Markeshia Ricks Photo
Jones and Clerkin Tuesday.
Mayor Toni Harp proposed a $554.5 million general fund budget that she said would “pay the bills and keep the lights on” without raising taxes — assuming the cash-strapped state ups its annual aid to the city by $30 million.
Harp announced her proposed budget for the fiscal year beginning July 1 at a City Hall press conference Tuesday afternoon, touting her administration’s three consecutive years of balanced budgets. (Her new proposed capital budget is $68.7 million and special funds budget, $25.6 million, for a total 2017 – 2018 fiscal budget of $648.9 million.)
The proposed budget, which Harp is bound by law to present to the Board of Alders before March 1, has three basic features: no new revenue from increased taxes; a reduced mill rate; and no new city positions or layoffs. It gambles on the state to honor more of its funding obligation to the city.
The budget now goes before the Board of Alders for consideration and revision.
“No new revenue is to be raised by taxes,” Harp said. “In other words, the proposed budget’s bottom line amount raised by taxes will remain the same as it is in the current budget year.”
To do that the current mill rate on real estate and personal property will be reduced from 41.45 to 38.68, which is a decrease of nearly 7 percent. That matches the 7 percent rise in the city’s grand list of residential property after the recent revaluation. That allows the city to collect the same amount of revenue from real estate and personal property taxes while simultaneously reducing the mill rate.
“To be clear,” Harp said, “some individual taxes will fluctuate largely as a function of the just completed city-wide revaluation, but in the aggregate this is a no tax increase budget proposal.” That means if your property values rose more than 7 percent in the revaluation, your taxes will rise, too; and if they rose less than 7 percent (or fell), your taxes will go down.
Harp: No new revenue from higher taxes.
With no added money from taxpayers, Harp’s budget looks to cover a roughly $31 million increase with funds from the state’s Payment in Lieu of Taxes, or PILOT, program which reimburses cities for revenues lost on tax-exempt properties. The state has been funding the program at only around 40 percent. In last year’s proposed budget, the Harp administration relied on $14 million from PILOT; this year it’s counting on another $30 million or so in state aid in as-yet undetermined formats, based on promises made in Gov. Dannel P. Malloy’s budget address.
“At this early stage we don’t know particulars about how the governor and the legislature will provide the increased state aid the Governor’s proposal includes,” state city Budget Director Joe Clerkin. “Nevertheless, we are committed to working with our state delegation and state leadership to make sure that the Governor’s vision is enacted and that New Haven gets sufficient state aid to balance the mayor’s proposed, current services budget.”
Clerkin said that the three biggest cost increases in the new city budget are pensions at $8.5 million, the Board of Education at $8 million and another $6 million for medical benefit costs.
The rest of the increase is driven by hikes in the police department for new officers who are entering their second and third years with the department and the cost of having to take over the 1 Union Ave. detention center from the state for just over $3.5 million; a $1.5 million increase for debt service; and contractual increases for the fire department.
Clerkin said the administration is looking to game-changing, revenue generating proposals being hashed out in Hartford, including Gov. Dannel P. Malloy’s plan to tax hospitals, which could generate about $33 million in new revenue for the city.
He did admit, however, that the mayor’s proposed budget does not factor in Malloy’s plan to shift a third of the cost of teacher pensions to local municipalities, of which New Haven’s share would be $15 million.
If the state were to fully fund PILOT, Mayor Harp said that would generate $70 million for the city. But the state has never paid the maximum amount even in good financial years. City Controller Daryl Jones said that it’s to the credit of the mayor’s leadership that the city isn’t asking for the full $70 million.
“If you look at other cities in the state, they’re reaching probably for more,” he said. “The budget is representative of residents’ expectation that the city receive as much aid as possible from the state budget.”
A day before the press conference, Harp said on WNHH radio’s “Mayor Monday” program that fire and police pension costs rose $8.5 million over this past year, largely driven by an increase in retirements by firefighters who were earning lots of overtime pay because of shortages in the ranks. Firefighters have their pensions calculated based on their four most recent years’ earnings. Firefighters union President Frank Ricci offered this comment about the rise in pension costs: “Members pay 11 percent of their pay into their pensions and firefighters are not eligible to collect social security. As well close to 40 percent of our members do not have overtime calculated into their pensions. Any large pensions that you see is the direct result of the previous administration’s willingness to violate the Constitution and Title 7 for political gain. The city has has been working diligently to fill command and leadership since the ruling in the Ricci case, which in turn will lower pensions and ensure the continuity of command.”
Also, Harp said, keeping Board of Education services at their current levels will cost an estimated $8 million more each year, partly because of expired grants for staff positions considered essential.
Has the State ever fully funded PILOT?