Thomas Breen photo
Budget Director Gormany, Mayor Elicker at Tuesday reveal.
Elicker's FY23 general fund budget revenue.
Libraries open on Sundays.
New neighborhood specialists, police supervisors, school nurses, and city tech staffers.
Higher “fixed-cost” payments around pensions, debt service, and utilities.
And a shaved mill rate — along with a tax-bill bump for most New Haven property owners.
Those are highlights of a $633.1 million general fund budget for Fiscal Year 2022 – 2023 (FY23) proposed Tuesday by Mayor Justin Elicker.
The second-term mayor unveiled the proposed budget during a second-floor City Hall presser.
Click here to read the mayor’s FY23 proposed budget in full. The mill rate would dip from 43.88 to 42.75 as the city phases in an overall 32.5 percent increase in property valuations over five years.
How might this affect taxes?
It really depends on how much each property increased in value during this year’s citywide revaluation.
For example, a two-family house in Fair Haven that saw a 68 percent increase in value from $103,600 to $174,300 would see its annual taxes increase from $4,546 to $5,033.
And a single-family house in East Rock that saw its value increase by 29 percent from $570,100 to $738,900 would see taxes go up from $17,511 to $18,071.
Elicker introduced the proposed new local budget — which is 4.42 percent larger than the current fiscal year’s $606 million general fund budget — at a time that New Haven has seen a flood of new money from the state, the federal government, and Yale.
That includes a proposed $10 million annual increase from Yale, a $49 million annual increase in municipal aid from the state, and a one-time $100 million-plus Covid-era bump from the feds.
During Tuesday’s presser, Elicker said all that new cash heading into city coffers has helped stabilize the local finances, dodge a potential large tax increase last year, and mitigate the fiscal impacts of the ongoing pandemic.
“We still face a lot of economic challenges,” he said. Those include increased “fixed costs” around such expenditures as debt service, pensions, employee salaries, healthcare, and utilities.
He also pitched adding 25 new general fund jobs to City Hall to help reverse a decades-long stretch of shrinking local government.
The mayor spoke in detail about how the city’s taxable grand list is on the brink of shooting up by 32.5 percent thanks to the city’s recent state-mandated, once-every-five-years full revaluation.
Taken together, Elicker said, he plans to reduce the mill rate by a small amount — and then phase in the proposed new 2021 revaluation property values over the next five years. (The mill rate equals $1 in taxes owed for every $1,000 in assessed property value.)
That should allow city property owners time to adjust to their new higher property values, and the resulting higher taxes.
Most New Haven property owners will nevertheless pay more in taxes next fiscal year. But the parts of town that saw the highest revaluation-induced increases in property values — such as Fair Haven and the Hill — will see less of a hike than they otherwise might have if the city had adopted the full revaluation right away.
“This is a balancing act to make sure that we are not having a significantly negative impact on people’s ability to adjust to new taxes while at the same time funding our city services,” Elicker said Tuesday.
“Every year moving forward for the next five years people’s property values will increase. And we will assess in that year if we need to yet again slightly lower the mill rate” so people don’t experience significant jumps in actual taxes owed.
The proposed budget now heads to the Board of Alders for roughly three months of public hearings, deliberations, and debate before local legislators make their amendments and vote on a final document in late May or early June. The final budget would go into effect starting July 1.
Because the city is on a two-year capital budget cycle, the mayor’s proposals on Tuesday did not include any changes or additions to the capital budget approved last year.
Elicker's Budget, By The #s
Elicker’s proposed general fund budget is $633,168,579 in total.
That’s $26.8 million more than the $606.3 million general fund budget the alders OK’d for the current fiscal year.
Some of the key drivers of that general fund hike include a $5 million increase to the Board of Education, a $6.5 million bump to the city’s health insurance payments, a $1.5 million increase to police overtime, a $2.2 million increase in debt service, over $1 million in higher pension payments, and funding for roughly two-dozen new general fund jobs.
Those new general-fund positions include a new police lieutenant and sergeant, two new Livable City Initiative (LCI) neighborhood specialists, a new fire inspector and special mechanic, and a new chief technology officer who will split time between the city and the Board of Education.
Every public school would have a nurse under this budget.
And libraries will stay open on Sundays.
2.58% Mill Rate Drop; 5-Year Reval Phase-In
The new proposed budget relies upon $294,318,017 in local property tax revenue.
That’s $5.5 million more — or 1.94 percent higher — than the $288.7 million in local property tax revenue accounted for in the current fiscal year’s budget.
The mayor’s budget would also dedicate $10 million in federal American Rescue Plan Act (ARPA) aid to bolstering the general fund.
To help make up for the increase in the city’s general fund, even with new cash flowing in to the city from Yale and the state and the federal government, Elicker has proposed reducing the mill rate by 2.58 percent — from 43.88 to 42.75.
Property Tax, Mill Rate Changes Explained
Wait a minute: How can property taxes go up when the mill rate goes down?
This is where one of the more complicated, and consequential, parts of Elicker’s budget proposal comes in.
Taxes would go up even though the mill rate would go down because the city’s taxable grand list is slated to increase thanks to this year’s revaluation. The state mandates that every municipality undertake such a reval at least once every five years to try to bring local properties’ official, taxable values in line with their actual market worth.
According to the reval that wrapped up on Jan. 31, the city’s taxable grand list grew from $6,712,653,144 to $8,898,999,006, or by 32.5 percent.
As part of Elicker’s proposed FY23 budget, the city would phase in the new revaluation numbers over the course of five years.
That means properties will see their official, taxable values increase by 20 percent of their planned reval increase next year, and then by another 20 percent the year after that, and then by another 20 percent after that, until the full reval increases are completely phased in by 2027.
So, for the sake of FY23’s budget, the taxable grand list would equal $7.2 billion — significantly higher than last year’s $6.7 billion, but nowhere near the full reval amount of $8.89 billion.
“In the reality, people, I think, are not particularly interested in what the mill rate is,” Elicker said. “They’re concerned about what they’re paying in taxes. And we want to make sure we’re not putting an undue burden on people.”
See below for more details on key new expenditures included in Elicker’s proposed FY23 budget.
The 5-year phase-in isn’t fair to all property owners, and feels a little regressive. It benefits landlords and owners whose properties have risen the most quickly in value, since they will not have to pay what they should until 5 years from now.
Meanwhile, people with depreciating properties or homes in less trendy neighborhoods, who would have received an immediate tax cut, now have to wait 5 years for their full tax cut to phase in.
That said, smoothing out these sorts of changes rather than having them all hit at once every 5 years might be a good idea for other reasons.