New Haven Independent

Posted by: andy ross | December 5, 2007 4:12 PM

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Pilot is not so a complicated a subject to understand as it is written, it is the States calculations that make it unclear as to how much a city will receive and be able to count on.

I have been studying the issue myself to understand how it works, and if we are getting short changed. I would love to hear from others that may have knowledge of the subject.

Yale owns 233 properties in New Haven.
The information below is from the office of Policy and Management State of Connecticut.

In September of 2007, New Haven received a total FY 07-08 Private Colleges and General and Free Standing Chronic Disease Hospitals Real Property PILOT payment of $38,690,375.52 for the tax loss due to exemptions on the 2005 Grand List.

In September of 2007, New Haven received a total FY 07-08 State-owned Real Property PILOT payment of $4,845,687.08 for the tax loss due to exemptions on the 2005 Grand List

Posted by: Gary Doyens | December 5, 2007 4:30 PM

Wow, Pat. You just made bitter enemies out of City Hall which is where all the misinformation originates. From the mayor to many key alders - the refrain is the same: It's the state's fault. The state gave us less money.

Mayor DeStefano, Sergio Rodriguez, Ina Silverman and any others who directly made up this misinformation or intentionally passed it on: Would you like your crow blackened, raw or well done?

Posted by: LAFAYETTE | December 5, 2007 4:52 PM

Urgh. This further obfuscates the situation.

Nominal dollars went up. That's true. But state aid as a proportion of the budget is stagnant.

In FY 06-07 State Aid was $202.7m of a total $415.7m city budget. Thus, State Aid was 49% of the non-capital budget expenditures.

In this latest budget, State Aid was $217.7m of a total $445.2m city budget. State Aid was again 49% of the non-capital budget expenditures.

The incomes of the upper quartile earners in New Haven are a lot more dynamic that the property tax base. We need income tax based revenue to pick up the slack during times of price inflations shocks, such as those the city has been going through the last few years due to health care and energy. If not, the local, regressive property tax has to be the source of funding.

The alternative is spending cuts, but people can only seem to agree on little things that make no difference like bottled water or the mayor's raise or a few school administrators. That would do a microscopic amount to reduce the local tax bill and could lead to worse problems if the cuts drive out those making middle-incomes and above (the gentrifiers) out of the city.

If people want the same amount of local services and lower taxes, then a greater share of the income we send to Hartford has to come back in the form of state aid.

Posted by: Rep. Pat Dillon | December 5, 2007 6:27 PM

Good comments.
Andy, you know this, but there are two PILOTS. The one designed in the 1970's to make up for tax exempt colleges and hospitals was 'owned' by New Haven. The state PILOT was 'owned' by Hartford. In those days, the big cities ruled the roost.

What New Haven gets from PILOT depends on how much is put into it, who is eligible, and how many properties qualify. For example, PILOT for New Haven went up a few years ago because of the new Pfizer building, and the allocation for other towns went down. Other towns want those dollars too. The VA in West Haven will be newly eligible for PILOT (since it's a federal facility, that required a change in statute), and Yale's purchase of the Bayer site will increase West Haven's stake. Quinnipiac is buying part of the Blue Cross Anthem property so North Haven will have a stake.
When I said PILOT is 'complicated' I was thinking of strategy as much as spreadsheets. Some aldermen are upset that other towns will be getting the PILOT dollars. Are they right? I don't know. There may be a stronger constituency for PILOT now.
Lafayette, I think it's more like 52%. But even if you are right, is that the best measure? From year to year the state share of New Haven's revenue might go down, not because state appropriations went down, but because the percentage changed on the city side - city revenues from nonprofits went up. (think Cancer Center building fees.) The trend over time is important, not just one year.
You may be right about 'income based' revenue, but the whole tax burden is important. At least one of the proposals this year would have put more money into city budgets by raising income taxes for those with gross income over $150,000. I have problems with that. $150,000 may be rich in Pomfret or Willimantic. In New Haven, it's a teacher and a nurse; two working partners with two paychecks, paying tuition, high property tax, getting hit by the federal alternative minimum tax (AMT). If we want to raise income taxes we should think about a better way to account for the property tax burden than we do (or don't) now.

