Final Budget Vote Preserves Tax Hike

The Board of Alders voted overwhelmingly Tuesday night to approve a final new city budget with an 11 percent tax increase after beating back three determined alders’ last-ditch attempts to cut expenditures.

The alders also voted to cut over $5 million in proposed borrowing for capital projects with an eye towards reducing the city’s long-term debt.

The votes took place during a special meeting in the Aldermanic Chambers on the second floor of City Hall for the final action on the mayor’s proposed $547.1 million operating budget and $79.6 million capital budget for the fiscal year that starts July 1.

After over three hours of deliberations, the alders voted overwhelmingly to adopt a $547.1 million operating budget that was largely unchanged from the amended version that the Finance Committee recommended two weeks ago. The budget that the alders adopted preserves the mayor’s proposed 11 percent tax increase for the fiscal year beginning July 1. It also follows the Finance Committee’s recommendations to increase healthcare funding by $5 million and to flat-fund the schools budget.

The alders voted to cut the mayor’s proposed capital budget by $5.18 million, leaving intact major upcoming projects like the new $10 million reconstruction of the Department of Public Works (DPW) headquarters and instead nibbling away at dozens of smaller line items ranging from police technology improvements to parks field upgrades.

Tuesday night’s meeting was the alders’ last chance to amend the mayor’s proposed budget before sending it back to the mayor’s office for final review and approval. Mayor Toni Harp must sign the budget or veto specific line items within the next 10 days, or else the budget as adopted by the alders will got into effect come July 1.

Tomas Reyes, the mayor’s chief of staff, said after the meeting that the mayor will need to review the alders’ budget, and that it is too soon to tell whether or not she will veto any line items. He said the mayor was wary of the alders’ decision to flat-fund the Board of Education (BOE) budget, and reiterated that her analysis of the school systems’ finances led her to believe that the BOE needs an additional $5 million from the city next year.

The alders ultimately made very few changes to the amended budget put forth by the Finance Committee, which in turn changed neither the total dollar amount of the mayor’s proposed operating budget nor its proposed double-digit tax increase.

The $547.1 general fund budget approved by the alders represents an increase of $8.1 million, or 1.52 percent, over last year’s final approved budget.

The tax increase will raise the city’s real estate and personal property mill rate from 38.68 to 42.98. One mill corresponds to $1 in taxes for every $1,000 of assessed taxable real estate. Therefore, the 11 percent tax increase means that a person with a house and lot assessed at $100,000 will pay $4,298 instead of $3,868 in annual real property taxes. Similarly, a person with a house and lot assessed at $500,000 will pay $21,490 instead of $19,340 in annual real property taxes.

Still, Tuesday night’s meeting featured a sustained volley of proposed policy amendments and budget cuts from a trio of alders seeking to cut city costs and increase budgeting transparency.

Nearly every proposal, however big or small, was voted down by a majority of alders, who dismissed them as too vague, too last-minute, or encroaching on legislative overreach.

The alders met, as they always do before full board meetings, for a private Democratic Party caucus which is not open to the public. Since every member of the Board of Alders is either a Democrat or unaffiliated and caucuses with the Democrats, the private caucus de facto functions as a closed-door session for all of the alders to hash out their thoughts, agreements, and disagreements before this final vote on the budget.

After spending nearly 50 minutes in private caucus in a meeting room on the second floor of City Hall, the board held its mandated public information caucus, which is open to the public, in another second-floor meeting room. The public information caucus lasted just under 30 seconds.

3 Musketeers

Beaver Hills Alder and Board of Alders Majority Leader Richard Furlow asked three times if any alders had any comments on the proposed budget. No one said a word. So the public information session ended.

During the formal board meeting itself, Downtown Alder Abby Roth, East Rock Alder Anna Festa, and Newhallville/Prospect Hill Alder Steve Winter proposed over 20 budget amendments among the three of them. The three alders supported each other throughout the night, seconding one another’s amendments and offering verbal support in the face of their largely disapproving colleagues. Five of their proposals passed; another two were tabled.

Festa, a member of the Finance Committee, was one of the most persistent and critical voices on the committee during the past three months of budget hearings, workshops, and deliberations. Roth and Winter, though not on the Finance Committee, showed up to nearly every one of the committee’s budget meetings as well as to the monthly meetings of the city’s independent Financial Review and Audit Commission (FRAC).

Roth’s first proposed amendment to the general fund budget called to restore projected vacancy savings from the $1.8 million recommended by the Finance Committee to the full $3.6 million recommended by the mayor. Roth said that the additional $1.8 million in expected savings should be put towards reducing the mill rate increase.

In her defense of the amendment, Roth warned about the impact of the 11 percent tax increase on city residents.

“We cannot tax ourselves out of this situation,” she said. She said current residents will move, affordable housing will become more scarce, and good jobs will flee the city if the 11 percent tax increase passed. She said restoring the proposed vacancy savings to $3.6 million was ambitious, but that the mayor believed it was possible in her original budget.

Westville Alder Darryl Brackeen, Jr. asked for a print-out of Roth’s amendment to be passed around to all of the alders in the room, as many had not seen or read it yet. Fair Haven Heights Alder Rosa Santana said she disapproved of the proposal simply because Roth was introducing it so late in the budget-making process. Ultimately, the alders voted overwhelmingly to table the amendment.

Winter proposed that the alders reduce a vacant police captain position’s salary to $1, reduce the Transportation, Traffic and Parking (TTP) director’s salary by $10,000, and reduce TTP’s ​“Other Contractual Services” line item by $4,000 in order to fund a second public code enforcement officer for DPW and an executive administrative assistant position for TTP.

