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The Road To Detroit?

by Thomas MacMillan | Aug 14, 2013 1:47 pm

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

Posted to: Morris Cove, Campaign 2013, City Budget

THomas MacMIllan Photo As the city’s bond ratings continue to drop, mayoral candidates Henry Fernandez, Toni Harp and Justin Elicker Wednesday said the city needs to change its financial course to avoid following Detroit off a cliff and into bankruptcy.

Andy Ross, a Republican aldermanic candidate, weighed in, too.

At a Wednesday morning press conference in Morris Cove, Fernandez (pictured) said the city needs long-term economic growth based around the city’s growing medical sector. In the near term, Fernandez said, the city needs to “hold the line on spending” and “build a coalition” to recover more money from the state.

Fernandez didn’t offer specifics on how he specifically he would increase the city’s cash reserves, cut spending, and avoid raising taxes. He said only that he would go through the budget in detail to find cuts, looking specifically at the possibility of reducing the number of administrators in the public school system.

Fernandez is one of four Democrats looking to win a Democratic mayoral primary election on Sept. 10.

Fellow mayoral candidate Toni Harp said she would look at saving money by consolidating the maintenance efforts of several city departments and looking at the number of certified employees the Board of Education employs. She said New Haven public schools have a higher percentage of certified and licensed employees than other towns, which increases salary costs.

Mayoral candidate Justin Elicker said the city budget needs cuts “across the board.” He called for capping new borrowing before making the city budget and renegotiating pension deals with city employees, a process in which the DeStefano administration has been engaged with municipal unions.

Mayoral candidate Kermit Carolina couldn’t be reached for comment by press time.

Fernandez held his Wednesday press conference in front of campaign supporter Sandra Travino’s house on Concord Street in Morris Cove. He stood in front of a chart showing changes in Standard & Poor’s ratings of New Haven’s bonds over the last 13 years, starting when Fernandez joined city government as development chief.

At that point, S&P’s rating was BBB+. It climbed to A+ while Fernandez was in City Hall. After his departure, it began to fall, returning to BBB+ this month.

“We are here at a home in the East Shore because it’s homeowners and taxpayers who ultimately bear the brunt of higher taxes and economic problems,” he said.

Lowered bond ratings will make it more expensive for the city to borrow money for sidewalks, police cars, fire trucks, streets, and bike lanes, he said. The ratings also affect $500 million in city debt, and could lead to higher taxes, he said.

Fernandez touted some of his achievements as development chief: bringing IKEA to Long Wharf, rescuing the Shubert theater, bringing Pfizer to town, developing the Ninth Square.

“That’s what economic growth has to look like,” he said. The next phase of growth in New Haven will be development of a new business sector around the medical industry, he said. At Yale-New Haven Hospital continues to grow, other businesses will come with it, including doctors’ offices, testing facilities, drug companies, and hotel rooms. The question is whether this will occur in New Haven, or just outside of it, in the suburbs, Fernandez said.

Fernandez listed a host of other ways the city can promote economic growth, including supporting entrepreneurs coming from local universities, building up Union Station as a mixed-use transportation hub, improve schools, and cut crime.

In the short term, the city needs to abandon one-time revenues like selling streets to Yale, he said. He said, the city should also create a “coalition” with other towns to ensure the state fully funds its Payment In Lieu Of Taxes obligations to cities. And the city needs to “hold the line on spending.”

“This is absolutely already an emergency,” Fernandez said. “We’ve seen Detroit,” where “years of mismanagement” led to bankruptcy.

“I do not believe the city is facing imminent bankruptcy,” Fernandez later clarified. But New Haven’s “trajectory” needs to change to avoid Detroit’s fate, he said. “A city can simply fall off a cliff.”

“I would go through the budget and find cuts,” Fernandez said. “You do that in detail as mayor.”

Harp

“It really is a serious problem,” Harp said of the recent hits to the city’s bond rating.

She said the solution is to look at the budget and find savings. “We’re doing things we can’t afford to do,” she said. New Haven needs to reduce the size and cost of government, she said.

Harp said she’d look at “realistic consolidations” of city services. She said maintenance tasks are divides between the Livable City Initiative and the parks and public works departments, and that she’d look at combining those into one. She said she’d look for savings in purchasing and in information technology.

“I haven’t been able to get my hands on the budget in an in-depth way,” she said when asked for specifics. She said New Haven’s ratio of licensed and certified staff in the public schools is higher than other towns. She said she’d like to see why that’s so “out of whack” and whether she could find savings there.

