Overtaxing? Honest Projections?

(News analysis) To some, the town budget Hamden Mayor Curt Leng vetoed last week represents an excessive tax increase. To others, it represents a more realistic valuation of what it will cost to run the town in the next fiscal year.

On May 30, Leng announced that he was vetoing the budget the Legislative Council had approved the previous week.

“Overtaxing is not the answer, we can do better,” he wrote in a statement.

The mayor’s proposed $235,998,505 budget for the fiscal year starting July 1 would raise taxes above last year’s 47.96 mill rate by .77 mills to 48.73. The council’s budget, meanwhile, would raise the mill rate to 49.99, 2.03 mills above last year’s rate and 1.26 above the mayor’s.

Leng posted a chart on Facebook (above) that showed that the average tax increase from his budget over this year would be $110, while with the council’s, taxpayers would pay $291 more than this year.

Some council members said they were not happy about the proposed mill increase, but found it necessary to end the fiscal year without a shortfall. They said the mill rate reflects more accurately the cost of running the town.

The council will vote Monday on whether to override Leng’s veto. As the budget passed 7 – 6 and the council needs a two-thirds majority to override a veto, the override is unlikely.

Here is a breakdown of the biggest differences.

Revenues

Changes in the revenue lines constitute by far the biggest differences between the two budgets.

Budgets contain projected expenses and revenues. If the expenses increase, the amount the town gets in revenues must increase as well to cover those expenses or the town will end the year with a deficit. Lowering non-tax revenues means raising tax revenues, unless expenditures can be cut.

The council decreased revenue projections in the budget by $3,537,891. That translates, in terms of taxes, into an increase of one mill.

The mayor’s projections have been the subject of criticism throughout this year’s budget process. Some council members, including At-Large Rep. Lauren Garrett and Majority Leader Cory O’Brien, have called many of the revenue projections ​“inflated.” They said that putting higher non-tax revenues in the budget allows the mayor to keep taxes lower.

The mayor has defended his revenue projections, explaining case by case why he chose them. In some cases, he had received updated numbers from departments when he submitted his budget that gave him confidence in certain revenue lines.

Last Monday, Deputy Finance Director Rick Galarza said that it looks like revenues for the fiscal year may come in $5 – 6 million short, though the numbers are still up in the air.

The largest revenue decrease the council in the proposed budget made was reducing an anticipated gift from Quinnipiac University by $750,000. In his budget, the mayor had anticipated receiving $2.1 million from Quinnipiac (not including tax revenue from taxable university properties). The council decreased that revenue line to last-year’s $1.35 million.

This year, the university has not yet made a voluntary contribution to the town. Last year, Quinnipiac gave the town $346,068, though the budget had anticipated $1.35 million. In the 2014 – 2015 fiscal year, the university gave $750,000.

Back taxes were the second largest revenue decrease. In his budget, the mayor anticipated $2.75 million in back taxes. The council decreased that projection by $550,000 to $2.2 million.

Tax Collector Kathleen Flynn originally submitted a request for $1.7 million in that line, which she said was the average of the previous three years. When she answered questions about her portion of the budget in March, she said that the town would probably collect the full $1.9 million in back taxes that had been anticipated in the budget this year. She said that collecting $2.75 million next year would be ​“challenging.”

In 2018, the town collected $2.1 million in back taxes, in 2017 $1.5 million, and in 2016 $1.3 million.

The next largest revenue decrease was in police department extra duty, which is when contractors pay the police department to have officers on site for construction or events. The mayor submitted a request for $2.5 million in that line, and the council decreased it by $400,000 to $2.1 million. In 2018, the town collected $1.9 million in that line, in 2017 $1.7 million, in 2016 $2.2 million, and in 2015 $2.1 million.

The council decreased Town Clerk’s Office conveyance fees by $350,000 from $1.65 million to $1.3 million. In 2018, the town collected $1.45 million, in 2017 $1.67 million, and in 2016 $920,000.

The council decrease a supplemental motor vehicle tax by $350,000 from $2.35 million to $2 million. The town collected $1.7 million in 2018, $1.7 million in 2017, and $1.64 million in 2016.

$300,000 met the chopping block in Finance Department’s miscellaneous revenues line, $322,116 in building permit revenues, $215,000 in transfer station fees (though the council increased transfer station commercial fees by $250,000), and $200,000 in the sale of blighted properties.

An-out-of-state motor vehicle tax that has been in the works but is not yet up and running also saw a slash of $250,000, from $500,000 to $250,000. Council members said that, though the town might be able to get the program off its feet in the next fiscal year, it would not have any way of enforcing it.

The council increased revenue projections in four places: $250,000 in transfer station fees from commercial sources, $5,000 from the swimming pool in the recreation department, $50,000 in Medicare reimbursement, and $109,780 in state Education Cost Sharing (ECS) funding.

Expenses

On the expense side, the net change was much smaller, though the council made large changes in both directions to various expense lines throughout the budget.

Overall, the council raised expenditures by around $900,000. The difference between the budget totals the council voted on was $867,969. Adding all of the changes together, however, yields a total increase of $925,784. The discrepancy is due to the fact that a few of the changes made at the last minute were not factored into the final budget number. These include a field renovation line in public works, a salary line in the finance department, and the police chief’s salary reduction. The council voted on a budget total of $236,866,474. Adding all of the adjusted expenses, however, yields a total of $236,918,536. Galarza said that had he known, he would have recommending adjusting the emergency and contingency account in the council’s budget so that the budget would still total $236,866,474.

