Paul Bass Photo
Jones: “We’ve learned to do more with less.”
City of New Haven
New Haven closed out its most recent fiscal year with money left to put away for a “rainy day.”
So announced Mayor Toni Harp at a City Hall press conference Tuesday afternoon.
She and her finance team announced that the the city ran a $1.7 million surplus for the fiscal year, which ended June 30. That money will go into the city’s “rainy day” or surplus fund.
That’s a big deal, because when Harp took office almost two years ago, New Haven’s rainy day fund had dropped below zero — an emergency-warning sign for agencies that had been downgrading New Haven government’s debt rating. Besides creating potential cash-flow problems, a below-zero balance in turn raises the cost of borrowing money, further damaging the city’s fiscal condition.
Tuesday’s announcement marked the second straight year New Haven has run a surplus after two years of deficits. (See above chart.) Last year’s surplus was $4.7 million. Two of the three major agencies have since raised their assessments of New Haven’s finances, while a third has kept its rating constant.
“My administration is operating a fiscally conservative enterprise,” Harp said Tuesday, adding that it is signaling to ratings agencies: “New Haven means what it says and does what it says it’s going to do.”
City government ended up collecting $3 million more than expected this past fiscal year, according to city Budget Director Joe Clerkin. The state gave $2.9 million less than expected to New Haven. That was more than made up for by $17.5 million in building fees collected — $7.5 million more than the city budget had anticipated. The biggest boost came from fees for the construction of two new Yale residential colleges. A torrid housing-construction market in town helped, too. The tax-collection rate topped 98 percent, Clerkin said.
The city also spent $1.36 million more than it budgeted. The biggest offender was the fire department, which went about $4.8 million over budget. Most departments, working closely with finance officials, came in under budget, Harp said.
“We’ve learned how to be innovative. We’ve learned how to do more with less,” said Controller Daryl Jones.
Dixwell Alder Jeanette Morrison, a member of the board’s Finance Committee, said later Tuesday that “as a team the administration and the board working together have done a good job of making sure the finances … are moving everybody is doing their job We’re definitely going in the right direction, especially with ratings going up. That’s always a telltale sign.
As a result of the surplus New Haven now has $1.7 million in its rainy day fund thanks, according to Clerkin. Analysts recommend that cities maintain a rainy day fund that equals 5 percent of their budgets. For New Haven, that would mean around $25 million.
“We’ve [still] got a way to go,” Harp remarked.
How To Get There
In addition to anticipating more building fees from other development projects coming onlne, Harp said her administration is getting there with several initiatives that will continue to rein in costs this coming year:
• Hiring 120 new firefighters as well as new cops to rein in overtime costs. So far this fiscal year monthly fire overtime costs have dropped to below $100,000 compared to around $300,000 this time last year, according to Jones.
• Rather than borrow money to buy equipment like fire trucks, the city is entering into more master lease-purchase arrangements. Jones said the city saves money that way by obtaining lower interest rates and paying the money off faster.
• Information technology (IT) improvements are making departments run more efficiently — for instance by keeping a better handle on overtime trends in real time.
Asked about the state of city pension funds, officials said the are currently around 39 – 40 percent funded. Analysts recommend they be 70 percent funded. Jones said the city has slightly increased its contributions. Looking ahead, it has also shaved around $1 million a year off user fees on pension investments and is training fund trustees as part of a broader once-in-20-years restructuring.