Elicker

“I’ve been on the record many times talking about the city’s long-term fiscal situation and the fact that our budget is being mismanaged,” Elicker said. He said that as alderman he’s introduced a number of cuts to reduce the city’s debt, and attempted to increase the city’s fund balance.

“The fact that Detroit happened underscores the difficult decisions that we need to make as a city,” he said. The state and the federal governments are not going to give the city more money, he said.

In his four years as an alderman, “I’ve introduced amendments to cut the budget by $100 million. About $69 million have passed, all in the area of borrowing and debt service,” Elicker said.

Elicker said he stopped parking-meter monetization, cut school construction and new Board of Ed positions. “I’ve shown a willingness to cut in every area that we need to.”

He said the city needs to decide how much debt it can take on every year, and then work with that number, rather than first deciding what it wants to buy and then simply borrowing to do so.

Elicker also called for renegotiating pensions. “I was the only candidate who had the courage to tell the police union we need to reconsider the pensions,” he said. Read about that here.

At his morning press conference, Henry said Elicker is partly to blame for the city’s current financial plight, having voted for budgets that increase taxes and debt.

“Henry’s comment is garbage,” Elicker replied. “It’s as if Henry doesn’t understand how the budget process works. If the Board of Aldermen had voted no on the final budget, it would revert to the mayor’s original budget,” which included higher taxes than the one that aldermen approved after finding savings.

“I have been one of the strongest aldermen on the board for reining in spending,” Elicker said. “I’m being honest with what we can afford and how we can pay for it. Toni and Henry are not.”

Ross

Andy Ross, who’s running for Wooster Square’s Ward 8 seat, meanwhile, issued a press release calling for the city not to increase its borrowing. He specifically took aim at the practice of borrowing to pay off other debt.

“New Haven, like much of the country, has been on a borrowing binge because rates are so low. What they are missing is the fact that these rates will go up at some point.  Even a 1 percent increase in our cost of debt will mean higher city deficits. We cannot keep taxing people and we cannot keep on selling off valuable assets to plug the hole,” Ross said.

“As alderman I will seek to put an end to the city borrowing more money to cover prior debt. We need to use our borrowing privileges wisely.  If we use debt to invest in improvements to our city, then we will see incentives to start businesses here and new homebuyers wanting to live here; thus resulting in a higher grand list and the economic boost we so desperately need to get us out of debt.”

 

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posted by: Hieronymous on August 14, 2013  2:00pm

“I haven’t been able to get my hands on the budget in an in-depth way,” [Harp] said when asked for specifics. That’s interesting. 418 pages is a lot, but I would have thought your campaign could afford to print it out and put it in your hands. Here’s an assist:


http://www.cityofnewhaven.com/Finance/BudgetsFinances.asp

posted by: Webblog1 on August 14, 2013  2:47pm

While I applaud Henry for his analysis to approach the impending financial crisis in the city budget, he does not have all the information necessary to make informed decisions at this time.

Should Henry become Mayor he will likely find in January, a 2015 budget already fully prepared by Mayor DeStefano, waiting for his signature. The budget will have automatic cost increases build in due to annual union increases and the ever increasing cost in doing business with the city, especially true due to the lowered bond rating.
The next Mayor will have to wait until the 2016 budget to implement cost savings.
If Henry wants to expand economic development beyond what DeStefano has in the pipe line, he will have to wait until 2016 or later, because the RT 34 project will take up all available matching funds.
If Henry wants to create a “coalition” with other towns to ensure the state fully funds its Payment In Lieu Of Taxes to cities; that just won’t happen, ask Harp.
As for Harp, once again she is fuzzy on the issues, saying: “the solution is to look at the budget and find savings. “We’re doing things we can’t afford to do,” she said. New Haven needs to reduce the size and cost of government, she said.
Well DUH….
Elicker, well he is just overly stating his role in past budgets. The Board of alderman’s roll call of board votes will show he voted for all budget increases while in office, including the current budget, the automatic mayor’s budget passing notwithstanding.

As for Kermit, he would do well not to say anything ...in the meantime kermit, only 11% of Hillhouse students passed the latest CAPT..
The number of Hillhouse High kids scoring at goal across all subjects stayed flat, at 10.9 percent.

posted by: downtown dweller on August 14, 2013  2:56pm

What the heck does “I haven’t been able to get my hands on the budget in an in-depth way” mean?  How is it possible to get your hands on anything in an in-depth way?  Don’t hands just touch the surface?  I’m genuinely baffled by Toni Harp’s use of the English language.