The council made major increases in two places, both of which Galarza told the council at the beginning of budget deliberations were mandatory. First, it raised the CMERS (Connecticut Municipal Employees Retirement System) pension plan by $866,248, to $3,726,248, as the result of an increase in what the state obligates Hamden to pay.

The second major increase was $463,110 to the bond interest line in the debt service portion of the budget. That interest was from bond anticipatory notes (BANs) that had not been included in the budget the mayor submitted to the council.

Together, those two increases added about $1.33 million to the expenses — more than the net increase that the council made to expenses overall.

The mayor’s veto does not extend to debt service. If the council sustains the veto, the budget that goes into effect will include the council’s $463,110 increase. It will not, however, include the CMERS increase.

District‑8 Rep. Jim Pascarella has said that if the council sustains the veto, he, as chair of the Finance Committee, will introduce a budget amendment to eliminate seven proposed vacant and new positions in the police department, as the council did in its deliberations, and use that money for CMERS. That would provide $347,984. The rest of the $866,248 the council would have to come up with elsewhere.

Together, the revenue-line decreases and the CMERS and debt service increases alone account for a greater mill increase than the net 1.26 mill increase overall between the two budgets.

Not including the CMERS and debt service lines, the council decreased expenses overall by about $400,000. It cut many expense accounts, but also added to others.

The largest decrease was in the police salaries, where the council eliminated five proposed and two vacant positions that the mayor had proposed as community police officers. It also eliminated raises to all non-union employees, though there are only two: the chief and one of the deputy chiefs. In total, the police salary line decreased by $347,984.

The council cut police extra duty by $300,000. It also cut two vacant fire fighter positions, both with salaries of $39,428.68, and it eliminated a $100,000 capital investment fund, which was intended to start a fund to pay for capital projects out of town-held money rather than using bonds.

Beyond those, the council only made relatively minor expense cuts. It cut all raises given to department heads (usually around $5000, but sometimes as much as $10,000), it cut $30,000 from a library materials account, and it decreased the police department’s uniform purchase account by $16,500, among other expenditure decreases.

It also made a number of increases, where council members said they feared expenses would end up over budget, resulting in a shortfall at the end of the fiscal year.

Seventeen lines in the fire department got increases, ranging from $66 to $240,370. The latter was for the sub/straight account, which pays fire fighters who substitute for their colleagues and are paid straight time to do so.

It also increased public works tipping fees by $250,000. On Monday, the council transferred $515,500 into that account in the current budget because expenses had run over budget. The market for recycling, explained Public Work Director Craig Cesare, has tanked, costing his department much more than it used to.

The registrars also got $49,520 more than the mayor had given them, spread out among multiple accounts, because, as council members said, this year is an election year.

Police Overtime Oversight

One major sticking point for some council members was the way the council dealt with police overtime and community policing lines, though they did not change the bottom line of the budget, but rather moved funds around.

The mayor originally gave the police department $1 million for overtime. In what some said was an effort to put pressure on the department to find ways of reducing overtime expenses, the council moved $800,000 from that account to its own emergency and contingency line. It did the same with $180,000 of the $200,000 the mayor gave for community policing.

If the council overrides the mayor’s veto, the police chief would have to come to the council every so often to ask for transfers to those accounts in order to carry out operations in the department. Though the council has held some police overtime money in the same way in the past, it has never held as much as the council approved this year.

Pascarella said he thinks the council ​“overreached” by taking that much money from the police department and placing it in its own budget. He said it was one of the reasons he voted against the budget.

“I don’t think a council should use the fiscal authority as a battering ram in order to prove a point,” he said. He pointed out that the council had not done the same to the fire department — the other public safety department in the town.

Similarities

In many places, the council made no changes to what the mayor had submitted.

In the budget he submitted in March, Leng proposed funding the Board of Education at the full $89,394,925 that Superintendent Jody Goeler had requested. After deliberating for six hours one Saturday, the council eventually voted to sustain the BOE’s budget at Goeler’s request, despite calls from some members of the council to flat fund the BOE and deny its request for $2.4 million over what it got last year.

The council also made no changes to the pension contribution. The mayor’s and council’s budgets will pay $19.21 million into the town’s pension plan, which meets, but does not exceed, the amount the state requires that it pay next year. In the 2019 – 2020 fiscal year, state statute obligates the town to pay 85 percent of its actuarially required contribution (ARC), the amount the state says the town needs to pay to get on track to fully funding its pension.

The medical line, too, stayed the same, at $44.5 million.

Two lines that generated controversy also did not change. The mayor’s budget included an anticipated $2.5 million in savings from union concessions packages and from attrition savings. As of yet, the town has achieved about $800,000 of the $1.5 million in concessions savings it anticipated in the current fiscal year. Some members of the council said that reaching $2.5 million next year would be impossible, yet no one made a motion to decrease the line.

The council also did not change a town project reimbursement line, which in either budget will count $950,000 from bonds on capital projects as revenue for the town.

No council members said they were happy to raise the mill rate to 50 (49.99 to be exact), but some said it was necessary to avoid a budget shortfall at the end of the year. With the pension funded at the state’s required 85 percent of ARC, using funds originally budgeted for the pension, as the council has done this year, will not be an option.

Yet all are loath to raise taxes. As Minority Leader Marjorie Bonadies put it, the council’s budget ​“is a more accurate budget,” but constituents are telling her to avoid a tax increase at all costs because they are getting taxed out of their homes. So, she said, she will probably vote to sustain the veto on Monday.