Beyond the Spin on Killer Budget

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by Paul Bass | Mar 1, 2006 4:43 pm

(5) Comments | Commenting has been closed | E-mail the Author

Posted to: City Hall

Mayor John DeStefano may have stretched the truth when he claimed his new city budget relies on no one-time revenues. Now that DeStefano has finished a carefully spun unveiling of the proposed $413 million, tax-boosting budget, aldermen who were left out of the loop, like Jorge Perez and Joyce Chen (pictured), want more forthcoming answers.

Knowing he had bad news to deliver in a year when he’s running for governor, DeStefano met privately with aldermen Monday night as well as the editorial board of the New Haven Register to discuss the budget, which raises taxes a whopping 9 percent, or 4 mills. DeStefano claimed, and the Register reported, that for the “second straight year” he was not relying on one-time revenues.

In fact, for the second straight year, DeStefano is relying on proceeds from the city’s $34.3 million sale of the Water Pollution Control Authority.

“That is one-time revenue,” said Alderman Perez.

According to mayoral spokeswoman Catherine Sullivan-DeCarlo, DeStefano’s proposed budget calls for using $12 million from the WPCA sale on debt service from the years 2000-2006; and another $9.5 million on debt service for the upcoming fiscal year. The money left from the sale would be spent on debt service the following year.

Sullivan-DeCarlo insisted on calling this an expense of “short-term” revenue, not “one-time” revenue, “because it is being spread over a five-year plan. It has been used already in the ’04 and ’05 fiscal years, is being used currently in the ’06 and the plan is to use it in ’07 and ’08. For this fiscal year, it will pay both principal and interest on debt service. As we did when we began citywide school construction and securitized the tax liens, we got $20 million that was used to start the school construction fund and we set up a school trust fund in order to use that money in
conjunction with state reimbursements and city funds to finance school construction.”

On top of that, the city plans to use $1 million from the WPCA sale on a youth initiative — including on programs that will be, hopefully, ongoing beyond this year. “What’s going to happen then?” asked Dwight Alderwoman Joyce Chen (pictured). “We can’t sell another WPCA.”

The mayor also, in his meeting with the Register editorial board, used the youth initiative as one of the reasons he needs to raise taxes 9 percent. Yet it turns out he’s not even counting that $1 million in the general budget. That galled some of the aldermen who learned about it Wednesday. Why’s he putting that program offline? Because, according to Sullivan-DeCarlo, the organizers of the youth initiative “really haven’t made any decisions” about their priorities for spending the money yet.

She said the money would go into a special fund account. Again, she said, the plan is not to spend the whole $1 million in one year, “but to have it accrue interest and to pay over a multi-year period” for uses like after-school programs.

The question of reliance on one-time revenues and budgeting sleight-of-hand is significant because a rating agency cited it in recommending lowering the city’s bond rating recently. Furthermore, it recalls another DeStefano sleight-of-hand era in City Hall, when he was a top aide to then-mayor Biagio DiLieto in the late 1980s. Then, as now, the city faced particularly hard economic times with a long-term budget crisis looming. Then, as now, they relied on questionable one-time revenues and left successors to deal with the mess. In fact, for three straight years back then, they “balanced” the city budget by “selling” the old Lee High School, even though the sale happened only once. Then, when the budget crisis hit, and they had left City Hall (as DeStefano hopes to by winning the governor’s race this year), they criticized their successors in City Hall for poor fiscal management.

The biggest long-term problem with short-term revenue thinking may come not from reliance on WPCA money (depending on how much goes toward paying down interest versus principal on the debt) as on the continued efforts by the DeStefano administration to avoid citywide revaluation. The city keeps getting state approval to delay revaluation, which avoids short-term political conflict but builds up even bigger tax problems for homeowners down the road.

“It’s going to be a tough budget,” said Alderman Perez (pictured), head of the board’s Black and Hispanic Caucus, who’s a banker in his day job. “In my opinion the board’s going to have a hard decision to make. We’re going to have to start realizing that the city budget is not much different from what we do every day with our own personal budget. We figure out how much income we have coming in, and we determine what kind of car payment we want. We determine what kind of vacation we can take. We decide what size swimming pool we can take. Then we fit that into our budget, not the other way around. We don’t decide what kind of car we want first.

“After five years of tax increases, we need to understand that we may be getting close to the breaking point where people cannot afford it. As such, we need to go back to some basic budgeting.”

Perez and Chen both acknowledged that it’s not easy to see where the city could cut to lower or eliminate the tax increase. They also said they haven’t had a chance yet to find out. Veteran Hill Alderwoman Andrea Jackson-Brooks said the same thing when asked for comment Wednesday. The city administration conferred only with its loyalists in putting the budget together, and those loyalists responded Tuesday and Wednesday by expressing skepticism that the tax increase could be cut much if at all.

“We need to closely examine [the budget] and go through a fine-tooth comb to see what we can do,” said new Finance Committee Chairman Joe Jolly (pictured with wife Susan Rivers and baby Ellie), a Fair Haven alderman. “To be honest, the big priority is increasing policing levels, and that costs money.” DeStefano’s proposed budget would add 24 new police positions, raising the force’s sworn strength to 438. It also includes 16 new firefighter jobs.

“It’s unrealistic to think you can find $16 million in cuts” and avoid a tax hike “unless you’re willing to accept big reductions in services,” Jolly continued. “Sixteen million dollars is a few hundred employees.”

He and the other aldermen will start seeing whether savings can be found, without sacrificing public education or safety or other city goals, when committee hearings begin on the budget later this month. In the meantime, a little truth in spin control could help the process.

Comments

posted by: Bruce on March 1, 2006 10:52pm

Forget the “fine tooth comb”. Hack and slash. We have one of the highest tax rates in the state, if not the country. Leave the tax rate where it is and simply cut services we can’t afford with the money we have. Do we need to spend all these millions of dollars on concerts on the green and a 2 week festival to celebrate…internationality? Draw a line in the sand and stop taking my money for things we don’t need. Taxes go up, people move out. This is a stupid policy and it will be devestating for our city.

posted by: nfjanette on March 2, 2006 11:55pm

Then, as now, the city faced particularly hard economic times with a long-term budget crisis looming. Then, as now, they relied on questionable one-time revenues and left successors to deal with the mess.
Someone pinch me, I must be dreaming. Has the long honeymoon the mayor has enjoyed with the local liberal press finally ended? If so, not a day too soon; now, how about a story on how the inflated cost of school construction is a factor in this proposed tax increase. Follow the money.

posted by: Fair Haven Resident on March 4, 2006 12:27pm

I personally believe new schools are an investment in our most precious asset—our children. Even though my husband and I do not have any children I support the work of Mayor DeSefano.

posted by: JGuillen on March 5, 2006 7:45am

So much for extraordinary fiscal management! The smoke and mirrors budgets of previous years and multiple use of one-time revenues have finally caught up just like it did when DeStefano was Chief Admin Officer

posted by: nfjanette on March 6, 2006 9:21am

Of course the new/rebuilt schools are an investment in our children, I agree completely. At the same time, the question is, how much did that investment really have to cost? How much political favor was purchased with the contracts from that rather huge sum of money over the years, and how much of that graft is causing the mayor to propose raising our taxes? Follow the money.

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