DeStefano banks on past PILOT funding for city’s budget

Mayor John DeStefano Jr. relies on over $3 million in uncertain funds from the state — including an assumed increase in state PILOT money — in order to balance his budget.

The $464 million city budget for fiscal year 2010, which DeStefano unveiled in a presentation at City Hall on Thursday, represents a $9 million increase over the fiscal 2009 budget. But the budget hinges on several assumptions — including that the state legislature will allocate the same amount of PILOT funding to New Haven as it did the year before. The budget also assumes that $3 million of that increase will come from state initiatives the Connecticut General Assembly may not approve.

While the state budget proposed by Gov. M. Jodi Rell would allot the about same amount of PILOT fundingto New Haven now as in fiscal year 2009 — approximately $37 million — the depletion of the state’s budget surplus due to the economic crisis has eliminated the possibility of additional funding being transferred to municipalities, as has been done in the past.

DeStefano said in a press conference following the budget presentation that the state does not yet know how it will balance the budget and that he cannot predict what PILOT funding levels will be next year. But he maintained that assuming fiscal year 2009 PILOT funding levels as a base and building on it was a prudent course of action.

“We picked a modest amount,” DeStefano said, “and that reasonable estimate was last year’s PILOT levels.”

Board of Alderman President Carl Goldfield concurred, saying that the final state budget may be a little bit more generous than Rell’s proposal.

“It’s a Democratic legislature,” he said, “and Democrats tend to be more sympathetic to city centers.”

Last year, DeStefano predicted a $10 million rise in PILOT funding that ultimately was not approved by the state, and the resulting budget shortfall forced the layoffs of several city employees. But DeStefano said that he made fewer assumptions about state aid this year.

In his presentation, DeStefano elaborated on city revenue sources. In the next fiscal year, the mayor has accounted for a $3.56 million increase in state funding initiatives, calculating that PILOT funding would remain at 2009 levels and that the city would be allowed to raise revenue from the so-called “municipal options,” such as the establishment of a local sales tax.

However, several members of the state legisalture, which must approve any municipal sales tax, say they doubt such a tax will be passed because of the potential negative effects on municipal economies.

Jeffrey Beckham, the spokesman for the governor’s Office of Policy and Management, said in a telephone interview Thursday that Rell is pleased she was able to maintain even the current level of funding in her budget proposal given the troubled economic climate. He said Rell has worked hard to give Connecticut cities and towns the funds they need.

“She is very proud that there was no substantial cut from last year’s [PILOT] appropriation,” he said, “because that would incentivize a property tax increase on the local level.”

Beckham said there was no way for the state to increase funding for PILOT programs to compensate for the effective cut of the surplus depletion, especially when other important programs are seeing cuts.

“Governor Rell’s budget included cuts throughout the state government to cut costs,” he said. “There wasn’t any way to add more to PILOT.”

Currently, the primary revenue source for Connecticut’s 169 towns and cities is property taxes, making larger non-profit landowners like Yale a significant drain on a city’s grand list. Yale owns the vast majority of the city’s tax-exempt properties.

If Yale were not tax exempt, it would pay the city more than $60 million in property taxes in 2009, according to Beckham. This year, New Haven will receive nearly $34 million from the state, or 56.1 percent of the total taxable value of Yale’s non-taxable property.

Being responsible for much of the city’s non-taxable property, Yale may be part of the problem. But it is also part of the solution.

Yale University, New Haven’s largest taxpayer for the for-profit property it owns, currently pays the Elm City $5 million in voluntary payments for its non-profit property — an amount, administrators said Thursday, that will increase 50 percent to $7.5 million in 2010.

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