The city is still wrestling with a projected $14.4 million deficit for the fiscal year that ends June 30, according to a recent financial update from the city’s budget director. The projected deficit is evenly split between the city budget and the Board of Education budget.
On Monday night Acting Budget Director Michael Gormany and City Controller Daryl Jones revealed that figure when they presented their latest monthly financial summary report to the Board of Alders Finance Committee during a meeting in the aldermanic chambers on the second floor of City Hall.
The report covered the current finances for the city and the Board of Education as well as financial projections through the end of the fiscal year in June.
Gormany told the alders that the city’s overall projected deficit by the end of the year shrank from $16.3 million in December 2017 to $14.4 million in January 2018.
He credited the change to better-than-expected increases in real estate conveyance tax collections, a year-over-year increase in building permit revenues, and a decline in police overtime in comparison to what the city had projected.
According to Gormany’s summary, the city is projected to collect $1.4 million over budget in tax revenue by the end of the fiscal year. The summary also states that building permit revenues are expected to be $1.2 million, or 32 percent, higher than last year.
Police overtime came in at under $100,000 per week for the first three weeks of March. Even though the overtime budget is still projected to be $2.5 million above what was initially budgeted, Gormany said, the recent decreases allow the city to revise down the latest projections for end-of-year overtime costs by $1 million in comparison to what the city projected back in December.
Gormany said that the Board of Ed’s projected deficit decreased by $2 million, from around $9 million to $7 million, from December to January.
“We did realize some more vacancy saving for open positions as we do not fill them this fiscal year,” he told the alders. “We’re only filling the critical need positions to reserve the saving from the vacant salaries for the fiscal year.”
Gormany and Jones also drew the alders’ attention to two substantive cuts in municipal aid from the state.
Gormany said that the city’s general fund had to cover $400,000 that the state usually sends to pay for the Youth Services department’s Youth At Work program.
The city went ahead with the popular summer employment program for local teens last summer even though the state had not yet passed a budget. When the state finally did pass a budget in October, the document did not include funding for Youth At Work, which the state has funded for over a decade. The city had to backfill the costs of last year’s program with money from the general fund.
Youth Services Director Jason Bartlett told the Independent that the program, which employs around 600 local teens over the course of the summer, is critical in connecting cash-strapped nonprofits with local teens who can help the organizations run summer camps while also getting their first taste of paid work outside of school.
Bartlett and mayoral spokesperson Laurence Grotheer said that they hope the state legislature puts funding for Youth At Work back into the next state budget, but that Mayor Harp’s administration is committed to continuing with the program in either case.
Controller Daryl Jones also said that two weeks ago the state cut $750,000 in municipal aid that New Haven expected to receive this year as its share of funds from an East Windsor casino project that has been indefinitely delayed.
Gormany’s report reduces the projected state Education Cost Sharing funding for the current year down down by $250,000. The report states that the state budget passed in October returned the administration of the Renters’ Rebate Program to the state Office of Policy and Management (OPM), but requires municipalities to cover the cost of 50 percent of the cost of the claims in their towns, up to a cap of $250,000 per town.
“It looks to me like the $14.4 million question is: What’s the path towards ending the fiscal year balanced?” asked Westville Alder Adam Marchand.
Gormany and Jones promised to present a more detailed plan to the alders at an upcoming Finance Committee meeting on how the city plans on reducing the projected $14.4 million hole.
“We have the expenditure controls for all the departments,” Gormany said, referring to strict rules in place about not filling vacant positions unless those positions are absolutely critical to the functioning of city government. “But we’d be happy to submit a plan on how we’re going to close that deficit before the end of the fiscal year.”
“From a budgetary standpoint,” Jones said, “the most important thing that we try to achieve is the balancing of the general fund.” He said that rating agencies tend to penalize cities for not balancing their budgets, and that an unbalanced budget could make borrowing money more expensive going forward.