I presume she just meant to say “I’m running for mayor of the second-biggest city in the state but I haven’t read the budget.”  That would be a lot more direct, and honest, albeit embarrassing.

posted by: Babz Rawls Ivy on August 14, 2013  3:06pm

Now this is a debate issue that actually has some merit and could be quite illuminating.  No it’s not sexy and headline grabbing, but the budget is what determines the quality of life of this city.  And too often everyday people glide by it, because on first glance it seems overwhelming and mind-numbing.  But if a candidate was smart and all of them are, I would suggest taking the budget apart and making it user friendly for citizens to grasp.  Making this easier for people to connect to. The candidate that shows citizens how the budget affects neighborhoods and households will go a long way in showing the voters that this is important.

posted by: Atticus Shrugged on August 14, 2013  4:07pm

Whomever becomes mayor in January is in for more than her/his fair share.  The budgeting process will not be easy and negotiating against the unions won’t be fun.  Further, we need to be honest that taxes will likely rise again as we may not get the additional approximately $4 million that Senator Harp sent to the City as the State’s overall fiscal health is not improving.

With all of that said, Detroit is a different beast.  It had pension liabilities ranging back to the 1960s and lost substantially all of its employment base (due to unions, NAFTA, international trade, technology increases), and it is one of the largest land massed cities.  In short, it is an entirely different beast.

posted by: HewNaven on August 14, 2013  4:14pm

Harpies keeps claiming how qualified she is to be mayor, and yet she hasn’t even glanced at our city budget, with less than one month before the election! That’s being disinterested, and she should be automatically disqualified from trying to run a city. I’m sorry, but this should be the last straw for this amateur campaign. What will it take for Harp to admit she is not fit for this job?

posted by: Eva G on August 14, 2013  5:09pm

Babs Rawlz Ivy—I’m truly not one who goes out stomping for political candidates, but I will say this: the last time there was a big budget hoohah happening in town, Elicker did in fact do a tremendous job of explaining what the budget looked like in a way that even I could absorb. (I famously have no idea for numbers and in general when the conversation turns toward politics, I get the song “Jesse’s Girl” running through my head, I pay so little attention, it’s congenital or something.) There was a video circulating of him explaining the budget, and why it looked so scary.
And it really looked scary.
The video wasn’t long, maybe three minutes, but it was highly effective. Kinda wish Toni Harp had watched it. This race is not making me happy and hearing that Toni hasn’t paid attention to the budget here, yet, does not give me faith in her. Not one iota.

posted by: Razzie on August 14, 2013  5:12pm

Everyone knows the budget ratings lag the real time fiscal policies of the City. Good ratings while Henry is in office followed by a steady decline is a clear indication that the bond rating impact of his fiscal decisions while he was in office are being reflected upon his departure. Just like the many as yet undiscovered fiscal “easter eggs” his mentor Johnny D is leaving us. Henry needs to stop acting like the voters are ignorant of his role in the fiscal demise of New Haven, starting with the decision to bring Gateway and Coop HS downtown, and to raze the residential neighborhood in the Hill North neighborhood to put up new school buildings. I It’s too late to “look at the budget and find some savings”. Sound fiscal policies need to be in place at the start of the new administration.

posted by: Dwightstreeter on August 14, 2013  5:41pm

In 1985 the Board of Aldermen established a Revenue Commission to study the City’s finances and the Report concluded that the wealthy non-profits like Yale and the Hospital were being subsidized by the rest of New Haven and a change was recommended.
The Board of Aldermen should update this detailed and easily understood Report so that the citizens of New Haven can understand how much their taxes would be reduced if these tax-exempt entities paid their fair share on real and personal property the way the rest of New Haven’s businesses and residential owners do.

posted by: anonymous on August 14, 2013  6:25pm

Razzie is right. Fernandez helped destroy the Hill, Robert-Moses-style, and Senator Harp did nothing to stop it, as the livelihoods of at least 100 families were wiped out. 

But at least Fernandez realizes that we don’t need to widen more roads and parking lots downtown.

posted by: TheMadcap on August 14, 2013  7:19pm

Oh, great, the woman who is probably going to be the next mayor hasn’t bothered to take a close look at the budget yet. It’s not like that’s the most important issue facing the city or anything. Then again it’s really no surprise given as chair of the appropriations committee she help craft a budget that even left leaning groups called a budget of ‘gimmicks’. Plus then you know she might actually have to tell the police union their pension plan is unsustainable and stuff.

posted by: Scot on August 14, 2013  8:04pm

The more I read about Harp the more worried I become. First her family tax bill and her unwillingness to even discuss it.

What is her record as a state senator?  The state now has unprecedented budget issues and a stagnant economy despite the fact CT has long been one of the wealthiest states. As a state senator for 20 years, does she take any responsibility for that? At the state level her record shows she has NOT helped to create jobs or control the budget.  Why do we think she’ll be able to in New Haven?

