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Mayor Justin Elicker proposed two budgets Monday for the upcoming fiscal year.
One would raise taxes 7.75 percent and close the Whitney firehouse, Mitchell library, and East Shore senior center.
The other would keep taxes as are — with an additional $53 million coming from the state and Yale.
The mayor unveiled those dual fiscal futures Monday during a midday press conference about his proposed budget for Fiscal Year 2021 – 2022 (FY22), which starts on July 1.
The mayor is required by city law to submit a proposed budget to the Board of Alders by March 1 each year, marking the official start of city government’s three-month-long budget-making season.
Zoom
Monday’s virtual press conference.
Breaking with long-standing precedent of proposing just one budget, Elicker put forward two — a so-called “crisis version” and a “forward together” version.
The “crisis” version’s general budget comes in at a total of $589.1 million. The “forward together” version tops out at $606.2 million.
Click here to read the proposed budget(s) in full.
“We do not want to raise taxes by this amount,” he said during Monday’s virtual press conference, which was held online on Zoom and YouTube. “We do not want to close services. But we have to make these difficult decisions if we do not get support from our partners.” (Click on the video below to watch a separate budget explainer released by the mayor on Monday.)
The unorthodox proposals come after over a month of public warnings by the mayor and City Budget Director Michael Gormany that the city is staring down a projected deficit of up to $66 million next fiscal year. That gaping projected deficit is driven largely by rising fixed costs related to city employee pensions, salaries, healthcare, and municipal debt service. It’s also been exacerbated by the pandemic’s hit to revenue from parking meters and fines, and by a drop in building permits after a two-year spike spurred by Yale New Haven Hospital’s planned neuroscience center project.
“Our City is facing a deep financial crisis unlike any we have seen in decades,” the mayor wrote in the opening pages of the proposed budget book.
“It is with this backdrop that we find our City at a crossroads. This financial challenge[s] we face are a result of a structure in the State where municipalities, such as New Haven, cannot adequately collect enough revenue to fund the very services our residents need and many residents in the region rely on.”
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Repeating a call that the mayor and the alders have made all fiscal year, Elicker said that the amount of money that the city currently receives from the state and from largely tax-exempt nonprofits like Yale University simply isn’t enough to keep the local government afloat.
And so the two budgets proposed on Monday hinge on two key difference: a $53 million combined increase in direct fiscal aid from the state and from Yale, and a potential 7.75 percent local tax increase if that money doesn’t come through.
The budgets now advance to the Board of Alders. The aldermanic Finance Committee will host a series of public hearings and workshops over the coming three months. The local legislature then will vote to amend the proposed budget and adopt a final version at the end of May or beginning of June.
“Crisis” Vs. “Forward Together”
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Elicker dubbed one budget proposal the “crisis” budget.
That version would see a general, operating fund budget of $589,149,644 — or 3.7 percent larger than the current fiscal year’s $567.9 million operating budget.
The “crisis” version would come with a 7.75 percent tax, bumping the city’s mill rate by 3.40 mills, from 43.88 to 47.28. The mill rate represents $1 in taxes owed for every $1,000 in assessed property value.
It would also see the closure of Westville’s Mitchell Library branch, the closure of the East Shore Senior Center, the closure of the Whitney Avenue fire station, and the elimination of 16 currently vacant city positions — including seven police department positions and one fire department position.
The general fund budget for the proposed “forward together” version, meanwhile, would come in at a total of $606,244,052. That’s more than $17 million larger than the “crisis” version, and 6.7 percent larger than last year’s final operating budget.
That “forward together” budget would keep the city’s mill rate at 43.88, and would not impose any cuts to existing city services.
Both versions of the proposed budget also include a two-year, $60 million capital fund budget and a one-year, $29.2 million special fund budget.
The overall size of the “crisis” budget — including general, capital, and special funds — is $678,434,108, and the overall size of the “forward together” budget is $695,528,516.
