Thomas Breen photo
Mayor Toni Harp at Tuesday night’s Downtown-Wooster Square community management team meeting.
The city has a revenue problem.
And if New Haven residents don’t want to bear that burden through higher property taxes, then they need to lobby the state legislature for increased tax-exempt-property reimbursements, fair education funding, a slice of the state’s sales tax receipts, and other state-enabled means for cities to raise more money.
Mayor Toni Harp delivered that message Tuesday night to the Downtown-Wooster Square Community Management Team (DWSCMT) during its regular monthly meeting on the second floor of City Hall.
It was the latest neighborhood stop on a tour by Harp, City Controller Daryl Jones and city Acting Budget Director Michael Gormany, who have been making the rounds of the city’s various community management teams over the past two weeks to talk city finances.
The Downtown-Wooster Square Community Management Team.
The mayor and her budget team’s recent community management team presentations have centered on the argument that the city has its fiscal house in order, and that the recent 11 percent tax increase and negative $11.09 million overall fund balance are due primarily to flat and/or falling state aid.
On Tuesday night, Harp singled out consistently low Payment in Lieu of Taxes (PILOT) reimbursements for tax-exempt properties and a decade of flat Education Cost Share (ECS) funding as the principal causes of the city’s current fiscal duress.
“We have got to put some pressure on our legislature” to make good on its state aid promises and to enable cities to generate new sources of revenue, Harp said.
Some of the roughly 30 residents who showed up on Tuesday night pushed back on the notion that the city only has a revenue problem, and not a spending problem. But for the most part, residents listened and bounced ideas around about how the city, hobbled by the fact that over 55 percent of its properties are off the tax rolls, can raise more revenue.
Neither Harp nor Jones nor Gormany nor anyone else present mentioned the city’s recent $160 million bond refunding, the largest such refunding in city history. The unusual decision to borrow heavily to cover tens of millions of dollars in annual operating costs helped balance budgets in the short term in exchange for higher debt payments a decade down the road.
Acting Budget Director Michael Gormany.
Harp began her team’s hour-long presentation to the management team by explaining that cities and towns in Connecticut have only one way to raise revenue: through property taxes.
And In New Haven, where so much of the city’s property (and most valuable property) is occupied by universities, hospitals, religious organizations, and other tax-exempt nonprofits, that solitary municipal reliance on property tax revenue is a big challenge.
“Fifty-five percent of our property is tax exempt,” Harp said. “And this is a challenge given that property tax in our state is really the only revenue we have besides parking tickets” and building permits.
Harp also noted that the city’s portion of the state’s ECS grant has remained flat at roughly $143 million each year for the past decade, even though the city’s public school population has increased by over 1,000 students.
“It’s required that we have had to step up as a city to the degree that we could,” Harp said, “and make up for the dollars that should have been redistributed.” She said she hopes that Democratic Gov.-elect Ned Lamont adjusts the current ECS formula to direct more education dollars towards cities like New Haven, even if the state’s overall ECS budget doesn’t change a dime.
City Controller Daryl Jones.
Jones and Gormany then embarked on a 40-minute digital slideshow presentation that offered residents a crash course on how the city budget is made. Throughout their presentation, they highlighted the relative decrease in taxes, increase in jobs, decrease in violent crime, and increase in funding of long-term obligations like city pension funds. All the while, they criticized the state for leaving the city high and dry on PILOT reimbursements and flat ECS funding, and noted the pressures that the city feels from being able to tax so little of its available property.
Gormany said that 51 percent of the city’s $547.1 million general fund operating budget comes from property taxes, while 39 percent comes from state aid and the rest from a mix of parking tickets and tags, building permits, and other sources of revenue.
He said that the 55 percent of city property not on the tax rolls is worth approximately $6 billion. If the city were to collect taxes on Yale University and Yale-New Haven Hospital, which make up a large percentage of the city’s tax-exempt properties, the city would bring in $193.8 million more in property taxes every year, he said. Currently, the university pays the city a $11.4 million voluntary annual PILOT, and the hospital pays the city a $2.6 million voluntary annual PILOT.
Gormany said that, in Fiscal Year 2017 – 2018 (FY18) alone, the city saw a $9 million drop in annual aid.
“That means the city is receiving less general fund state aid than in the past,” he said. “That means there’s more reliance on taxpayers to make up that shift in revenue.”