Now she says she hasn’t read up on the city budget a month before the election. When she does she will realize that her suggestions of replacing some licensed staff with unlicensed, and finding some consolidation between Parks and LCI, will not put a dent in the budget issues we have.  Those aren’t real solutions in my opinion.

posted by: anonymous on August 14, 2013  8:38pm

Hieronymous and Downtown: The city budget is published online every year. 418 pages takes maybe a few hours to read, especially if you skip over the repetitive sections. I read it every year, and I’d assume that many other residents do, too, even if they also have no particular reason for doing so.

The idea that Harp hasn’t read it should come as no surprise, though—considering the almost complete lack of specifics in her debate answers over the past few months.

posted by: Noteworthy on August 14, 2013  8:44pm

Numbers Don’t Lie Notes:

1. As LCI and development czar, neither would afford Mini-me Fernandez the opportunity to drive up or drive down the city’s credit rating.

2. The stunning admission that Toni Harp hasn’t read the budget and is unable to discuss it, is truly remarkable. If she did, she might be “traumatized” all over again. This is because once Toni Harp left the BOA, she never looked back - she never attended a budget hearing, never testified, never stood with taxpayers at any of the hundreds of public hearings on the budget in the last 10 years.

3. It is not worth my time to remark on these lame, shallow and unremarkable suggestions to the city’s budget, especially by Harp and Fernandez. Needless to say, out of a general fund budget of nearly $500 million - their contributions to the budget aren’t worth much. Moreover, Toni Harp hasn’t cut a budget, a real cut meaning a decrease in total spending, not just moving the deck chairs around on the Titantic, in 25 years. And by the way, the state budget and bond rating mirrors the city’s.

posted by: Xavier on August 14, 2013  9:38pm

One City Henry gets it and is on top of it, 24-7 for New Haven. One City Henry has a grasp of the facts, even with cool graphics, all to help us to understand.

One City Henry sees the future and sees the threat to his City. While One City Henry is not Super Man, his embelem is for hope. One City Henry may not be able to fly around the world in reverse to turn back time, but come January 2014, One City Henry will do what he has to do to trim that budget and make all right with his City.

One City Henry, the man with the graphics, the man who breaks it down for us to understand, who speaks clearly to us.

One City Henry, not SuperMan, but a Man with Vision and the testerone to turn New Haven into His City, a Great City.

posted by: A Contrarian on August 14, 2013  9:54pm

Dwightstreeter:

If you and others manage to treat Yale like a “business” you’ll surely get contract and non-union dining hall workers, custodial staff, and temp secretarial & clerical positions just like in the corporate world.  Wonder how that would work out for working class New Haven residents?

posted by: HhE on August 15, 2013  3:56am

Sen. Harp:  “She said the solution is to look at the budget and find savings. “We’re doing things we can’t afford to do,” she said. New Haven needs to reduce the size and cost of government, she said.”

How does Mini City Halls help this? 

If we look at Mr. Fernandez’s chart, the city’s bond rating seams to go up and down with the economey.  I do not see his role as cause, but merely cororlation. 

While I am very distressed about our city’s finicial health, I think it arogant (and typical of OneCity) to claim he is going to sort this out. 

 

Of course, I am an Elicker supporter.

posted by: HewNaven on August 15, 2013  7:30am

The situation now is that you have thousands of residents clawing their way toward one employer (Yale). We need a more resilient economy in this town. We need help for small businesses. We need good jobs, but not just for major companies. The Jobs Pipeline that the unions keep bragging about does not accomplish any of this. It simply funnels all our residential talent into big companies like Yale and At&t, without even a nod to the vital role that is served by small business. Its corporate welfare, plain and simple. We need representatives who aren’t just following orders, but actually thinking these things through recognizing the multitude of solutions that do not reward these already prosperous companies.

posted by: Seth P on August 15, 2013  12:13pm

Although people have been made to believe that our Great Recession was in 2008-2010, our economic distress point is ahead of us and some really clever decisions need to be made in order to brace ourselves for impact.  The budgets of municipalities have been developed based on forecasts of monies that are projected to trickle down from the federal and state levels.  I will not belabor the point that mismanagement of funds has happened at every level and that greedy self interests have found their way into the pockets of the less fortunate.  I will only state that sacrifices must be made, and jobs will be lost.  These jobs will be lost by residents because many of them have not held their elected officials accountable to serve in their best interests. 

