One is a reconsideration of the PILOT (Payments in Lieu of Taxes])agreement with the New Haven Water Pollution Control Authority (WPCA). That won’t help this year, but it might help next year’s budget. The second it the PILOT agreement with the Ninth Square. The sum of both is significant. Obviously non-tax revenue increases will relieve pressure on the taxpayer. ​“There’s certainly potential to be in a position to do that.” Not today but maybe in a few days.

7:13: Bitsie Clark asks for clarification about the Ninth Square business.

Budget staffer Rebecca Bombero says the Ninth Square development project from the 1990s had a tax abatement period when it was subject to PILOT, not direct taxes. [After the meeting, Bombero and Rusconi clarified this point. There was a miscalculation between the budget office and tax assessor’s office that found $400,000 or $500,000 in PILOT funds that the city had not accounted for in next year’s budget, because of confusion about when the Ninth Square development project’s tax abatement period ran out. There is a similar recalculation going on with regard to the WPCA, but Rusconi said he didn’t know for sure how much that would save.]

Roland Lemar has joined the committee.

Rusconi: We’re looking at the phase-in of the last property tax revaluation. Last year, that phase-in was frozen. A new idea: staying at year two of the phase-in instead of going to year three, as was planned. That would reduce the burden on residential taxpayers.

Bombero takes over to guide aldermen through a handout: Going to phase two would ​“mitigate the shift towards the residential taxpayer.” [The phase-in as previously planned would result in a shift of the tax burden from businesses to homeowners.] For a home of $100,000 value in ​‘05 that went to a $200,000 value after the phase-in, the savings for going back to year two would be $273, over what it would be if the phase-in went right to year three. [In other words, there would still be a tax increase, but a smaller one.]

7:20: Rusconi, answering a question from Goldfield: A new property revaluation is coming up this year. The year two phase-in rate might be closer to what current home values are now, since we’re past the housing bubble.

7:23: Elicker: Is this legal?

Bombero: Yes. … A revaluation is required every 5 years. In 2011 it will be a visual inspection, which costs the city more than a statistical calculation. It’ll cost the city $1.5 million.

Goldfield: ​“They actually come out to your house. … That’s why it’s so expensive.”

7:25: Goldfield: You want to talk about monetization [the parking meter deal]?

Rusconi: Attorneys are still in negotiations over the contract. [Aldermen asked the city last week to renegotiate some aspects of the deal and look at alternatives.]

7:26: Perez: What about an alternative model for raising that money?

Rusconi: We looked at issuing pension obligation bonds, but it doesn’t look good. The main reason: it requires state approval. Plus, they can only be used to cover the unfunded pension liability. Also, experiences in neighboring towns shows that there’s greater susceptibility to ​“market risk” when bonding. The 7.65 percent interest rate in the meter deal gets locked in; it could rise under other borrowing options.

Bombero: We’re talking to the traffic and parking department to see if the installation of parking pay kiosks could be sped up, and if garage fees could be raised. It’s not going to get us the $6 million the parking meter deal would.

Perez: There were other options mentioned last week: more parking enforcement, raising parking fees…

Rusconi: ​“We are looking at what else might be possible” in terms of raising rates.

7:31: Roland Lemar asks a question about city money spent on eviction processes.

Bombero: We’re still required to do storage. We’re still looking at it.

Elicker: What about the Board of Ed budget?

Rusconi: They’ve identified some programs that they may be able to put off. I don’t have anything specific.

Alderman Sergio Rodriguez, from the audience: What about a surcharge on private parking lots?

Rusconi: ​“We’d need enabling legislation from the state to allow us to do that.”

7:34: Live updates are coming in from some of the observers here in the chamber. See the comments section, below.

7:35: Rusconi and Bombero have left the table. The committee is scheduling its next meeting: next Tuesday at 6 p.m. Amendments are due on Friday, Shah says.

Goldfield: The final details of the monetization plan should be in by Friday, or Monday at the latest. He says he’ll ask the administration to make sure that happens.

Shah: The public has asked us to reconsider the budget. ​“It is a bit of a crunch [the timeframe].”

7:40: Castro: Can we have until Tuesday to submit amendments?

Shah: They should be in by Monday at noon, no later.

Budget amendments can always be proposed later, at the full board meeting.

7:43: Goldfield: Proposed cuts are not coming just from the administration, but from aldermen as well. … Scheduling: Goldfield says he’s going to cancel the full Board of Aldermen meeting on Monday and move it to Thursday, after the next Finance Committee meeting, on Tuesday. That will allow for two full readings of the budget by the full board, one on May 20 and one on May 27.

7:46: Shah: since we are not going to deliberate, let’s pass the special district agenda items.

Perez moves items eight through 15 on the agenda, comprising enterprise fund budgets and special services district items.

Clark explains that aldermen can vote for those items without discussion, because they have been heard before and they’re not part of the budget.

The items pass unanimously.

7:48: Goldfiled moves for adjournment. Meeting adjourned.