Covid Updates: $15M Deficit Projected; English, Farnam Drives Closing To Cars

The city is staring down a projected $15 million deficit thanks to steep pandemic-induced drops in delinquent property tax collections, building permits, and parking meter and ticket revenue.

Mayor Justin Elicker gave that budget update Saturday afternoon during his daily coronavirus-related virtual press briefing held online via the Zoom teleconferencing app and on YouTube Live.

The city currently has 1,379 confirmed Covid-19 cases and 49 fatalities.

Elicker said the anticipated deficit mostly comes from lost revenue from delinquent taxes that would normally be collected around this time of year.

The city has also lost revenue it would normally collect from building permit fees, parking meters, and parking tickets, he said.

The other deficit driver, he said, is the multi-million-dollar hole in the New Haven Public Schools (NHPS) budget that preexisted the Covid-19 pandemic. He noted that some of the school district’s deficit has been mitigated by savings due to school closures.

According to the city’s February 2020 monthly financial report, the most recent such report that the city has published, the city was projecting a $6.7 million deficit for the fiscal year ending June 30.

But those numbers reflected the city’s projected financial health BC, or ​“Before Covid.” The fiscal numbers today look quite different.

Normally, around the end of the fiscal year, the city would ramp up efforts to collect delinquent taxes, Elicker said. It can boot cars or put liens on houses to pressure residents to pay taxes, which, if they become delinquent, also carry interest of 18 percent per year.

Due to the pandemic, the city has not been taking any of the measures it normally would to collect those overdue taxes.

“We believe we’ll be able to regain a significant chunk of this lost revenue in the next fiscal year,” said Elicker.

Once the pandemic is over, the city will again be able to collect delinquent taxes. Building will resume in full force, he said, and the city will collect the revenue from building permit fees on construction that was halted by the pandemic.

Lost revenue from parking tickets and parking meters, however, the city will not be able to regain.

But until the city can realize the lost revenue, it will have a large hole to fill in its budget.

Elicker said the city might consider issuing a tax anticipatory note (TAN), which is a form of short-term borrowing that allows municipalities to borrow money for less than a year in anticipation of tax revenue. (Hamden is also considering a TAN.) The interest rate on TANs tends to be low, said Elicker, which means it would not have a large impact on the city’s debt burden.

A TAN would also help the city with its cash flow until it collects taxes for the next fiscal year, which have been deferred.

In accordance with Gov. Ned Lamont’s executive order 7S, the Board of Alders voted to defer the deadline for municipal property taxes until Oct. 1 for those who have been adversely impacted by the coronavirus. The Board of Alders also opted city taxpayers into a low interest program that reduces the interest the city can levy on delinquent taxes.

Since the city will not see the tax revenue it normally would at the beginning of the fiscal year, a TAN would bridge the gap until taxes start coming in, Elicker said.

A TAN is just one option. The city is also in conversations with local private partners about other ways to mitigate the shortfall, Elicker said. He said Superintendent Iline Tracey is also looking for ways to save money.

“We’d prefer, as much as possible, to not dip into our fund balance,” he said.

Cities and towns around the state face similar revenue-loss problems to New Haven. In his budget address at the beginning of the month, Hamden Mayor Curt Leng warned the town’s council that the town would experience a significant revenue loss from the pandemic.

“This is an important reason why the federal government needs to help out states and municipalities,” said Elicker.

Elicker frequently criticized former Mayor Toni Harp while on the campaign trail last year for what he described as steep tax increases coupled with borrowing practices that covered short-term deficits by pushing higher debt payments onto the backs of future generations.

Now, Elicker finds himself in a situation just a few months into his first term where his administration is trying to forge its own path towards municipal fiscal health amidst an unprecedented economic crisis.

In March, before the pandemic made landfall in New Haven, Elicker proposed a 2020 – 2021 fiscal year budget that would raise taxes by 3.56 percent.

Many of the aldermanic budget hearings since then have featured city department heads stress just how uncertain the short‑, mid‑, and long-term impact of the pandemic might be —not just on the city budget, but on the very operations of city government itself.

Other updates Saturday included:

• Starting either Sunday or Monday, the city will close English Drive and Farnam Drive in East Rock Park to cars in order to give pedestrians in the park more room to socially distance. Around the nation, Elicker said, cities are closing down streets so pedestrians can stay further apart from each other than they could on a sidewalk. As a way to ​“test drive this, or let’s say, test walk this,” the city opted to start with the two roads that wind through East Rock Park.

“That would allow people to, instead of using the trails which are more narrow, walk through the park on the street itself,” he said. If it goes well, the city might do the same with other roads, and if problems arise, it will simply reopen the streets, he said.

• The city will resume parking enforcement starting next Monday. Since the pandemic hit, the city has only given tickets for the most egregious violations, Elicker said.

“We’ll be doing some training with our parking enforcement officers on how to keep safe as they do their job,” Elicker said. They will be giving out warning tickets starting this week. The real tickets will start next Monday, May 4.