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Tax Hike Cut In Half

by Thomas MacMillan | May 15, 2014 12:16 pm

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

Posted to: City Hall, City Budget

Thomas MacMillan Photo By eliminating some proposed new mayoral staff, factoring in new Yale building permits, and flat-funding the Board of Ed, alders managed to cut the mayor’s proposed tax increase by more than half.

That happened during a five-hour Finance Committee meeting Wednesday night.

The committee made several amendments to the mayor’s proposed $511 million budget, which included a 3.8 percent tax increase. The changes resulted in about $2.5 million in cuts, and about $2 million in new state and building permit revenue, all of which was put toward reducing the mill rate, which determines the size of property tax bills. The tax hike would now be 1.8 percent.

The amendments were all put forward by Board of Alders President Jorge Perez.

Newhallville/Prospect Hill Alder Michael Stratton put forward several pages of amendments of his own, proposing dramatic cuts to education spending. He found the support of only East Rock Alder Anna Festa, not enough to pass his proposals; but other alders said that structural budget criticisms he raised will become part of the legislative debate going forward.

The budget now heads to the full board for a final vote at a special budget meeting on May 27, when further amendments can be made. The budget takes effect July 1, when the new fiscal year begins.

Here are the changes alders made at Wednesday’s Finance Committee Meeting:

• Alders first passed an amendment proposed by Alders Perez (pictured), Jessica Holmes, Al Paolillo, and Jeanette Morrison. The amendment eliminated four new positions Mayor Toni Harp had included in her budget: a legislative director and three staffers for a new grants office. The budget still includes three other positions she requested: a bilingual receptionist, a grants director, and a head of a new small and minority business initiative.

This amendment also reduced the line items for fire and police departments salaries, based on the fact that new classes of recruits are being seated later than expected. 

All together, the amendment would save $740,668

• The same alders then proposed an amendment reducing workers compensation by $250,000 and eliminating a $1.5 million increase to education funding. On the revenue side, the amendment added $2 million for building permits, based on the fact that Yale will begin building new residential colleges this year; $50,000 in fines to be collected by the Livable City Initiative; and over $2 million more coming from the state for payment in lieu of taxes (PILOT).

All together, this amendment would free up $4,128,899 to go toward tax reduction.

• Alders made a number of technical changes to the proposed budget. These largely included changes to the salaries for positions that were not yet filled when the mayor drafted her budget. Those changes increased the budget by $64,172.

• Alders voted to create a “master lease” program that would allow the city to rent — instead of buying — some of the new equipment included in the city’s capital budget. The amendment means the budget would include $500,000 set aside to pay for leasing new public works, parks, traffic and parking, and fire equipment. The change means the city would borrow $2.8 million less than initially proposed.

• Alders voted to take $1 million of the proposed new bonding in the mayor’s budget and put it toward needed repairs to city youth centers.

• The committee also agreed to borrow $2 million to start to pay down debts of some $8 million for lawsuits lost by the city.

• In a first for the city, alders voted to approve a line of credit for cash flow purposes. Because the city’s fund balance is so low, Perez explained, “the city is having serious cash flow issues.”

The city receives money from the state and PILOT from Yale, but those and other revenues don’t come in one lump sum at the beginning of the year. Meanwhile, city expenses have to be paid every week.

Perez said he thinks the Board of Alders should impose some restrictions on the short-term borrowing program. For instance, if the state borrows to pay bills, expecting PILOT from the state, when the PILOT comes it should be used only to pay back the borrowed money.

Perez said those restrictions can be added at the full board meeting, through a policy amendment.

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posted by: IloveMYcity203 on May 15, 2014  9:57am

I would like to see the tax hike completely go, but I’ll take 1.8 over a 3.8 tax hike any day. I give the BOA credit for at least trying to save the taxpayers (including myself) of New Haven.

posted by: Pantagruel on May 15, 2014  10:36am

Channeling my paranoid Machiavellian side, maybe the plan was to open with a high increase so we’d all be relieved and thankful when they cut it back.

posted by: mohovs on May 15, 2014  10:48am

Lets look at this for what it is. Our taxes are going up another 1.8% nothing to be happy about. 