This post was framed as 'new money' because of the comments we all heard about 'state cuts'. But 'new money' isn't the only measure of the legislature's year's work either. It's only part of it. For example - the needle exchange, Arts and Ideas Festival, and infant mortality dollars we added don't appear anywhere in these calculations. If the governor's budget cut a program, and we added it back, it took work, but it isn't 'new money'. Under our methods it shows up, not as 'new money', but as no difference because it's the same amount as last year. Also some program dollars do not go directly to the city, and dollars to nonprofits don't appear anywhere here either.
Gary, you've made a case for more cooperation and teamwork.

Posted by: Esbe | December 5, 2007 8:49 PM

Rep. Dillon's numbers are, I think, all non-inflation adjusted "nominal" dollars and therefore not directly helpful. We should be interested in so-called "real," inflation-adjusted, dollars.

The rate of inflation in goods and services bought by governments is probably in the 4.5% percent range; maybe even worse because of medical costs.

Now, a $15 millon *nominal" increase on a base of (according to Layfayette) $202 millon is a about a 7.4% nominal increase. So even accounting for inflation this is a real increase in state funding.

Rep. Dillon is, in real terms, correct!

Posted by: Chris Gray | December 6, 2007 3:23 AM

I recall being asked by the Green Party to run against Pat, as well as her anger when she confronted me after she'd heard the rumor. I did not blame her and was relieved when they rescinded the offer. I'd have been affronted; too, if I did as good a job as I've seen her do and was challenged.

That points to a failing on the part of the State Democratic Party. There is much skill, experience, and even wisdom on the part of our State delegation. Why, then, does the Party allow the cities to be ruled by such mediocre talents as petty, parochial fiefdoms? Why can't we have a Pat Dillon or a Bill Dyson competently operating the levers of power?

What benefit does the Party derive by letting a Malloy or a DeStefano run a losing ego trip when it has real talent to deploy?

Meanwhile, they allowed their turncoat to run for the Vice Presidency and were surprised when they couldn't muzzle him at the polls.

Posted by: jms | December 6, 2007 8:06 AM

This conversation is all well and good until you consider that the funding (up, down or sideways) is simply to low to begin with. It's like arguing how much frosting to put on garlic bread. No amount of frosting is going to make it taste like birthday cake. But this is not exactly shocking news.

JMS

Posted by: Gary Doyens | December 6, 2007 9:48 AM

Pat's numbers are correct: State support exceeds 50% of City of New Haven operating revenue as it has for many years. Secondly, that percentage would be even higher this year with that $14 million infusion, if Mayor DeStefano and the Board of Aldermen didn't piggyback on the property revaluation by ramming through a record $29 + million dollars in new and incremental spending. This was at least twice as much as the annual spending increases in previous years - it was a real porkfest.

And finally..while City Hall continues it's annual bashing and complaining about PILOT, in fact, the mayor and the board have approved projects that takes potential Class A, high tax producing properties off the tax rolls for new and expanded non-profits, which in turn produces more of the "inadequate" PILOT payments. It's a vicious and dishonest circle. If PILOT is insufficient, quit supporting the kind of non-profit development that generates only PILOT payments or in the case of Yale and YNHH, negotiated additional payments. If you believe, as City Hall says it does, that this development is a net positive for the city, then quit bitching about PILOT payments and quit complaining that a state subsidy of more than 50% of your operating costs is insufficient.

Posted by: robn | December 6, 2007 12:16 PM

What makes PILOT unfair is that the legislature forbids New Haven from taxing large non-profit entities that are, in reality, profitable corporate cash-cows, and then offers a small percentage of that taxable value so that the leg appears to be helping the city. The problem with PILOT (beyond the fact that it is, at a basic level, anachronistic and unfair) is that New Haven's reimbursement for lost taxes is arbitrarily set by the legislature each year. The tax-exemption law combined with PILOT allows the legislature to meddle deeply in the budgeting affairs of our city.

