Hamden Council Starts Budget Cuts

In the first two of many deliberations on the 2020 – 2021 fiscal year budget to come, the Hamden Legislative Council set a course that may allow the town to weather the significant fiscal challenges of the next year: deep cuts that may leave departments short-staffed and employees laid off.

Last year, the town mostly avoided the painful slashing that some residents and members of the council called for. In the process of amending the mayor’s proposed budget, it mostly adjusted revenue lines and lowered expense lines where it could, eliminating any raises that were not required by union contracts. But it did not eliminate positions, and it did not gouge into the services the town provides.

If the first two deliberation sessions are any indication, this year will be very different. Residents who have called for deep cuts may get what they want. But it may come at a significant cost.

Nothing the council does in its budget deliberations is final until it passes its full budget, but unless the council reverses the votes of its first two meetings, deep cuts are on the way.

Just in the budgets of three very small departments, the council has cut three positions, one of which would require laying someone off. It has slashed expense accounts to levels that made department heads squirm. It has eliminated department head raises. It has also asked every department head to show what a 10, 15, and 25 percent cut to their department would look like. Whether that last request is just an exercise or a roadmap for the next few weeks remains to be seen.

Council President Mick McGarry set the tone when he opened the first deliberation session on Wednesday.

“We are starting possibly the toughest budget season Hamden has had to face in a generation,” he said. ​“In this new reality, we need to change our expectations in terms of the scope of services we are able to provide.”

Hamden was in deep financial trouble before the Covid-19 pandemic hit. It has $300 million of unfunded pension liabilities after decades of mayors and councils underfunded the town’s pension. In the last few years, that historical underfunding, along with other large long-term liabilities, have caught up to the town. The mill rate has soared to one of the highest in the state. In December, Moody’s downgraded the town’s bond rating to one step above junk status, making it the state’s third-lowest-rated municipality.

In his budget address at the beginning of April, Mayor Curt Leng said he had wanted to start getting a handle on the town’s long-term liabilities, which would have involved raising taxes. But then the pandemic hit, throwing countless Hamden residents out of jobs. Raising taxes too much would not be fair, he said, and he limited the tax increase in his budget to one mill.

The budget Leng proposed did not reflect an economic downturn that may rival the Great Depression. He had been crafting it all winter, before anyone knew the coronavirus would hit Connecticut. By the time the lockdown began, it was just a few days before he was originally supposed to present it. The budget process was pushed back, but by the time he presented it to the council, there was still significant uncertainty on how the pandemic would affect town and state finances.

This week, Leng sent the council recommended changes to his proposed budget, first on the expense side and then on the revenue side. His recommendation would cut about $3.5 million, including $1 million from the Board of Education. He also recommended cutting $600,000 from the medical insurance line, and included a recommendation to reflect $500,000 in savings from union concessions in the budget.

On Thursday, he also sent revisions to his revenue lines. In total, he recommended raising anticipated revenues by just under $1 million.

Leng has been criticized in the past for submitting unrealistically high revenue projections. His recommendation was to lower many of the revenues in his proposed budget, but increase three large figures. He recommended adding an additional $1.9 million to a Covid-19 aid line that anticipates state aid, bringing the total to $5.1 million. That line has come under fire, both from residents and from state legislators, who said they don’t think it’s realistic, and that state aid for Covid-19 related expenses can’t be counted as revenues in the operating budget. Leng did not respond to a request for comment on why he is recommending increasing that line.

He also recommended adding $150,000 in revenue from the sale of blighted properties, and $200,000 to a line that counts capital funds as revenue for the town.

Leng’s adjustments this week were simply recommendations. Officially, the council still has before it the budget the mayor originally proposed, and it must vote to accept any additional recommendations he submitted since the budget passed into the council’s hands in April.

Leng’s proposed revenue adjustments on Thursday came attached to a letter recommending that the council ignore a proposed department restructuring plan he had originally proposed. The council voted Saturday to do away with the reorganization, as per the mayor’s request, reverting to the town’s current structure of departments.

Positions Cut, Accounts Slashed, Raises Eliminated

The Finance Department was the first to sit on the chopping block. The council did not spare it.

Council members quickly honed in on two vacant clerk positions: an account clerk and a payroll clerk.

Neither position is new, said Finance Director Curtis Eatman, and even with them, the department is already short-staffed. ​“If you cut those out, we’re not going to have the amount of folks we’re going to need,” he said.

Deputy Finance Director Rick Galarza said those clerks are responsible for an enormous amount of data entry and for making payments.

But looming over the council was the reality that without significant cuts, the town would either have to raise taxes on residents who have lost their livelihoods, or it would risk going into the red.

“These are things I never dreamed of doing,” said Majority Leader Berita Rowe-Lewis. But, ​“we are no longer living in the time of plenty.”

The council voted to cut funding for the two clerk positions.

The tax office came next.

First, the council lowered projected revenue lines to what Tax Collector Kathleen Flynn anticipated they will be. For instance, Flynn had projected that back taxes would total $1.9 million, but the mayor had submitted a projection of $2.9 million.

Next came the department’s positions. The department has a part-time cashier position, which is currently filled.

The council eliminated that position as well.

Saturday morning, the council took up the engineering department’s budget.

Town Engineer Mark Austin gave a detailed report on each line in his budget, and what cuts would do. With a 5 percent cut, he could just squeak by, he said. At 10 and 15 percent, some tests and other services might be impossible, putting the town in violation of state regulations. Any higher, and that would mean laying off employees whose union contracts include no-layoff clauses.

The council voted to slash a professional and technical services line that serves as a catchall for expenses related to permits, testing, consultants, and other costs. Austin pleaded with council member to cut the line no lower than $45,000, down from $70,000. He said he was anticipating some state-required tests that he has not had to do in the past. The council cut the line to $30,000. It lowered another small expense line, and then turned to the positions.

Aside from Austin himself, every other employee in the department is protected by a union contract, and the council cannot change salaries without negotiating with the union.

The mayor’s budget included a $20,000 raise for Austin, from $105,000 to $125,000. Most of that was to reflect the fact that he would be overseeing a much larger department under the reorganization.

Without the department reshuffling, Austin might have seen a $7,000 raise. But council members made it clear that they would not be handing out any raises, even to department heads as competent as Austin. They eliminated his raise.

The council will meet again on Tuesday to continue its deliberations. Nothing is final until the council passes its full budget, which it must do by June 5.