Melissa Bailey Photo
(Updated) New Haven and Bridgeport’s mayors joined top state officials on the dais at the state budget address Wednesday for a reason — the governor’s proposal, while it was hard medicine, protected cities and offered unexpected help.
New Haven Mayor John DeStefano (pictured) and Bridgeport’s mayor, Bill Finch, scored high-profile seats alongside the attorney general and comptroller Wednesday as Gov. Dannel Malloy issued his first budget address.
In past years, the governor’s speech was more like a wake for New Haven. DeStefano watched from the audience, then braced for a fight at the legislature to restore budget cuts.
Both the city and arts organizations have braced for devastating cuts as Gov. Malloy and the state legislature tackle a $3.2 billion budget deficit.
But when the details of Malloy’s proposed new budget dribbled out at the Capitol, New Haveners who traveled to get the news firsthand discovered that the governor — a former Stamford mayor — was finding ways to shield cities from some of the worst pain.
“I’m blessed,” DeStefano said. “He’s not balancing the budget on us.”
Malloy’s two-year budget addresses a looming deficit of $3.2 billion in FY2012 and $3.0 billion in FY2013.
Click here to read the budget documents and Malloy’s speech.
Malloy balanced a $39.94 billion biennial budget with some serious cuts: The FY2012 budget slashes current spending levels by $1.76 billion, he said. It relies on $1 billion in concessions from state employees and $1.5 billion in new taxes. (Click on the play arrow to watch part of his speech.)
While taxpayers statewide will be hit by the income tax hikes, city governments managed to escape the budget axe. The budget holds the line on most statutory formula grants to cities, including Education Cost Sharing and Payments In Lieu of Taxes. It also sends an extra $85.2 million in revenue to towns by implementing seven new types of revenue sharing that wean cities off of their reliance on the property tax.
DeStefano praised the governor’s package.
“He’s got ambitions for the state and he’s trying to deal honestly with the budget problems.”
Click here for a Wednesday New York Times story on how Malloy, unlike other governors, is attempting to carry out painful budget cuts and other measures without devastating the social safety net, schools, or cities.
The news came as a relief to New Haveners who trekked up to the Capitol on a yellow school bus for a lobbying effort timed with the budget address. New Haven and Bridgeport delivered Malloy’s biggest pluralities in the November election.
In his budget, Malloy proposed that portions from seven state taxes be returned to cities. He proposes raising the sales tax to 6.35 percent with 0.1 percent returning to cities. He’d also send an extra 3 percent cabaret tax, 1 percent hotel tax, 1 percent rental car tax to cities. All cities would be allowed to raise their real estate conveyance tax to 5 percent. New Haven’s is already that high because it was flagged as a distressed area, according to DeStefano.
Malloy also proposed two new taxes: The state would levy a 20 mill tax rate on boats and aircraft, and send that money to the cities where they’re stored.
In all, the municipal revenue sharing would send $85.2 million to cities in FY2012, of which $1.5 million would go to New Haven. The following year, New Haven would get $1.9 million of a $129.3 million pot.
Unlike in past proposals, the local revenues are “not an option” for cities, said Ben Barnes, Malloy’s budget chief. The state plans to implement the changes; they have to
While PILOT funding will stay constant overall, the city’s share would rise slightly: payments on tax-exempt hospitals and colleges would go up from $34.4 million to $37.5 million next year, and on state-owned property from $4.4 million to $4.8 million.
Meanwhile, arts groups discovered that the governor is proposing to keep their state funding constant over the next two years rather than cutting it as anticipated. For the Shubert Theater, that means $378,712 a year; for the Arts Council, $94,677; for the Arts & Ideas festival, $797,287.
Mary Lou Aleskie (pictured with Shubert director John Fisher) who runs the annual festival, got a momentary shock, followed by relief, as she combed through the budget book around 11:30 a.m. Because of consolidation, the festival line item was zeroed out and switched to another department. The state contribution represents 20 percent of the festival’s budget, she said.
“We’re cautiously optimistic,” Aleskie said.
New Haven’s pioneering youth program, LEAP, suffered a $70,000 cut to its state funding, bringing it to $765,000 for each of FY2012 and FY2013.
Executive director Erik Clemons downplayed called it a “slight drop.”
“Governor Malloy really made a good decision to support non-profits like LEAP,” Clemons said. His group hires high school and college-aged students to teach younger kids in after-school programs. Clemons said his group helps kids academically and keeps them out of trouble — two goals Malloy endorsed in his speech.
The good tidings for New Haven come with two caveats.
Caveat: Malloy’s full proposal still hasn’t been digested. It will include cuts to reimbursement rates for school construction and possibly to priority school funds. Social services were also cut; it wasn’t immediately clear how that would affect New Haven.
Caveat #2: This budget still needs to be approved by the legislature, which is dominated by suburban interests and heavily influenced by private business lobbyists. The process will take months. The final budget, if history is a guide, will look different.
But the governor’s original proposal sets the direction for that process and carries significant weight.
New Haven had anticipated much worse news, and planned on a $31 million budget gap in the coming fiscal year as a result. On Monday, the budget gap had shrunk to $22 million, said DeStefano. After Malloy’s speech Wednesday, he said he would head home and ask his budget staff to crunch the numbers.
DeStefano previously said he plans to announce layoffs this fiscal year, and the number of layoffs will depend on Malloy’s proposal.
If Malloy’s general approach ends up becoming law, fewer city teachers and cops, for instance, may end up losing their jobs.
State Sen. Toni Harp, who represents parts of New Haven and West Haven, said she’s optimistic that New Haven’s funding won’t get stripped in the legislative process.
“I think that the funding to the cities is going to survive the legislative process,” she said. Harp has been co-chair for six years of the powerful appropriations committee, which decides how the state’s money is spent.
Harp said having the governor on cities’ side makes it easier to retain municipal funding throughout the legislative process, she added. In the past, when the governor cut funding out of New Haven’s budget, Harp would have to take money from another town or line item in order to restore the cut.
“The really good thing about his proposal is that all the towns are pretty much held harmless, so we don’t have to fight among ourselves,” she said.
New Haven state Sen. Martin Looney, the senate majority leader, commended the governor on two points: preserving municipal aid and endorsing his long-running campaign to implement a state version of the Earned Income Tax Credit.
“I think most of the elements” of Malloy’s proposal “will be adopted,” Looney said.