Seriously people how hard is it to cut 1.8% in spending???????

posted by: Noteworthy on May 15, 2014  11:18am

Tax Hike Blues Notes:

1. There should be no tax hike. None.

2. Rising employee related costs should be funded through spending cuts so it balances.

3. There should be an immediate investigation in the BOE budget and its accounting. The rampant dishonesty surrounding how those funds are spent, from what account and how much taxpayers are really paying to educate our kids is offensive to the max. We are not flat funding education by the way. The cash portion is flat funded but because the budgets are commingled, and those other costs are rising, the education budget has actually been increased.

4. The city has cash flow problems and needs to have a line of credit to pay its bills? That should tell these alders all they need to know about a budget that exceed half a billion dollars. “Should” is the operative word.

5. Just because the tax hike could have been worse is no reason to celebrate. That’s like celebrating a “D” on a report card when it could have been an “F.”

posted by: dwightst on May 15, 2014  11:33am

Aren’t the grant positions designed to increase the funding the city receives? Did they decide that those positions were unlikely to be cost effective or did they just cut what was politically feasible to cut? I don’t know much about it, but those positions sound like a good idea, and I was sad to see them cut.

posted by: jim1 on May 15, 2014  11:33am

GOOD.  Yes cut the rate back to 0 that would be nice.  Good to see the BOA will not kiss a—.  Thank you…........

posted by: Dwightstreeter on May 15, 2014  12:05pm

This is not a victory.
The same taxation system is in place and doesn’t work.
The B. of A. just kicked the can down the road again.

Stratton will just have to keep raising hell.

posted by: IloveMYcity203 on May 15, 2014  1:29pm

Everyone made some valid points!

@mohovs,
I agree with you. Although any cut to the 3.8 is good, I do believe 1.8 cuts shouldn’t be that difficult to get rid of. New Haven is watching that’s for sure. This tax hike could be a huge factor in whether or not people run for Mayor next yr. Come on Harp and BOA… get this one right. No tax hike! It’s rough out there!

posted by: Noteworthy on May 15, 2014  1:31pm

Let’s be clear notes:

1. Parking fines and other fees went up.

2. The city is authorized to have a line of credit to $50 million - with no strings attached, no BOR approval. This is because it is having cash flow problems. This is the experience Harp brings from her time under the dome. It has never been done before in New Haven. Extraordinary.

3. The long term debt of the city was raised again by $42 million - almost three times what previous bond counsels said was wise. This will push debt about $800 million not counting the line of credit.

4. The salary decreases were not really decreases because when Harp took office, she unilaterally raised all those salaries. So the decrease is from the increase she instituted.

5. The only reason for the tax decrease is because “the state’s money” was substituted for our money. Not because they achieved any significant decrease in spending.

6. Borrowing money to pay off lawsuits because your settlement fund is in the hole is poor budgeting and management. What is being done to manage risk? Anything? Corp Counsel was supposed to design a program years ago. Where is it?

posted by: formerNHIT on May 15, 2014  2:10pm

The BoE part of the budget needs more transparency.

They should eliminate the insane salary for the NHPS Finance Director, a new position, its $151k.  I question this position.  They already have a budget guy, the COO.

The City Controller doesn’t even make that much.  If anything give the controller more power and over-site on the BoE budget and increase his pay.

We need less government not more…

posted by: Brutus2011 on May 15, 2014  3:12pm

I believe NHPS is essentially a shadow municipal government here in New Haven.

Look at the burgeoning budget of our public school district.

I believe this is a major reason why the private equity folks want into education via charter schools, testing and computer contracts, and consultancy firms. They see the bonanza already being reaped by public school administrative bureaucrats. And, with little to no resistance from the electorate.

It is not the teachers or the para or custodians who are cashing in—it is the managers and administrators.

Someone said it here—this is insane.

Only we citizens can stop this madness.

Otherwise taxes will continue to rise while the foxes guarding the hen house will tell us that we are holding a budget guillotine over our kid’s head.

