On Budget, Alders Cut, Cut, Pray

Committee votes to halve tax hike, slash $7.1 million in spending — and demand $2.5 million in voluntary payments from Yale.

Committee alders took that vote Wednesday night during a roughly two-and-a-half-hour virtual meeting held online via the Zoom teleconferencing app.

The meeting represented the culmination of over two months of Finance Committee-led public hearings, departmental workshops, and aldermanic deliberations on Mayor Justin Elicker’s proposed $569.1 million general fund budget for Fiscal Year 2020 – 2021 (FY21), which starts July 1.

The amended budget proposal now goes to the full Board of Alders for a final debate and vote on May 26.

The committee voted 9 – 1 in support of the amended budget, with East Rock Alder Anna Festa casting the sole dissenting vote.

She told her colleagues she was voting against the budget Wednesday night because she still had outstanding questions about detailed cost and revenue assumptions behind the various amendments. For instance, alders do not have power to force Yale to make more voluntary payments. And the cuts are unspecified — city departments would be ordered to find them.

“Our future can be bright, but the burden has fallen on too few shoulders,” said Finance Committee Vice-Chair and Westville Alder Adam Marchand (pictured). ​“There are entities in this community whose shoulders are bigger than anybody else’s, by far.”

He framed the amended budget as asking more from taxpayers through a tax increase, more from city departments and the public schools through wide-ranging cuts, and more from large wealthy local institutions like Yale through increased contributions.

“We need a different structure to this relationship with our key partners,” he said. ​“Otherwise, our path is not sustainable.”

Wednesday’s committee vote marked a significant milestone in a budget-making season overshadowed at every turn by the Covid-19 pandemic.

Except for the first public budget hearing held at Hillhouse High School on March 11, just days before the mayor closed City Hall to the public and declared a state of emergency, budget hearings and workshops this spring have taken place entirely online.

During the three department-level workshops, nearly every city official who spoke emphasized that the mid- and long-term financial implications of the pandemic on city government coffers and operations are largely unknowable.

Last month, the city finance department projected that the city would end the fiscal year with a $15.3 million deficit, driven largely by steep revenue drops in property tax collection, building permits, parking tickets and parking meters.

During the two online public budget hearings, dozens upon dozens of members of the public filled the virtual meeting space to decry Yale University’s immense wealth and largely tax-exempt nonprofit status.

Click here to read Yale President Peter Salovey’s response in early March to Elicker’s criticism that Yale needed to contribute more to city coffers.

1.81% Tax Increase; $7.1M In Cuts

The amended budget moved out of committee Wednesday night would increase local property taxes by 1.81 percent, or by 0.78 mills. It would bump up the city’s mill rate from 42.98 to 43.73.

The mill rate represents $1 in taxes paid for every $1,000 in assessed property value.

That increase is roughly half as much as was included in the mayor’s originally proposed budget, which had taxes go up by 3.56 percent, or by 1.53 mills to a new rate of 44.51.

Marchand said that the smaller tax increase would shave $4.8 million off of the roughly $11.6 million in new property tax collection revenue baked into Elicker’s original proposed budget.

The committee’s amended budget would also set aside $4.8 million into a reserve fund designed to help cover unexpected expenditures and revenue shortfalls in the fiscal year ahead.

Marchand explained that that tax increase reduction, reserve fund set aside, and roughly $455,000 in newly proposed city expenditures (see more below) would be paid for by over $7.1 million in cuts to city services, staffing, and general departmental operations. They would also be balanced out in part by $2.9 million in new anticipated revenue.

The largest proposed cuts recommended by the Finance Committee fall on the school board and other city department operational budgets.

The committee alders proposed trimming the year-over-year increase to the Board of Education by $2.5 million, reducing that bump from the $3.5 million proposed by Elicker to a total of $1 million.

They also created a new budget line that essentially calls on every other city department besides the school board to find a total of $3,854,304 in savings across their operational budgets.

“This is tough,” Marchand said. ​“It’s not an easy target whatsoever.”

The amended budget would also reduce four new positions in the fire department to $1 dollar each, cut down on expected city utility expenditures by $330,000, and, per Westville/Amity Alder and Majority Leader Richard Furlow’s recommendation, zero out the Neighborhood Public Improvement Program (NPIP) line item by stripping that participatory budgeting initiative of $100,000.

“Yale Needs To Do More”

On the new revenue side, the amended budget boosts building permit revenue by $400,000 thanks to Morris Cover Alder Sal DeCola’s proposed permit fee increase on building projects 10,000 square feet and larger.

And the amended budget would add $2.5 million to the ​“Revenue Initiative” line with the expectation that Yale University would increase its annual voluntary contribution to the city.

That would bring Yale’s total expected payment to the city next fiscal year to $15.5 million between voluntary payments and fire service reimbursements.

“I don’t think it’s fair that we always talk about shared sacrifice without it actually being shared,” said Board of Alders President and West River Alder Tyisha Walker-Myers.

She described the committee’s expectation that Yale will contribute more money to the city next fiscal year as ramping up the pressure on a key city partner to match the financial sacrifices that the proposed budget asks of local homeowners through a property tax increase and of city departments through wide-spanning cuts.

“Institutions with a lot of money and power are constantly saying that there’s not enough to go around,” said East Rock Alder Charles Decker. He said that the university underspent its 5.25 percent targeted spending rate on its $30 billion-plus endowment last year by well over $100 million.

“Our large institutions need to do more,” he said. ​“Yale needs to do more.”

“Are you comfortable with that number?” East Rock Alder Anna Festa asked Marchand, who had proposed the suite of budget amendments that included the $2.5 million Yale-related increase to the Revenue Initiative line.

“No, it makes me very uncomfortable,” Marchand admitted. ​“But I’m confident” that the city and the alders can work with Yale to make it happen.

Counting on hoped-for money is not unprecedented.

The hoped-for extra Yale money was put under a budget line called ​“revenue initiative.” Former Mayor Toni Harp once put $18.6 million in that line and alders approved it; none of it materialized, after which point the city raised taxes 11 percent. The next year she put $6.1 million in that line; the city ended up realizing $3 million of it. Current Mayor Justin Elicker had zeroed out that line in this budget.

Q House Librarians, Parade Expense Fund Funded

The committee-endorsed budget also adds $455,580 in new expenditures not previously included in Elicker’s original submission.

Dixwell Alder Jeanette Morrison included an amendment that funds two Stetson Library staff positions at a joint total of $100,000. Morrison said those two positions are for the expanded Stetson Library in the new Q House, which she said is on track to open in April 2021.

Morrison’s amendments also restores $40,000 in funding to the library book and digital resource acquisitions line item as well as $65,580 to a previously cut city/town clerk position.

DeCola included an amendment that creates a $150,000 parade expense fund that would cover the security costs for eligible parades in exchange for parade leaders testifying before the alders that they first made every possible effort to pay for those costs themselves.

Furlow included an amendment that moved the $100,000 from the NPIP democracy budgeting line to a new tree litigation settlement fund designed to help residents if they suffer property damage from a falling tree limb.