Posted by: robn | December 6, 2007 12:35 PM

BTW

Esbes numbers arre about correct...if Pats $14M number represents a NET increase in state aid to the city, its about 5% of the $271M of state aid in the 07-08 budget and that would make it slightly ahead of inflation. I beleive that a lot of it is earmarked aid for school construction, so I'm not quite sure in the long run what these numbers represent.

Posted by: robn | December 6, 2007 12:54 PM

Just out of curiosity, I was wondering how much real estate value would be neccesary generate the PILOT college and hospital reimbursement of $44M. With a 44.21 millrate, you need roughly a billion dollars worth of property. Sounds like a lot, but not so insane if you think of it as 2000, half million dollar homes...there are about 53,000 houses in New Haven...so this number sounds reasonable.

Then I wondered about the value of commercial real estate and just for yuks checked Vision Appraisal for the assessed value of the New Alliance Bank tower (the old pink New Haven Savings Bank). What struck me as strange is that this tower is assessed at about $50 per square foot. If the published Shartenberg costs ranged from about 250-450 $/SF then whats up with the low assessement on NAB? Maybe a bit tangential to the conversation of untaxed corporations, but why are the assessments so low for the tax paying corporations?? WTF?

Posted by: LAFAYETTE | December 6, 2007 2:02 PM

"...it was a real porkfest."

"Pork" implies an Alaskan bridge to nowhere. Wasn't the bulk of the budget additions the result of things like cops, energy and medical inflation? That doesn't seem like "pork" to me. Maybe it is more spending than some would like on things like teachers, but that's not the same as the notion of "pork."

"subsidy of more than 50%..."

The word subsidy is an emotionally-laden term that distorts the state-municipal relationship. The municipality's expenses (the bulk of which are education expenses) are mandated by the State Constitution. It would be appropriately defined as a subsidy if New Haven's situation was an abnormal infusion of aid outside of established formulas to fund state mandates on municipalities (like Hartford's situation.)

"...proper metric"

I obviously agree with ESBE that real $s are better than nominal $s to find growth. My frustration is that just using nominal figures without some adjustment or point of comparison just tells us that things went up. It might help pass the buck, but it doesn't help find a solution. We should strive to help our neighbors understand that they can't want the same level of services without any pain. And if it doesn't come from the income tax side, it comes from the property side.

"At least one of the proposals this year would have put more money into city budgets by raising income taxes for those with gross income over $150,000."

I'm glad the representative is not supporting this, but I wonder what gross incomes she would be willing to tax more...in any event, as long as medical costs keep growing faster than the overall economy there's increasing futility to taxing ourselves to keep buying the same level of public services. Maybe Representative Dillon has some ideas on how the State government can use its scale and ability to tax different sources, not to mention regulatory powers over the healthcare industry, to help municipal government contain healthcare costs.

Posted by: RealEconomy | December 6, 2007 2:49 PM

Representative Dillon does all a service with these data. For the fullest comparison, it would be useful to compare New Haven's $ from the State for education, PILOT etc, for this FY and for 10 years ago and 20 years ago. Bet all are DRAMATICALLY up (while the population is not). Perhaps Representative Dillon could ask OFA to share the comparative data from FY98 and FY88 -- which will probably show that Dyson/Harp/Dillon/Looney/Staples/Walker have brought us all home quite the rashers of bacon over the years.

It is curious that the myth of the state cut persists so much -- well maybe not so curious, since the myth maybe provides cover to local elected political interests.

Also worth noting that PILOT does not exist at all in any other state except Rhode Island, where it is much less...which further proves the point that CT cities get a pretty darn good deal. Hey, we all always want more more more, but we should recognize what we got, too.