All of these candidates are well intentioned and have considerable expertise in managing budgets.  Some are much more up to date and adept than others.  The fact remains that responsible management of the budget is the bottom line for a mayor.  We should not be surprised by vague answers for currently unpredictable financial forecasts.  Deals have been cut by the current administration that will surely span over the next two years.  The question is “how do we stop the financial hemorrhaging?”  You better believe that whomever our next mayor is, they will be held accountable to that standard.  Thank you Dwightstreeter for that tidbit of information.  Henry has knowledge of one time period, Justin has studied recent developments and devised a plan and Toni has ensured that New Haven received personal attention on the State level so that Henry and Justin will have some concrete numbers with which to work.  If you think managing the budget of a high school is an easy task, then you should sit with Kermit for an afternoon for a tutorial.  We can only improve through collaboration, best practices and knowing the mistakes of the past and not repeating them. #NewHavenRising

posted by: Dwightstreeter on August 15, 2013  2:55pm

Contrarian:
I can’t follow your thinking that taxing wealthy non-profits will have an adverse effect on any one in New Haven.
Yale is a multi-national, multi-billion dollar corporation.
If you want to subsidize it, be my guest.
And the hospital pays its CEO millions per year.
It’s nice to be a non-profit and have tax exempt status.
I’m working on figuring out how to do it for myself :-)

posted by: HhE on August 15, 2013  5:17pm

Dwightstreeter, your “In 1985 the Board of Aldermen established a Revenue Commission to study the City’s finances and the Report concluded that the wealthy non-profits like Yale and the Hospital were being subsidized by the rest of New Haven and a change was recommended.” is something I find problematic.  To begin with, 1985 was a low point in town/gown relations.  It is reasonable to belive that a BoA would seek to blame—rich and unpopular—Yale. 

Of course our taxes would go down if all non profits were taxed as for profits.  Our property taxes would go down if property taxes were leveled by the State instead of towns and cities (and Greenwich would get a kick in the teeth too).  The problem is the very structure of our system of taxiation combined with the localization of regional problems. 

Let us consider your “And the hospital pays its CEO millions per year.”  Now I take issue with the use of “millions” as being inexact, missleading, and inflamitory.  Two million is “millions” just as tweenty million is “millions.”  Yet these are very different numbers.  According to this link,

http://articles.courant.com/2013-05-30/business/hc-hospital-executive-salaries-20130529_1_fringe-benefits-backus-corp-compensation

“At Yale-New Haven Hospital, the top-paid executive is President and CEO Marna P. Borgstrom, who was compensated $2.8 million, of which $2.15 million was salary. Borgstrom has been CEO since 2005 and started working at Yale-New Haven in 1979. In addition to overseeing the hospital, Borgstrom is the chief executive of Yale-New Haven Health System, a hospital network of about 18,000 employees and an operating budget of about $3 billion,...”

Now let us consider a privite sector leader, of 15,00 to 20,000 people, and anual expenses on the order of three billion dollars.  What would be the going rate?  Now while I think million plus pay cheques are a bit much, this is the market rate.

posted by: Dwightstreeter on August 16, 2013  9:54am

To HhE:
Yale and New Haven have had recurring “low points” precisely because the unequal and deeply exploitative relation between them has never been seriously addressed, let along overcome. President Salovey, are you listening?
The closest New Haven came to changing that was the New Haven Revenue Commission in 1985. As explained to me by a professional economist, “the market rate” is the result of what buyers and sellers negotiate. Yale is a major buyer of hospital top administrators and so it plays an outsize role in setting “the market rate” for such jobs in the northeast US. When criticized for what it pays, to answer that it is the “market rate” is a thin hustle (aimed to fool and pacify the public) for it really means that Yale pays the rate that its policies are key to establishing.”
This is an old fashioned company town and the workers (i.e. tax payers) are in debt to the company store (the local gov’t) and the debt just keeps rising.

posted by: Christopher Schaefer on August 16, 2013  12:08pm

According to the NH Register*, the main effort to elect Gov. Malloy was organized by U.S. Rep. Rosa DeLauro’s campaign staff. So remember that, voters: THIS is the triumvirate—Malloy, DeLauro, Harp—that has
•  put CT’s economy DEAD LAST in the nation,
•  with a foreclosure rate that’s FOURTH HIGHEST in the nation and
•  the HIGHEST per capita DEBT in the nation. 
“New Haven needs to reduce the size and cost of government, [Harp] said.”  She sounds like—a Republican! Gasp! However, she isn’t—and the state’s shameful budget—which she helped craft—clearly demonstrates this. Too bad we don’t have a real GOP member running for mayor. Fortunately we DO have 4 GOP candidates for Alder. *http://www.nhregister.com/articles/2013/08/15/news/new_haven/doc520d3c2e569c7443076606.txt?viewmode=fullstory

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