Why does the budget assume an extra $2 million from the state? Why isn’t the Livable City Initiative expected to collect a single penny in fines? And what’s this about short-term borrowing for cash-flow purposes?
Those questions emerged Wednesday evening in City Hall’s Aldermanic Chamber, where the Board of Alders’ Finance Committee met to discuss the mayor’s proposed $511 million city budget for the fiscal year starting July 1.
It was the first chance for lawmakers to grill the administration on the budget as they try to whittle away at the proposal to lessen or eliminate a 3.8 percent tax hike by the time of a final vote at the end of May.
Wednesday’s meeting was not a public hearing, but a briefing by budget chief Joe Clerkin and city Controller Daryl Jones. During questioning they took down a laundry list of questions and requests for more information from alders.
Clerkin and Jones promised to supply all the information alders asked for, include about the following newly raised mysteries:
1. The $2 Million Assumption
On the revenue side, the budget includes an expected $2 million from the state, above a $3 million increase already included in the governor’s proposed budget.
Clerkin (pictured) said the extra $2 million is expected to come through action by the state legislature.
East Shore Alder Al Paolillo seized on that assumption as a possible danger: “If we don’t get that $2 million, you’re not on balance anymore. We are creating holes from the get-go.” Paolillo asked Clerkin to come back with an explanation for the assumption, a justification of why it’s a reasonable expectation.
2. Giving Up On LCI?
East Rock Alder Jessica Holmes jumped on another line of the revenue budget: “LCI (Livable City Initiative) Ticket Collections.” In the current fiscal year’s budget, that line reads, “$50,000.” In next year’s proposed: “ - “.
“Is the mayor giving up in the idea that LCI issue any tickets?” Holmes asked.
LCI enforces city housing and property standards. It can issue fines if landlords violate the city’s anti-blight laws. Historically, however, the agency has had a hard time collecting on those fines due to a lack of manpower.
Clerkin promised to get back to Holmes with more information. He said it may be that LCI ticket collection has been folded into another line item. If that’s the case, he said, he can separate it out for alders.
3. Short-Term Borrowing?
Included in the proposed budget is an appropriating ordinance that would allow for “short term borrowing for cash flow purposes if needed.”
Asked about this after the meeting, Controller Jones said that the measure is designed to even out the city’s cash flow. State aid comes at certain times of the year, and city bills can come at other times, he said. In order to ensure that the bills get paid on time, the city may want to borrow some quick cash.
“Lots of places do it,” Jones said. The city itself already does it in the capital budget. “We want to do it for the general fund, to keep cash flow even.”
Jones said cash-flow borrowing could lead to very short-term debts of maybe a month. Such brief obligations would mean negligible extra costs for interest payments, he said.
4. Leasing Trucks?
“Have we looked into leasing public works trucks?” asked Board of Alders President Jorge Perez of the Hill. The city has an aging and deteriorated fleet of trucks on the roads.
Controlled Jones said he’s looking into it. Leasing can be a good option because it “takes pressure off” the capital budget and you “have brand new stuff every three or four years.”
“I think it’s a great idea,” Jones said.
Perez also asked the administration to look into the possibility of including private maintenance as part of a lease deal. He stressed that he was not advocating for that option, only requesting information.
5. $100 Million Extra?
Prospect Hill/Newhallville Alder Mike Stratton (pictured) grilled Clerkin on details of the city’s education spending, drawing support from his colleagues for his general spirit of inquiry, but censure for what they called his “sensationalizing” methods.
Stratton, a trial lawyer, cross-examined Clerkin about the “minimum budget requirement” (MBR), the amount that the city has to spend on schools in order to secure state education funding. Stratton said the city has been spending, by his calculations, $100 million that hasn’t been counted toward the MBR. That’s extra money the city doesn’t need to be spending, he said. Stratton said the education budget could be cut by at least $35 million; he didn’t specify how.