Posted by: robn | December 6, 2007 6:06 PM

realeconomy

The heart of the issue isn't the amount of PILOT money New Haven gets ...the heart of the issue is the neccesity for PILOT to exist at all.

Pretending that Yale's public benefit erases all tax obligations is an absurd anachronism. They're a huge profit bearing corporation with executives that are paid seven figure salaries.

As Ralph Ferrucci pointed out during the last election cycle, Yale's property tax exemption is worth about 40 million dollars...their endowment is about $22 Billion, generating about 6 million dollars of interest per day. In other words, one weeks of interest on the endowment would cover Yales property taxes. But they don't pay taxes.... they pay about $4 million as a pretend-magnanimous gesture and stick state taxpayers for the remainder.

Posted by: Pay Attention | December 6, 2007 7:36 PM

What PILOT really does is take pressure off Yale and Yale New Haven Hospital. The State would give New Haven the same amount of money whether there was PILOT or not. By calling it PILOT, Yale can then say "see New Haven gets this money because of us."

Do any of us really believe that if Yale left New Haven that the state would give the city one dollar less? Not as long as New Haven has a lot of clout in the appropriations process. PILOT serves its purpose which is to make cities not complain about state office buildings (Hartford) or private colleges (Yale, Wesleyan, Conn College, etc.). But it provides not a single new dollar to cities.

And as to Pat's numbers, she knows that the cities have not caught back up from the last economic down cycle. That's why things like police officers were cut and are only now coming back online.

The Democrats in the legislature are an odd lot. While folks like Pat come from Democratic strongholds like New Haven, their majority is based on Democrats from wealthier parts of the state like Fairfield County. Thus they cannot muster their veto proof majority to tax the wealthiest people on the planet (again mostly from Fairfield) a half percent more to do something as basic as provide affordable healthcare for all.

But then the same legislature will sneak through a bill to strip land from the city and give it to CMHC so that state employees and Yale affiliates can park for free.

So numbers say what you want them to say. If you cannot figure out that a system so reliant on property tax is broken then you will believe anything a politician tells you. New Haven suffers because the Democrats are afraid to tax higher income people more via an income tax. We have limited land and high demand for services. And not just for the poor -- how many suburbs have sidewalks or even a sewer system.

At the end of the day, New Haven is a poor city in the wealthiest state in the wealthiest country in the history of the world (not an exaggeration). To pretend in the face of that reality that our legislators have done some remarkable job in bringing home the bacon is a bit of a stretch.

Posted by: Chris Gray | December 7, 2007 2:11 AM

Yes, Payattention, everything you say is true, but our delegation isn't responsible for the Dems in the whole state.

In my opinion, our delegation is a cut above the level of any of the Democratic city Mayors in recent memory and that some of that talent should be directed by the Party to better assuring effective city management practices. With the abundance of infrastructure failures lately, you would have thought that they would have reasoned this out by now.

The money does have to come from somewhere and those in our society who have long been given a free pass, such as certain large, multifaceted though interlocking, multinational health and educational corporations, may eventually have to forego another expansion to replenish their homeland and its people.

Yale's tax exemption makes as little sense as limiting income upon which Social Security taxes are paid.

Posted by: jms | December 7, 2007 8:13 AM

"At the end of the day, New Haven is a poor city in the wealthiest state in the wealthiest country in the history of the world (not an exaggeration). To pretend in the face of that reality that our legislators have done some remarkable job in bringing home the bacon is a bit of a stretch."

"The money does have to come from somewhere and those in our society who have long been given a free pass, such as certain large, multifaceted though interlocking, multinational health and educational corporations, may eventually have to forego another expansion to replenish their homeland and its people."

Both comments are on target.

This whole numbers debate is meaningless as is this proud declaration of statistical success by Dillon which in my eyes amounts to nothing more then a smoke screen to cover up the fact that the bigger picture is not something that she or anyone else who supposedly represents our interests is willing to take on. Makes me wonder whose interests (the collective) she really represent?