Oh, and while they reap $10K bonuses for giving a timely notice to retire…

Maybe we are that dumb….....

posted by: Webblog1 on May 15, 2014  3:53pm

There is no redeeming feature in this budget deal that makes me happy. It represents another in a long history of mill rate and/or assessment increases for taxpayers to reguisitate. In fact this is replay of last year’s tax increase…

See that here:

http://www.newhavenindependent.org/index.php/archives/entry/taxes_reduced_a_little/

...where the board took credit for reducing an increase, but wound up giving back the savings mid year due to their foolish approvals of department overspending, leading to this back- room deal to increase spending over 6.5M and call it a decrease.

What is horrific about this increase is that 70% of the reduced 6.5M; (was 13.5M) spending is due to personnel cost. The city was obligated to pay union negotiated contracts close to 2.4M, but in the process the mayor decided the time was ripe to increase her salary from 123K to 131K and give her executive staff and management a hefty increase as well. Why not, we can always blame the unions.

Another point to consider is that the CT. state legislature increased New Haven’s grants by over 9M, 4M to the BOE alone, which allowed the 1.5M to be cut for city taxes for education. Voodoo math, it take it from the right taxpayer pocket and slip it into the left pocket and calls that a tax reduction. Now where’re all suppose to be happy until next year when we do it all over again.

Hell no, I’m not taking any more.

posted by: robn on May 15, 2014  4:40pm

New Haven has one of the highest rations of employees per capita in the country. I’ve been wondering where is that excess baggage?  Given the budget shenanigans Alderperson Stratton recently revealed, he should take a harder look at the employee ratios in our school system.

posted by: Public-Inefficiencies on May 15, 2014  9:06pm

Robn,

Not only do we have one of the highest ratio, the city management can’t even get the job during normal business hours.  Did anyone else see the public works department posting street sweeping signs on Sunday, Mother’s Day, for Tuesday’s street sweeping?  I’m presuming we paid overtime for those hours….

posted by: accountability on May 15, 2014  10:52pm

If you want city services you have to pay for them.

there are critical departments that are desperately underfunded—parks and rec, the library, which has lots of beautiful buildings open 28 hours a week.

Mike Stratton has uncovered no “shenanigans” at all. He’s raised a phony legal issue regarding city payment of health insurance costs, then just waives his hand and says “I bet they could find $40 million in there.”

Wow. incisive analysis. Have Stratton and his stragglers considered that if the BoE were to manage its own health care plans, it would have to, um, well, hire people to do it? That is, hire people to do something that other people in the city are already doing?

What sharp-eyed budget hawk. If there really is anything illegal, why doesn’t Stratton sue the city? He’s certainly not shy about litigation.

I’ll tell you why. It’s made up. Phony. A non-issue. Worse, it’s mindless demagoguery designed to convince his (East Rock) constituents that there is no pain in reducing property taxes, that city government can easily be slashed. The reality is that staffing in most departments has been cut deeply into the bone.

I’m sick of the demagoguery on budget and taxes.

Half our grand list is exempt. We get pennies on the dollar from the big non-profits in town and the state PILOT. That’s the issue. the BoA did a good job in back and forth with the new Mayor. But really, let’s stop the hype about the BoE. $40 million bucks! Illegal!! Easy cuts! I’d wade my macho self into headquarters with a machete!!!

Grow up.

posted by: Noteworthy on May 16, 2014  12:42pm

Pot Calling the Kettle Black Notes:

1. Accountability doesn’t like demagoguery, and then becomes one.

2. It is not a matter of wanting city services - we do and we pay dearly for them. But city services do not need to cost as much as they do, nor be performed by the number of employees we have. The management structure (director, assistant director) is outdated and creates more management, especially for relatively small departments. So much of the “services” cost are eaten up before the “service” ever reaches the street.

