One Gap Closed, One To Go
by Melissa Bailey | September 11, 2008 7:50 AM | Permalink | Comments (4)
Fresh from filling last year’s budget hole, the city announced progress on this year’s deficit — though more layoffs are coming next week.
The news came at a press conference in City Hall Wednesday, where Mayor John DeStefano, Jr. gathered troops for a budgetupdate.
The mayor brought good tidings: The city came back from a $13 million hole to close out its FY07-08 budget with a surplus. And as for the current fiscal year, it has made some headway towards closing a $6 million budget gap.
What was once a $6 million deficit has been pared down to about $4 million, DeStefano announced. The rest, however, will be made through union concessions — including job cuts.
“There will be layoffs,” the mayor said. He wouldn’t say how many, but he said the city’s plan is being finalized and will be released next week.
In The Black
Climbing out of what was once a $13.5 million budget hole, the city closed out FY07-08 with a $773,000 surplus, DeStefano said.
The hole started at $10 million and grew to $13.5 million when the final state budget was set. The city dug its way out with the help of several one-time revenues, including selling 55 Park St., Lot E and part of the former Coliseum lot all for private development. The city also earned $6 million by selling the city’s transfer station and setting up an independent authority to oversee the city’s trash.
The surplus will go into the city’s “rainy day fund,” the mayor said.
The city’s aggressive tax-collection practices appear to have paid off: The city sustained a 98.3 percent collection rate overall, with a 99.0 percent collection rate for real estate. The city also sustained its bond ratings: A3 by Moody’s and A- by both Standards & Poor’s and Fitch’s.
Click here to read the city’s full release summing up FY07-08.
Unlike last year, the mayor said this year he won’t be using one-time revenues to dig the city out of its budget hole.
Digging Out
The city passed its $456 million FY08-09 budget with a $6 million hole — a hole it expected to fill through union concessions.
The mayor announced Wednesday that the city has just struck three deals that will help fill that hole by adding an unexpected $1.2 million into city coffers (figures updated):
• Health Care: For the first time since 1984, the city negotiated its healthcare plan through a competitive bidding process. Budget Director Larry Rusconi said when he came to the city in 2006, he took a look at the budget and thought the competition would help cut costs. The method worked, he said: Six health care insurers answered the bid. The city ended up with the same company, Anthem, but because of the competition, it got a cheaper plan. The plan will save the city at least $300,000 in this fiscal year.
The plan covers 5,809 employees and 13,534 lives, according to budget staff. DeStefano said the contract took seven months to negotiate.
• Energy: Taking advantage of new permission from the Board of Aldermen to enter into multi-year utility contracts, the city closed last week on a new, 3.5-year contract to buy electricity. The contract locked the city into paying 8.15 cents per kilowatt hour. The rate is lower than what the city was paying in November 2006, and will save the city $2.5 million over the course of the contract, Rusconi said. Total savings this fiscal year should come out to about $500,000.
• Waste: The rest of the savings — about $400,000, according to updated city figures — come from the city’s new municipal trash plan. Savings were earned when the city went out to bid for contracts for running the transfer station as well as hauling and disposing of solid waste.
• Retirement plan: The city saved about $750,000 when 27 of its employees took an early retirement plan, according to the mayor. (City unions have previously calculated that the plan saved over $1.3 million).
All the above leaves the city with a roughly $4 million deficit for FY08-09.
DeStefano said despite the tough financial times, the city will keep hiring for some positions. Since the fiscal year began, the city hired six new people, he said, including two bridge tenders (one for the soon-to-be-open Ferry Street Bridge), a director of labor relations, and a police chief and assistant police chief. The city still needs to hire some school nurses, he added.
DeStefano noted that efforts to cut city services — including closing the Stetson Library, the Whalley Avenue police substation, and the West River Senior Center — were wildly unpopular.
“Citizens have been protective of their services,” he said.
So the city is turning to the personnel side for further cuts.
Asked about the delay in balancing the budget — the city missed a Sept. 1 deadline and is now 10 weeks into the fiscal year — the mayor said the delay was in the effort to minimize impact on employees. He said he wanted to see how much could be saved by the health care, energy and waste contracts before calculating layoffs.
