Thomas Breen photo
Acting Controller Mike Gormany, with Corporation Counsel Patricia King: Budget surplus transfers "would be the primary mechanism for the Cox settlement."
A key panel of alders signed off on $16 million in budget-surplus transfers and, “if necessary,” new city borrowing, in order to cover the uninsured portion of a $45 million police-misconduct-and-paralysis settlement.
That was the outcome of Monday night’s latest regular monthly meeting of the Board of Alders Finance Committee, which took place in the Aldermanic Chamber on the second floor of City Hall.
The committee alders voted unanimously in support of two legislative items related to the city’s settlement in June of a federal civil rights lawsuit filed by Richard “Randy” Cox, the 37-year-old New Havener who suffered paralyzing injuries while in police custody one year prior.
Taken together, the proposals — which now advance to the full Board of Alders for further review and a final vote — would allow the city to transfer and/or borrow up to $16 million to cover a portion of that $45 million settlement.
Finance Chair Adam Marchand: "It is simply a matter of the financial mechanisms for meeting an obligation the city has due to a negotiated settlement."
“The issue before us is very straightforward: There was a lawsuit. There was a settlement. There was an award,” Finance Committee Chair and Westville Alder Adam Marchand said at the top of Monday’s meeting. Insurance is covering $30 million of that settlement. The city must now pay for the rest. “The question before us is how to do that: bonding or general fund monies.”
This is not a “replay” of the legal debate or underlying facts behind Cox’s agreement with the city, Marchand stressed. “It is simply a matter of the financial mechanisms for meeting an obligation the city has due to a negotiated settlement.”
Monday's Finance Committee meeting.
The Elicker administration struck a deal with Cox and his lawyers, including national civil rights attorney Ben Crump, to pay the injured arrestee a total of $45 million. Cox’s advocates have described that amount as the largest police misconduct settlement in the nation’s history, while city officials have defended it as commensurate to Cox’s ongoing care needs and the harm he incurred.
As city Budget Director and Acting Controller Michael Gormany explained Monday night, $30 million of that settlement has been covered by the city’s insurers. That leaves the city responsible for covering the costs of the remaining $15 million. Taking into account additional fees owed to lawyers who worked with the city on negotiating the agreement, the city actually needs to pay up to $16 million related to this case, he said.
Thus the two proposals before the Finance Committee on Monday. One would allow the city to transfer up to $16 million from the city’s Fiscal Year 2022 – 23 (FY23) general fund to pay for the Cox settlement. The other would allow the city to borrow up to $16 million to pay for those same legal costs.
The general fund would be the “primary” means of paying for the Cox case, Gormany said. “That is the best solution for this settlement. We would be taking it out of surplus funds that we see for the last fiscal year,” which ended on June 30. The second proposal, to borrow money to cover a portion of the city’s $16 million debt, is more of a “backup” because of the added costs of taking on additional interest payments.
Gormany pointed to the city’s June 2023 monthly financial report, which projects that the city will end FY23 with a $16.4 million surplus. By the time the city officially closes out its FY23 books in September, Gormany said, that surplus could increase to as high as $20 million.
“If we are able to achieve that, we would be able to pay for whatever we need out of that surplus,” he said. That’s cash on hand — “money already accounted for, received, no interest” or borrowing costs required. And more than enough to pay the entire $16 million related to the Cox case.
“However,” he continued, “we are not certain of that actual [surplus] number” and it could come in at less than projected. If that’s the case, then the city would borrow the rest and “it would become a debt instrument for the city. We would be paying principal and interest if we were to bond for it.”
Gormany also noted that the city has more than $36 million in its “fund balance” — that is, general fund surplus dollars that have accumulated across several years of budgets ending in the black.
Why not tap into that fund balance, or rainy day fund, to pay for this portion of the Cox settlement instead of borrowing anew? “We’ve done a lot to building up the fund balance over the past few years,” he said. “Talking to the city’s financial advisers, it is advised that we don’t run a deficit in the general fund, even if it is related to a settlement. That could affect our credit rating” and could make it more expensive to borrow going forward.
“But again,” he concluded, “fingers crossed, we are actually looking at above $16 million as a surplus going into next year. That would be the primary mechanism for the Cox settlement.”
Majority Leader Furlow.