The $100 million takes the form of health care and pension expenses for Board of Ed staff and faculty, as well as debt service the city pays for school construction bonding, Stratton said. Those expenses are folded into totals listed on page 2-47 of the proposed city budget, under the heading “CITY TOTAL (Non-Education),” Stratton pointed out.
“Just for the record,” Perez said, “we do note how much” medical, pension and debt service goes to the Board of Ed. It’s listed in the Board of Ed’s budget, on page 19 of the current fiscal year’s spending plan.
Stratton said that, by his calculations, if you add in the extra $100 million, the city is paying $29,000 per student. Those kids could all be sent to private school for that much money, he said. “And get a BMW when they turn 16.”
New Haven pays far more on education than comparable towns, and is paying far more than the required MBR, Stratton said.
“We can’t actually take what you’re saying for granted,” Holmes said; “$29,000 per pupil is basically an imaginary number.” The city should look at how it’s allocating it’s MBR, she said. But throwing around numbers and “sensationalizing” the issue isn’t helpful, she said.
“It’s not sensationalized,” Stratton said.
“The BMW is not sensationalized?” Holmes said.
“If my numbers are wrong, then I have sensationalized,” Stratton said.
“As an accountant, the idea of somehow having $100 million disappear somewhere doesn’t jibe,” Clerkin said.
“I hope I’m crazy,” Stratton said.
Clerkin said it’s worth looking at Stratton’s basic MBR question but “there’s no $100 million floating in the system. That’s not the reality of it.”
“We can’t take $100 million out of the budget in one year and not cause a huge problem,” Stratton said. “We could take $35 million out.”
Stratton was asked by email Thursday if he had a breakdown of those $35 million in cuts. He responded that the Board of Ed’s budget “is not transparent so being exact is not easy. But looking at the site based budget, and Meadow Street central offices, there appears to be enormous amounts spent on administration rather than direct student services. The amount spent on admin appears to be well in excess of the norm for well rub public systems and charter school systems. ... My recommendation will be that we cut the cost of administration down to no more than 15 percent of the total operating budget for education. This should save at least $35m without impacting direct services. The trick is ensuring they do not decide instead to cut paraprofessionals and programming. The way we do this is indicate that the city will cut 35m if the cuts are targeted to admin as set out by the alders. If the [Board of Ed] refuses to agree to these cuts, we then do a much larger cut of 50m.”
6. Ready For “Pay-As-You-Go”?
Alder Paolillo asked about the city’s plan to start a “pay-as-you-go” fund for purchases that would otherwise be bonded out. The proposed budget includes $500,000 toward that fund.
Controller Jones said it’s part of an effort to rein in debt service expenses and to address the city’s lowered bond rating, which has a taken a hit as rating agencies look at the city’s debt obligations and its lack of cash on hand.
“I’ve reviewed their comments,” Jones said of the rating agencies. The pay-as-you-go plan is meant to improve the rating, he said.
“Folks that generally implement pay-as-you-go tend to have a strong balance sheet,” said Paolillo. The city does not have such a strong balance sheet, he noted. He asked Jones and Clerkin to come back with a strong justification for the proposed plan.
7. More Mayor Money?
After railing against what he called bloated education spending, Stratton ended the evening on a contrasting note.
“The mayor’s salary is way too low,” he said. The mayor makes $131,000 per year. “That doesn’t seem appropriate.”
Stratton has come out in strong opposition to the mayor’s proposed $435,064 — or 48 percent — increase in her office’s budget, to create a new grant-writing operation.
Stratton said CEOs of major companies in town make far more than $131,000 per year: “It should be $350,000, $400,000.”
“You’d get more people running for mayor,” cracked Perez, who himself weighed a run in 2013. “Now you’re talking!”
“We had a perfectly good pool last year,” Stratton said.
At any rate, the mayor’s salary can’t be changed until the end of a term; a salary change can’t be approved by a sitting mayor. “We can’t touch that for another year and a half,” Perez said.