“I think that its important that we are looking at the budget and trying to invest in positions that can bring revenue into the city,” Winter said. ​“And both of these positions are great candidates for that.”

He said DPW currently only has one code enforcement officer, Honda Smith, and that she brings in more revenue to the city than her position costs. He also said the TTP executive administrative assistant, which was recently vacated, will help shore up parking ticket and meter bag revenue, which are projected at coming in at $500,000 under budget this year in part due to that position’s vacancy. He said that amendment was revenue neutral, but that the funding of the two positions would in fact result in a net revenue gain for the city in the long run.

Brackeen said the alders did not have the correct information before them regarding the amendment’s details, and the alders voted to table Winter’s amendment.

“FRACing All Over That!”

Festa proposed an amendment to take $3.5 million out of the $5 million increase to the city’s healthcare fund that was proposed by the Finance Committee and use that money to reduce the proposed tax increase. She cited as rationale for her amendment a recently released analysis by the city’s Human Resources (HR) department that projected that city employee contributions towards their healthcare premiums will likely increase by $3.5 million next fiscal year.

Westville Alder and Finance Committee Co-Chair Adam Marchand stood up and opposed Festa’s amendment. He acknowledged that Anthem, the insurance provider that the city uses for its own self-insurance policy, had indeed provided new premium rates to the city which the city’s HR department projected would result in a 17 percent average increase in monthly premium contributions for city employees. But, he cautioned, that increase in employee payroll deductions for medical would not necessarily result in a lighter medical cost load for the city.

In fact, he said, based on historical trends and market projections, the city will likely have to pay at least as much of a premium increase as its employees for medical coverage next year.

“I question the wisdom of moving any of those $5 million” from the medical fund, he said. ​“It’s a recipe for a continuing slide into greater negative fund balances. We currently have a $13 million negative fund balance in medical. You quote FRAC. They’ve been FRACing all over that! It’s the number one thing that they mention.”

The alders voted overwhelmingly to discard Festa’s proposed amendment.

The only amendments that the alders approved for the general fund budget were a revenue-neutral amendment from Quinnipiac Meadows Alder Gerald Antunes to shift $30,000 from police overtime to help pay for officer promotions; amendments from Festa to require the city to publish a list by Sept. 1, 2018, of all properties currently benefitting from tax deferrals, and to require the city to get the approval of the Board of Alders before issuing any salary increases for executive or management employees.

Some of the proposed amendments that failed to win the support of the Board included:

• Roth’s proposal to cut 5 percent from every city department except for public safety departments and put the savings towards a mill rate decrease.
• Winter’s proposal to require the Finance Department to publish the budget electronically as an Excel Spreadsheet to facilitate easier manipulation of financial assumptions.
• Festa’s proposal to sequester all existing and proposed funds for the Escape Teen Center until the city renegotiates its lease with Bethel AME Church and drops the proposed youth center and homeless shelter project entirely, which has been significantly delayed and will compete with the new Q House once that city-owned site comes online next year.

The only alders to vote against the adoption of the general fund budget as amended by the full board were Roth, Winter, Festa, Santana, and Newhallville Alder Kimberly Edwards.

$5M Cut From Capital Budget

For the capital budget, Winter proposed a detailed list of cuts that avoided some of the city’s major upcoming projects and critical functions like street and sidewalk repair, but that nevertheless added up to $5.18 million. Those cuts included a $400,000 reduction to the Finance Department’s IT initiatives line item, a $500,000 cut to the Parks Department’s infrastructure improvements line item, and a $100,000 cut to the City Plan department’s Farmington Canal Greenway line item.

Marchand praised the specificity and careful reason behind Winter’s proposed cuts. He said they would not affect this year’s tax increase, but they would help reduce the city’s long-term debt obligations. The city currently pay $67.2 million per year towards debt service. Every alder except for Festa voted in favor of adopting the capital budget that included Winter’s line item amendment. (West Rock Alder Michelle Sepulveda, who left the meeting before the vote took place, did not vote on the capital budget.)

Click here to download the complete list of capital budget cuts included in the amended capital budget that was approved by the alders on Tuesday.

“I appreciate the work that everyone has done in this budget season,” West River Alder and Board of Alders President Tyisha Walker-Myers said at the end of the meeting. She said she recognized that an 11 percent tax increase puts a lot of pressure on city residents and alders alike. She said the alders’ work on the budget is not over, and that there is always the opportunity to amend the budget after it has been adopted in case unforeseen revenues come from the state or elsewhere. She said the alders always have the public’s interest at the forefront of their minds.

“We are facing challenging times,” Marchand said before the alders voted to approve the amended general fund budget. ​“We are trying to face that challenge in a fiscally responsible way. No one is excited about raising taxes. We did not have the money to reduce that mill rate. But New Haven is a city on the rise. There are still many people coming here to live, to develop, to build. And if we can tackle the structural issues that are in our budget and make progress … then we can position ourselves in an increasingly favorable way going forward.”

Acting Budget Director Michael Gormany said his department will now take a look at all of the policy amendments approved by the alders as he consults with the mayor in the coming days.

The April 2018 monthly financial report put out by Gormany’s department projects a $14.07 million deficit for the fiscal year that ends at the end of June. He said city has frozen all expenditures and that he and City Controller Daryl Jones will present a final plan on June 11 to the Finance Committee for balancing the city’s budget by the end of the fiscal year.

Click on the Facebook Live videos below to watch the full Board of Alders budget hearing.