“I didn’t want to lay off anyone that we didn’t have to lay off,” the mayor said. “To rush would have been to lay off more people than needed.”
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Comments
Posted by: Gary Doyens | September 11, 2008 10:23 AM
Reality Check:
1. Last year's budget deficit was closed with more than $10 million in one time revenue by selling city assets or creating off balance sheet operations which then borrowed money for which New Haven taxpayers are responsible for repaying.
2. The rainy day fund is 3.6% of operating revenues - all the bond rating agencies require a 5% fund balance or they penalize the city.
3. The city's bond ratings are not high, they're average - in fact, they're one step above a huge downgrade from Upper Medium Grade to Lower Medium Grade. There are six categories of bonds above where the city currently resides. The city has not recovered from its major bond rating decrease of several years ago.
4. Of particular note is this statement by the bond ratings agencies: "New Haven's full faith and credit pledge including an UNLIMITED AD VALOREM TAX (property tax) secures the bonds." I'm glad they're comforted by that....fresh off my 14.6% property tax increase this year, I'm not.
Posted by: Sins of New Haven
| September 13, 2008 2:33 PM
instead of laying off resident employees the City should be asking who is responsible for the fact that City Police and Fire personnel en route CANNOT see each other's whereabouts in real time, on any screen?
It's all radio chatter and despite wireless laptops on board there is no real-time GPS system that lets cops see each other on a map.
Another sin.
But let's focus on the rank and file who have to take the punishment for their sins. It's a shame.
Perhaps better technology in cops cars would have let the officers avoid a tragedy - see here's the catch - the technology is already there - I believe I see Panasonic Toughbooks in squad cars, correct?
It's the policy that's wrong, including the policy makers.
How hard is it to implement a real time GPS map of new haven with red flishing dots on it with street names so officers can see each other (on a screen)?
layoffs? its not like the money saved with union layoffs is a lot compared to what the City pays its "independent contractors" who look, act, work, dress and function like employees - but make much much higher salaries as "contractors".
Those jobs should go first. The Union jobs are full time while some of the contractors are part time - but they make double the amount of a mid level full time union salary!
and you can also have a pension concurrently too! as long as you do not work over 19 hours, you are allowed to work for the City as a retiree AT ANY RATE THE CITY CHOOSES as a "contractor". Awful juicy....
so lets look at the real issue. Human Resources and Corp Counsel make this machine of contractors run. Someone should get a list of all of them and inspect the public record on file in City Hall. Let's see who is who and who makes what and who is getting a pension meanwhile and take look at the whole financial picture of personnel expenditures, not just what full timers to cut.
A good amount are resident employees.
The financial mess can be avoided if someone inspects all of the personnel expenditures but unfortunately we cannot undue the lack of policy that led to cops crashing into each other while serving the public at all cost...because nobody thought of putting a map with dots on a laptop screen.
the financial mess is just a smokescreen of the deeper sins of 165 folks, you can never take what you see as the whole story.
DEMOND MORE OF YOUR CITY HALL & GENERAL FUND
Posted by: cedarhillresident
| September 14, 2008 12:08 PM
First we all know next week the layoffs are coming from parks, publicworks and other public service departments! Why? because city hall refuses to layoff the double dippers!!! JOHN it is time to do what is right! These consultants that already get pensions should be the first to go! I can here it now ...sorry citizens we had to cut the staff because you did not want your taxes raise so service are going to be effected. No not if you cut the contributors of campaigns in no nothing pt positions and keep the lower paid employees that actually do work to keep the quality of life decent in this city!
Posted by: Disgusted with All | September 15, 2008 9:48 AM
Hooray for Cedarhillresident and Sins of New Haven!!! You hit the nail right on the head. The double dipping workers, consultants who already retired but are back with hugh salaries working part time are killing us. Get rid of all the overhead like those, and leave the full time working people with small salaries alone. Then if the budget still comes up short, then you see where cuts can be made. But until then, you have no one to blame but the Mayor, and his high salaried friends. Good thing he didn't win the Gubernatorial race. Could you imagine what he would do to the state????
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