Jones said that the city’s current fiscal duress isn’t just a result of dropping state aid, though. It’s also a result of the prior mayoral administration’s underfunding of long-term obligations, like the city’s two pension funds.
Jones said that the city’s annual contributions to its two city employee pension funds has increased from $29.2 million in Fiscal Year 2009 – 2010 (FY10) to $59.6 million in the current fiscal year.
“The prior administration for 20 years wasn’t properly putting in the right amount for the pensions,” he said.
The city’s controller also said that the city’s workforce has dropped significantly over the past decade, from 1,601 employees in FY09 to 1,508 employees in FY18.
By the end of the calendar year, he said, the administration plans to release a five-year budget plan that details projected revenues and expenses over the next five years, and further demonstrates the administration’s fiscal responsibility around paying down pension and debt obligations and keeping under control spiraling employee and retiree medical costs.
Hoping Not To Raise Taxes Next Year
Ed Anderson.
Even before Jones and Gormany began their presentation, Wooster Square resident Ed Anderson asked Harp about how much she projects she will have to raise taxes next fiscal year.
“We’re hoping not to increase the mill rate,” Harp said.
Gormany jumped in, saying that the city’s budget making process has already started, even though the mayor’s office doesn’t have to deliver a proposed budget to the Board of Alders until March 1. He said he hopes to see the new Democratic governor bolster state aid for the city.
“Our hope is not to raise taxes,” he said.
“No tax increase sounds great,” Anderson replied.
After the presentation, Anderson grilled the mayor and her budget team for scapegoating Yale University and the hospital. Without those two institutions anchoring downtown, he said, New Haven would not be experiencing its current construction boom of primarily market-rate apartments.
“I think we’ve got our own financial problems,” he said, “and every time we deflect to Yale, saying the problem is that we’re not taxing yale, it keeps us from really dealing with the real problem, which is that we’ve got to get our house in order.”
Harp.
Harp responded that she is not blaming or scapegoating Yale, but rather drawing attention to a structural problem with how cities in this state are allowed to raise money.
“The real issue is that municipalities in Connecticut only have one major way to raise revenue,” she said, “and that’s through the property tax.”
“Do I expect the state to enable us to have other ways to raise revenue?” she asked. “I absolutely do.”
Anderson asked her to name some potential alternative sources of revenue for the city.
“If we could have a portion of the sales tax,” Harp said, “and that it be distributed regionally so that we’re not pushing things out to our suburban neighbors.” She said that some cities, like New York City, are allowed to levy their own income taxes on people who work in those cities. There are 80,000 people who work in New Haven on a daily basis, she said; picking up a city-specific income tax from that employment base could go a long way towards lightening the property tax bills on city residents.
She said she would also like to see the state make it easier for cities like New Haven to directly bill insurance companies and Medicaid whenever local Fire Department emergency responders go out on a medicl call.
“We have one tool,” she said about the property tax. Other cities in other states “have five or six tools. … There is an obligation of the state to give us the tools we need to raise the revenue.”
Cordalie Benoit.
Wooster Square resident Cordalie Benoit suggested two ways for the city to raise additional revenue. One: it should start sending bills to surrounding towns whenever local emergency responders treat a suburban resident for a medical emergency.
Two: it should look into issuing higher property assessments on multi-family residences and apartment complexes so that big out-of-state landlords are not paying less in property taxes than local owners of single-family homes.
“We need to have an aggressive assessment program that fairly returns value to the City of New haven,” she said.
Anstress Farwell.
Anstress Farwell, the founder of the New Haven Urban Design League and a member of the DWSCMT’s executive board, said that the Harp administration should pressure the new governor on changing the state’s plans to build a new seven-level parking garage at Union Station.
She said the land is a prime target for a corporate headquarters or some other transit-oriented development that would actually bring money and people and jobs into the city, as opposed to little to no money and lots more vehicle traffic.
“What we would get out of one of the most valuable pieces of land in the city,” she said, “is almost nothing” if the parking garage is built.
Harp said that the city has already fought, and lost, that battle with the state about whether to build a new parking garage and about whether the city or the state should run it. But, she said, with a new administration heading to Hartford, she promised to revive the issue.
Click on the Facebook Live video below to watch the mayor’s full presentation to the Downtown-Wooster Square Community Management Team.