JMS

Posted by: Esbe | December 7, 2007 1:36 PM

Robn -- I am with you on the oddness of the commercial valuations, both profit and non-profit. $50/sqft for class A office space? And the projected tax from Shartenberg seemed to imply a very low eventual valuation. And as for the non-profit total being $1 billion, recall that Yale is spending $1 billion *this decade* on new science and medical buildings. Yes, I understand that the property assessment is "market value" not "replacement," but I still find it very confusing.

Posted by: Esbe | December 7, 2007 1:46 PM

Oh, and the idea that ending Yale's property tax exemption would save the city is nonsense. First, it actually doesn't help that much. Say that the tax due really is $44 million on a billion of assessed value. The state reimburses roughly half through PILOT? Now we are down to twenty-two. Subtract the $4 million "voluntary payment." Now it's 18 million, out of a budget over $400 million? Less than 5 percent of the city budget sure helps, but doesn't solve the problems of New Haven; doesn't come close to covering one year's increase in city spending.

Further, politically, no state in the country taxes non-profits and it just isn't going to happen. Having the city at political war with Yale would hurt the city and the university.

Posted by: ROBN | December 7, 2007 5:31 PM

Esbe,

I looked again on vision appraisal and EVERY tower I looked at along church street (including the beautiful old SNET art deco tower which is now ritzy high end apartments) is appraised at $50/sf. Conversely, normal houses in East Rock are typically appraised at twice that much. City apologists will claim its all a matter of recent sales, but that doesn't mean that they should be complacent about a system which is totally screwed up. Profit bearing commercial properties are appraised and taxed with the same rules as our homes, where we live and raise out kids and where we don't make a profit. The loudest silence this year came from the DeStefano administration which has failed to send our New Haven delegation to Hartford to remedy this absurd inequity.

Posted by: Observer | December 10, 2007 4:08 PM

Chris Gray; The party could care less about effective government for New Haven. Stop and think about this for a minute: Connecticut is a generally viewed as a Democratic state. Then why is it Democrats have been unable to win the Governor's Office in almost twenty years?

Posted by: Chris Gray | December 11, 2007 5:49 AM

As the RLS associated with my MS is keeping me from succumbing to my exhaustion, let me continue.

Since Hurricane Katrina, in my heart of hearts, the only way I can imagine a lasting, positive change in the manner of our governance is for there to be at least two election cycles where not a single incumbent is returned to office. Unfortunately, this would mean the forced retirement of many good public officials. It would also eliminate many, many more who are not good public servants. Then, again, sitting out a term did seem to improve Bill Clinton's performance as Arkansas' Governor.

Even more unfortunately, the vast majority of America's citizens did not spontaneously come to the same conclusion as I, even in the face of that government driven fiasco and international embarrassment, though the 2006 election results gave me some hope.

This solution would, undoubtedly, result in some pain, as those unfamiliar with the levers of governmental power, in some cases complete incompetents, would then be serving. After Katrina, I had thought that the public would realize that those too familiar with those levers were already proved incompetent.

As far as that goes, nothing about the current status of New Orleans or New Haven has changed my opinion of our need for electoral change. One need not pick up arms to revolt.

Posted by: Chris Gray | December 13, 2007 12:25 AM

Seems like the first of my posts (of which the above is the second) from Dec. 11 got lost in the ether, so I will repost it here:

Esbe, I know it wouldn't solve all our budget problems and I have little illusion about taxing the large non-profits becoming a reality, but continued pressure, in the form of that demand, does have an effect.

We've had many (broken) promises result from the pressure and, once in a while, some actual help in terms of cash.

The same, Observer, with shaming the State Democratic Party. They invented PILOT payments in lieu of Yale taxes as a result of public pressure, don't you think?

I doubt it was out of the goodness of their hearts.

Robn, I bow to your dogged research skills, but does our delegation answer to DeStefano? We should have them answer to the citizenry.