3. There are very few departments that are underfunded - parks and rec is; public works and libraries are. That’s it.

4. You’re wrong about “shenanigans.” Stratton successfully got the city to admit it overfunds the MBR at the NHPS by at least $100 million. The city has never admitted that before and that’s because there has been a pattern and practice of rampant dishonesty and lack of accountability for spending at the NHPS and City Hall. Does it rise to illegality? I’m not a lawyer. But it does rise to the level of lies and deceit and I’m still waiting on an answer as to why that was done - and how in the world the current mayor, claiming budget expertise, could possibly say the NHPS budget has been decimated by “flat funding.” The NHPS have NEVER, EVER been flat funded.

5. As for staffing being cut to the bone “in most departments.” It seems clear you need to study your city budget some more - city staff remains at or very near 5,000 as it has for years. This is a ratio of 1:26 - one employee for every 26 residents.

6. Nobody said cuts were painless. The pain would be felt by employees, not residents.

7. It is a extremely specious argument that our financial woes are tax exempt property. It’s as wrong as the bogus flat funding.

8. BOR did a good job? Pensions are underfunded and the return is overstated; $50 million credit line needed and massive new debt and millions in new spending. Grade: D-

9. Grow-up indeed.

posted by: Webblog1 on May 16, 2014  2:08pm

posted by: accountability on May 15, 2014 10:52pm

“If you want city services you have to pay for them”.“there are critical departments that are desperately underfunded—parks and rec, the library, which has lots of beautiful buildings open 28 hours a week”.

Nonsense…..

I think Noteworthy more than adequately addressed your incoherent and conflicting rant concerning this matter, However,I am compelled to get a piece of this.

The juxtaposition to your unsubstantiated argument is that for the previous twenty years taxpayers have been paying increasing property assessments leading to increasing mill rates and taxes. Even renters conclude that the return of services for taxes from both city and state is dismal, if not appalling.

You cite parks and libraries to support your argument that Parks and libraries need more funding. For your information; the total 2015 funding for the library budget $4,420,148 and no one ever leaves the building to perform a service.
Total funding for the Parks & recreation department is $6,571,058; this department over the years has laid off city resident employees, who work on grounds and park care, tree trimmers, and utility workers, in favor of contracting out these services, while paying more money for the same service. This is a clear example of paying more and receiving less.

Secondly, you said, “the BOA did a good job in back and forth with the new Mayor”.
Firstly, there was no back and forth, this was strictly between the Mayor and Perez. That’s a sad commentary when two people decide the fate of 130K citizens.

If you think that a $740,668 reduction to an 11.5M increase to city side departments is a good job, you are NOT a “sharp-eyed budget hawk” as you denigrated Stratton.

If you believe the alders $1.5M city tax reduction to the BOE’s $396M budget, and then the same alders accept a additional $4.5M from state taxpayers, is a good job, you’re like celebrating a “D” on a report card, inst

posted by: Don in New Haven on May 16, 2014  6:30pm

As I said a week or so ago, my $10,000 property taxes are 30% of my gross income and I can only endure until the summer of 2018. Beyond that time, I must move to some other State.

The renewed Q-House and new basketball courts may make fine talk but taxes are forcing non-welfare people out of CT faster than anyone can imagine.

In my case, I must reduce my selling price to accommodate the high taxes when I place my house on the market. For example, if I set a very reasonable price of $350,000 and the buyer paid $50,000 down to obtain a 30-year 4% loan, the total to pay over the life of the loan is almost one million dollars…with no increase in tax. This example simply could not work in the real world. The price must come down to take care of the tax.

Accordingly, it looks like I must sell my house for $175,000, the amount owing on my mortgage, and less than the almost $200K I paid to buy the house in 1998.

Perhaps I could donate the house to the NRA if they would agree to payoff my mortgage? I’m sure our Gov and his friends could accept this idea then encourage others to follow my example.

posted by: Brian L. Jenkins on May 19, 2014  4:29pm

I’m proud of the members that stood up to cut this monumental budget.

In my view, the board should erase the entire proposed tax increase of 3.8.

The idea of creating jobs and increasing taxes is unheard of.

This would be a tremendous selling point for all members of the board should they vie to be re-elected.

Don’t be afraid, cut some more. And after that, cut some more.

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