Harp: Tax Hike May Be Coming

Melissa Bailey Photo

New Haven Mayor Toni Harp issued an advance warning to city taxpayers Friday: the mill rate may soon go up.

Harp (pictured) issued the warning at a City Hall press conference.

At the time, she was answering questions about the subject of the press conference, the release of a final 105-page report from her mayoral transition team chock-full of recommendations for her first term in office. (Click here to read the report.)

She was asked about one of the team’s recommendations: “[D]etermine the benefits of” selling city tax liens to generate new money for the cash-strapped city. The city currently has a $4.7 million deficit in its rainy day fund, a precarious position as it seeks to stave off further downgrades in its bond rating. The city is owed $11.2 million in past-due real estate taxes dating back to 1998.

Harp responded she is disinclined to sell tax liens to plug budget holes.

Before selling tax liens, I would look at raising taxes,” she said. I know that is something people don’t want to do. I don’t want to do it.”

But the city’s in a fiscal hole, she said. Plus, as the transition report details, government’s information technology systems are woefully outdated. Harp also spoke about how recent storms revealed the costs of having such outdated public-works equipment: We’ve got equipment that has a life span of eight years that is 12 years old” and is out on the streets, expected to function.

Does that mean she plans to recommend a tax hike in the proposed new city budget due March 1?

I’m not going to say now,” Harp responded. But you might be hearing soon” about a tax hike. She then spoke of how mill rates are higher in comparable cities.

New Haven’s mill rate is 40.80. (That’s $40.80 per $1,000 of assessed property value.) New Haven’s rate is lower than Bridgeport’s (41.86), Hartford’s (74.29), and Waterbury’s (56.98), but higher than in surrounding suburbs, such as West Haven (31.25), East Haven (30.95), Woodbridge (34.14) and North Haven (28.1).

Tax Liens Redux?

New Haven sold tax liens to the Breen corporation in the 1990s. Cities do that to generate quick cash; at a discount, the city sells the right to collect unpaid taxes to a private company that can then seek to recover a larger amount, often by piling up legal fees on debtors and driving them out of their homes.

Indeed, New Haven’s Breen sale generated controversy. Supporters said it enabled New Haven to afford its share of the cost of a citywide school rebuilding program. Critics pointed to the secrecy of the deal, which shielded the details of individual transactions carried out by a newly created trust (it was unclear how much money people were making, at whose expense). Critics also pointed to the unpayable legal fees incurred by seniors struggling to keep their homes while falling fast into debt to Breen’s counsel, the Marcus Law Firm. And critics objected to tying up of properties needed for neighborhood renewal projects.

Harp, a former alder and state senator, alluded to that checkered experience in her remarks Friday. She also said the question of selling tax liens might be moot, anyway: She pointed out that unlike in the 1990s, New Haven now collects most of its taxes. The city’s tax collection rate for the fiscal year ending July 1, 2012 was 97.84, according to the city. So there’s a lot less money for a private company, even the most aggressive, to make off New Haven tax debt that there was two decades ago.

It really is not something I would consider,” Harp finally said in reference to the lien recommendation.

Harp Offers Schools Budget Relief

Harp also offered a hint as to how she might treat the school board when she compiles her budget. The mayor and alders set a baseline budget for the schools. The school board has proposed an $8.8 million, or 4.9 percent increase in its operating budget, including $5.3 million in extra city tax dollars.

They will not get everything they asked for,” Harp said Friday. But we’ll try to give them something to work with.”

She said that since the Board of Ed faces unavoidable increases in fixed costs, she won’t make them go through another year without a budget increase of some kind.

The First 5

Asked to identify five actions she will take resulting from the transition report, Harp mentioned the following:

• Create a new Community Outreach Center at the Bethel AME Church at 255 Goffe St., offering activities for kids.

• Identify four neighborhood arteries to work with the Connecticut Main Street Center to build capacity” on those streets.

• Create a new Minority and Small Business Initiative.”

• Create a central grant-making office in City Hall. (Harp has asked for alders’ permission to create these new positions; they have held up the request pending more information.)

• Through new traffic czar Doug Hausladen, create more low-cost and no-cost traffic calming on city streets.

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