Next week, New Haven Mayor John DeStefano Jr. will outline specific layoffs in city government to help make up for a remaining $6 million deficit in the 2008-’09 fiscal year.

But yesterday, the city had reason to smile.

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At the end of the 2007-’08 fiscal year, DeStefano announced yesterday, that the city had managed to balance its annual budget, finishing with a $773,000 surplus. The savings accrued primarily from a surprisingly robust tax-collection rate, the sales of land parcels and the initiation of the Transfer Station Solid Waster and Recycling Authority, he said.

“The tax-collection rate, despite the relative weakness of the economy, came in at 98.3 percent,” DeStefano said at a press conference on Wednesday.

That mark compared with a rate of 98.6 percent in fiscal 2006-’07. An expanded property-tax base yielded $1.7 million, land sales generated approximately $4.6 million, and the sale of city assets to the new Solid Waste Authority delivered an additional $6 million in revenue. The sold land included parcels — including one at 55 Park St., the Lot E development site and one auctioned off to the Knights of Columbus.

Still, Ward 28 Alderman Mordechai Sandman noted that while the city’s breaking even was not unexpected, the surplus was certainly not.

“I’m happy to hear about [the surplus]. But it didn’t happen by a windfall,” Sandman said in a phone interview after the Finance Committee meeting last night. “It happened because the city had some sound financial management in place. The staff looked at every expenditure. They were very forward-thinking.”

Together, the budget strategies closed what DeStefano had projected would be a $13.5 million budget deficit for fiscal 2007-’08.

For comparison, DeStefano offered Hartford and Bridgeport, Connecticut’s two other large urban cities, as evidence. He said their relatively worse budget numbers demonstrated that New Haven had managed to effectively navigate a difficult economic period.

Hartford posted a $6 million deficit, according to DeStefano, while Bridgeport’s came in at $20 million.

Among other accomplishments, the city maintained its A3 and A- bond ratings with Moody’s and Standard and Poor’s, respectively. These marks are important in light of the city’s continued commitment to school expansion and general infrastructure upkeep because they allow the city to take out more loans. Both are fiscally sound, though not perfect, ratings.

“Our peer cities weren’t as fortunate as New Haven and were unable to achieve the economic position we were able to accomplish,” Ward 23 Alderman Yusuf Shaw, chair of the Finance Committee, said in a press release issued by the city. “Our credit ratings validate this position.”

But despite the good news, eyes are already looking ahead to next week, when the city will announce how it intends to deal with the current shortfall.

This year’s budget problems began when the state legislature in May declined to pay New Haven and other municipalities anticipated levels funds under the state’s Payment in Lieu of Taxes program, leaving a nearly $10 million hole in the city’s projected budget.

PILOT reiumburses cities for income lost to non-taxable land, but this year, as is often the case, the state did not fully fund the program because some legislators argued the state could not afford to have greater expenditures in a poor economic year.

Since then, the city has reworked its budget to reduce the gap to only $6 million by various small cuts to the budget. At Wednesday’s press conference, DeStefano discussed three further steps that he hopes will save an expected $1.2 million.

Two of those initiatives involve competitive bidding for the city’s health-insurance plan and for its waste disposal. The other was a multi-year energy deal that lowers the price of electricity to 8.15 cents per kilowatt-hour from 9.2 cents.

The city has tried to close the remaining hole by asking for concessions from labor unions with city contracts, but the two sides were unable to reach an agreement. The shortfall will be made up through incentivize workers to retire early, as well as by not filling some open positions, DeStefano said. Still, the city will need to make new hires at the same time, including two new bridge operators for the Ferry Street draw bridge that is reopening on Saturday after six years.

“There will be layoffs as part of next week’s proposal,” to close the rest of the $4.8 million deficit, DeStefano acknowledged.

In response to questions about whether there have been inordinate delays in announcing the layoffs, he said they were not specified earlier because the city has been working to make sure that no more workers than necessary lose their jobs.

“I plead guilty to being prudent about people’s livelihoods,” DeStefano said after the press conference.

Sandman was pointed in explaining what he thinks are some of the ultimate reasons for the the layoffs.

“Some of it’s [the city’s] debt burden,” Sandman said. “But also a lot of it is the commitments made by city to state that are not to being followed through upon. It’s the [lack of] PILOT funding — not just in New Haven, but other cities in Connecticut. … It’s because we’re the last state that has a 100-percent reliance on property taxes for municipalities.”

A significant portion of New Haven’s land is not taxable because it is owned by non-profit universities and hospitals, Sandman noted. He added that those resources benefit the entire state, including smaller towns that can afford to have lower property taxes.

Despite the upcoming cuts, Sandman said property taxes had still jumped nearly 15 percent on the average home owner in the city.

After the press conference, DeStefano said that while targeted cuts were made in the budget to help close the gap, residents were also protective of their city services. DeStefano noted the “outrage” directed at initial proposals to close a city library and the Westville senior center — both ideas that were ultimately withdrawn from consideration.