If Gov. M. Jodi Rell executes her proposed plan for balancing the state’s budget, New Haven’s already shaky fiscal situation could worsen overnight.
As of October, New Haven is facing an approximately $7.5 million budget deficit for the current fiscal year, and city officials said they are waiting with baited breath to see if the state legislature will reduce the state’s overall funding for towns and cities by $84 million, as Rell proposed last month. The state legislature could vote on the plan as early as Dec. 15, and if the cuts are approved, they will go into effect immediately.
DeStefano told the News on Monday that Rell’s cuts to municipal aid would be “very difficult.” The city has already spent half of its proposed budget for the current fiscal year, which assumed the city would receive $214,239,188 of municipal aid from the state; according to the city’s October budget report, the most recent one available, the city has projected it will receive only $207,504,770 from the state if Rell’s proposed cuts pass.
Rell’s spokesman, Adam Liegeot ’94, wrote in an e-mail message that everyone must “tighten their belts.”
“We cannot spend what we do not have,” Liegeot said.
As it is, DeStefano said, the city has little room to make further budget cuts because so many of its costs, such as pensions and health care workers’ compensations, are fixed by contracts. If Rell’s cuts are made, the city’s deficit would increase by $6 million to $8 million or more, said city budget director Lawrence Rusconi.
DeStefano added that even if the city were to lay off employees, the unemployment costs the layoffs would create would almost completely offset any savings generated. He added that as a result, the city would either have to impose a mid-year supplemental tax or run a deficit — “not particularly attractive alternatives.”
Rusconi said the city’s charter requires city officials to balance the budget, and that the city is not going to run a deficit under his watch: If $84 million in cuts go through, he said, the city would have to generate additional revenue and curb further expenditures, possibly closing libraries or cutting back on police and fire services.
New Haven has already made significant budget cuts in order to reduce its current fiscal year budget, Rusconi said. In order to prepare for this year’s budget, the city has laid off 51 employees, eliminated 50 vacant positions, had 13 employees retire early, closed three senior centers and sold one public school.
The primary causes of the fiscal juggling, Rusconi said, are the assumptions the city had to make when it put together its budget in May. Because the state budget would not be approved until September, in May New Haven officials had to estimate the amount of municipal aid the city would receive from the state, he said.
To figure out how to get the most bang out of the fewest bucks, Rell last week formed a panel, on which DeStefano sits, to discuss how to implement Rell’s proposed cuts most efficiently.
The state panel is scheduled to meet on Wednesday, Liegeot said, at which point the members are supposed to review a list of unfunded mandates for Connecticut’s cities and towns, and decide which ones to eliminate.
DeStefano said his goals for the panel are to discuss the state’s deficit in a broader sense because the state is currently on track to run a deficit that could reach $3.5 billion by 2011.
While Board of Aldermen members, such as finance committee chairman and Ward 23 alderman Yusuf Shah, said having DeStefano on the panel is an advantage, DeStefano said he does not think so because everything decided on the panel is subject to action by the Conn. General Assembly. Liegeot said he does not think there will be any favoritism for towns with large or small populations.
First selectwoman for Portland, Conn., Susan Bransfield, who is on the panel, said both large and small cities and towns have an equal say in the panel, adding that a mid-year cut is “impossible” for a city of any size.
A special session of the governor’s panel will occur on Dec. 15.