By early next week, New Haven aldermen should have a better idea of how the city’s hope to receive new Payment In Lieu Of Taxes funds fits in with the state’s larger fiscal situation.
Board of Aldermen President Carl Goldfield and a handful of colleagues have spent the last two Wednesdays — and plan to spend next Wednesday, as well — lobbying state legislators in Hartford to ensure that additional money for PILOT is included in the final state budget proposal, that will be up for legislative approval. But the likelihood that the city receives those funds depends on the amount of federal reimbursement for Medicaid and on the total revenue, numbers which are currently trickling in.
PILOT is a state program that reimburses municipal governments for money lost to nonprofit universities and hospitals.
City Hall and the aldermen are hoping for enough money to plug a $10 million hole in the $466 million budget proposed by Mayor John DeStefano Jr. A bill approved by the Finance, Revenue and Bonding Committee in early April would fully fund PILOT with a $102.7 million package. The plan calls for that money to come from a delivery tax on parcel services — such as United Postal Service — and profits from the sale of abandoned properties.
But the suggested tax increase had met strong resistance from Republican legislators worried about the impact of new taxes in a year of economic downturn, and the plan faces uncertain prospects before the full legislature.
Currently, legislators are meeting with the governor’s office to compare their estimates of these budget revenues. But Finance, Revenue and Bonding co-Chair Cameron Staples said the difference between the budget that has been approved by legislative committees and the governor’s plan differ by a ballpark range of between $100 and $200 million — depending on how the 50 percent reimbursement for Medicaid is included.
While New Haven legislators have sought out money for their constituents, they have warned the city not to expect too much this year, as even Democrats have been hesitant to provide full PILOT funding.
“There are a lot of other towns with a lot of anxiety about their revenue this year,” New Haven Representative Pat Dillon said. “But we’ve put a lot of energy into building a coalition to support PILOT. It no longer benefits only New Haven — a lot of other towns benefit.”
Still, her optimism was cautious, and she said this year’s efforts may lay the groundwork for more extensive reworking next spring. Dillon said Staples had done an excellent job pushing the funding package through the finance committee and bringing the issue to the table, but that its future is not secure.
“We may not be able to get the support for a tax hike,” she said. “There appears to be a lot of resistance.”
Furthermore, Dillon said, it appeared, based on initial estimates by the Democrats, that the state budget surplus has declined from about $240 million to $15 million, so legislators would be limited by revenue.
The top Republican on the finance committee, Sen. Bill Nickerson and others have said the delivery tax could aggrevate the economic downturn. Instead, Nickerson favors eliminating the $250 business tax levied on most state enterprises.
But after this past Wednesday’s lobbying trip, Goldfield said there is reason to be more optimistic. The group of aldermen — which also included Roland Lemar, Dolores Colon, Migdalia Castro and Ina Silverman — had the chance to meet with House Speaker Jim Amann, who has been skeptical that there is enough money to fully fund PILOT this year, but who Goldfield said was supportive of Staples’ plan to create a dedicated revenue source to provide for PILOT funding over the long haul — although he said Amann did not refer to it specifically.
“Amann seemed supportive of fully funding PILOT, but his reservation is he doesn’t think it’s possible to get a tax increase through,” Goldfield explained. “It’s also encouraging that he’s not saying there has to be some long-term solution [this year] … if we can find enough for a year or two, we can spend the time working on a long-term plan.”
Still, Goldfield admitted that the aldermen had only been able to speak with representatives from more urban areas. Those districts not only have high property taxes to deal with, but also are more likely to benefit from increase to PILOT.
“I think all cities and towns are hurting. There is general recognition that the property tax system is broken,” he added.
Staples said by the end of the week, there will be a better sense of how much money the legislators would need to fully fund their initial proposals. He said the current difference of opinion over how to account for Medicaid reimbursements is a larger factor in the differences in his and the governor’s office’s calculations than the specifics of how much will come in through income, corporate and sales taxes.
“Whether the reimbursements come in this fiscal year or next fiscal year determines whether or not we are dealing with small surplus, or with a deficit, in ’08 and ’09,” Staples said.
Either way, he said, whether the difference is $100 or $200 million, legislators will have to either raise taxes or cut proposed spending increases. He said although Gov. M. Jodi Rell has not proposed any tax increases as part of her budget, she does have spending she would like to see passed, and so Staples is hopeful she will be amenable to some tax changes.
The governor’s office could not be reached for comment Thursday evening.
In the meantime, Goldfield added, aldermen would keep making the trip to the Capitol, next Wednesday as in Wednesdays past.
“Unless something radically changes,” Goldfield concluded, “we’re going to go up to Hartford get this horse over finish line.”