The language of the ordinance proposals themselves don’t appear to specific that borrowing would be done “only if needed,” Majority Leader and Amity/Westville Alder Richard Furlow pointed out.
That’s right, Gormany said. The city submitted these two transfer-borrowing proposals as soon as possible after the Cox settlement was struck. But “we know bonding is the more costly solution,” and therefore would avoid it if possible. “We want the flexibility” to borrow, however, if the city’s FY23 general fund surplus comes up shorter than expected.
East Rock Alder Festa.
If the city were to bond the full $16 million, East Rock Alder Anna Festa asked, “could that funding be used for other city needs” like sidewalk repairs or anything else, if the full uninsured portion of the Cox case settlement can be covered by a budget transfer? “Isn’t it safer to actually bond” and would allow for the city to make “additional investments?”
Gormany said that the capital budget is defined on a project-by-project basis. The current two-year capital budget adds up to $55 million. If the city were to borrow an additional $16 million for the purposes of paying the Cox settlement, then city staff would need to come back before the board and follow a number of other generally accepted accounting principles in order to direct that borrowed money elsewhere.
“If we bond for it,” he said, “it’s specifically for that settlement.”
Dixwell Alder Jeanette Morrison.
Alder after alder spoke up in support of the $16 million settlement plan during the deliberations portion of the nearly four-hour-long meeting Monday night.
“It’s going to take a lot of money to take care of him,” Dixwell Alder Jeanette Morrison said about Cox. “It’s in his best interest,” she added before voting in support.
“Let’s put closure to this,” Edgewood Alder Evette Hamilton said. “It’s been a very bad situation for Mr. Cox and the city as a whole. Because my taxes, all of our taxes, go into this. Let’s get it done.”
Morris Cove Alder Sal DeCola thanked Gormany for presenting the alders and the city with “two roads” — budget surplus transfer and borrowing — that the city can take to pay off this debt. Marchand made clear that, if the Board of Alders approves both ordinance proposals before the committee on Monday night, then Gormany’s office “has the authority to do one or both, whatever it is needed” to get to the $16 million total.
“I’m in favor of this resolution,” Hill Alder Kampton Singh added, “so we can put this matter to rest.”
Key moments of the police arrest, transport, and detention of Richard Cox.
The settlement payment plan proposal come more than a year after police arrested Cox on weapons charges without incident at a Lilac Street block party on June 19, 2022.
En route to the police station, Officer Oscar Diaz, the driver of a seatbelt-less prisoner conveyance van, slammed on the brakes to avoid crashing into another vehicle at the intersection of Division and Mansfield Streets. That abrupt stop sent Cox flying head first into the wall of the van, injuring his neck and spine. The driver of the van later called for medical help but, instead of asking for an ambulance to come to the scene, the driver proceeded to take Cox to the detention center at 1 Union Ave.
There, rather than waiting for a medical crew to attend to Cox’s crumpled and paralyzed body, officers at the police lock-up accused Cox of lying, demanded he stand up, pulled him out of the van, placed him in a wheelchair, then dragged him across the floor into a cell. The case sparked national outrage.
Cox’s family, represented by national civil rights attorney Ben Crump, subsequently filed a $100 million civil lawsuit against the city, the police department, and the involved officers seeking damages for the officers’ alleged violations of Cox’s civil rights. That case has now been settled for $45 million.
The incident led the city to update its training and police transport policies, requiring that officers ask arrestees if they need medical attention, seek care immediately if the answer is yes, and transport arrestees in police cruisers with seatbelts, among other changes.
Each of the five involved officers — Diaz, Betsy Segui, Jocelyn Lavandier, Ronald Pressley, and Luis Rivera — has been arrested and charged with one misdemeanor count of second-degree reckless endangerment and one misdemeanor count of“cruelty to persons” for their roles in Cox’s mishandling. All five arrested cops have pleaded not guilty to those charges.
Segui, Lavandier, Diaz, and Pressley were also all fired from the police department for their conduct in this case. (Pressley retired before he could be fired.) During Internal Affairs (IA) interviews in the runup to their police commission disciplinary hearings, the four now-fired officers sought to justify their treatment of Cox by telling investigators they thought he was drunk, intentionally noncompliant, or otherwise faking his injuries after his arrest.