“As of the day of the release of this budget, March 1, active and positive conversations are happening between my Administration and both the State of Connecticut and Yale University,” the mayor wrote in the budget intro. “We are cautiously optimistic that both entities will realize that we all need to be a part of a solution that sets us on the right course.”
Elicker has a committee, headed by former city development chief Henry Fernandez, negotiating with Yale about an increased financial contribution to the city.
“I’ve been on the phone with [Yale President] Peter Salovey weekly, if not more,” Elicker said at the Zoomed press conference he held Monday announcing his budgets.
Meanwhile, New Haven State Sen. Martin Looney is leading the charge for a change to the formula for reimbursing cities for lost tax revenue under the state Payment in Lieu of Taxes (PILOT) program. That proposal is currently advancing in the legislature. Elicker has been meeting with state executive branch officials as well to press for more financial help. If Looney’s proposal is adopted and fully funded by the state, the city would see an increase in state aid of around $49 million per year.
In response to a request for comment on the mayor’s proposed budgets, Yale spokesperson Karen Peart told the Independent, “The University maintains an open dialogue with the City of New Haven to work together on a wide variety of opportunities for economic development, educational programs like New Haven Promise, and Yale’s community investment program.”
In previous statements in response to calls for Yale to increase its voluntary financial contributions to city government, Yale’s spokesperson has stated that the university spends over $700 million annually “directly on New Haven,” including compensation to city residents who work at the university. It also pays $13 million each year in the form of a voluntary payment to city government.
Key Differences
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Proposed increase to annual pension contributions.
In both budget versions, the two pension funds would drop their estimated annual rate of return from 7.75 percent to 7.25 percent. That would increase the city’s total pension contribution to $83 million in the “crisis” budget, and $84.7 million in the “forward together” budget.
Elicker said that the pension boards for both the Police and Fire Fund and the City Employee Retirement Fund have already voted to reduce the annual estimated rate of return to 7.25 percent each.
In the “crisis” budget, the city would flat fund the Board of Education at $189.2 million. In the “forward together” version, the city would increase Board of Ed funding by $3 million to $192.2. million.
In the “crisis” budget, the city would close the Mitchell Library in Westville, close the East Shore Senior Center, close one fire station, eliminate 16 currently vacant city positions — including seven police positions and one firefighter position — and reduce the requested funding for the proposed new Community Crisis Response Team by $425,000. In the “forward together” version, all of those proposed cuts would not take place.
Elicker said Monday that the “crisis” budget includes a total of $2.6 million in “unspecified layoffs. That’s a significant amount of city staff we would need to lay off,” particularly considering that the city eliminated over 100 vacant positions from city government last budget cycle.
He also recognized that flat-funding the Board of Ed essentially equates to a budget cut, since the school system also has its fair share of increasing fixed costs, including salaries and building maintenance.
The “crisis” budget also proposed bringing in $4.5 million through the sale of city “fixed assets.” Elicker said on Monday that that could include selling the now-closed former Quinnipiac School, as well as the closed former Strong School on Orchard Street.
“As everyone can imagine, we want to avoid this budget at all costs,” he said about the “crisis” version. “But it’s also very important that we’re real about the consequences” of not getting increased financial contributions from the state and Yale.
Elicker said that the “crisis” version specifically calls on more money from Yale University, and not from Yale New Haven Hospital, another largely tax-exempt nonprofit that owns a significant amount of valuable real estate in town. Elicker said he did not want to call on the hospital to increase its annual voluntary payments during a pandemic.
As for the “forward together” budget, Elicker said that version would “keep the status quo as far as city services, and ensure a 0 percent tax increase.”
“If that reliable funding continues,” he added, “it allows us to be sustainable and not have to year after year have these dramatic gaps between revenues and expenses. … If we are able to get that support from the state and Yale, we will be able to not just muddle through but actually get our financial challenges under control.”
Below is a department by department breakdown included in the mayor’s new proposed budget that documents key changes between the current fiscal year’s budget and the “crisis” and “forward together” proposals.
