In his 18th State of the City address Monday night, Mayor John DeStefano Jr. sounded a tough call to change the way the city does business.
In front of a packed Board of Aldermen chamber at City Hall, DeStefano outlined his strategies for bringing the city’s fiscal house into order. Most importantly, DeStefano said, the city must tighten employee benefits and pensions packages, cut non-essential services, lay off city workers, and obtain greater flexibility from the state to collect revenue. While DeStefano began his speech by highlighting the city’s school reform efforts and economic growth of the past year, his tone quickly shifted from hope to urgency when addressing a budget gap expected to reach $254 million over four years.
“We would be deceiving ourselves, and defrauding our children, were we to pretend that this is a temporary economic situation,” DeStefano said. “It’s time to reset our priorities, change our expectations and make hard choices so that New Haven can compete successfully in today’s world, rather than in yesterday’s.”
RUNNING OUT OF MONEY
[ydn-legacy-photo-inline id=”4990″ ]
The most pressing fiscal objective on the mayor’s agenda is reining in the city’s benefits and pensions agreements.
At current funding levels, DeStefano said, the pension plans of city employees are not sustainable. Last week, the city’s actuary reevaluated the city’s pension packages and predicted that the City Employees Retirement Fund, which covers most city employees, will run out of money within 15 years under current funding levels. Funds for the pension plans of policemen and firefighters would run out in 19 years. DeStefano said he wants to limit eligibility for early retirement, tighten the formula the city uses to calculate pensions, and increase individual contribution requirements for the plans.
“The bill has come due and it’s time for a new normal in our pension plans,” DeStefano said.
In a press conference after the speech, DeStefano said he did not fault the unions whose pensions are at stake for creating a system that has proved unsustainable. He added that he acknowledges many employees have already made “life decisions” based on expectations about their retirement that may not be met. Still, he said, reform must not be limited to future employees.
The same cost-saving approach must be taken with the city’s health care expenses, DeStefano said, which have doubled in the past eight years.
“The city must offer health care plans that resemble those held by the people paying the bills — our taxpayers,” he said.
CUTS ARE COMING
DeStefano said citywide workforce reductions would come before the end of the month.
Before he announces which jobs will be cut, DeStefano said he will wait to hear what newly elected Gov. Dannel Malloy, the state’s first Democratic governor in over two decades, says in his budget address Feb. 16. DeStefano added that certain unions, such as the fire, public works and parks unions, have recently made concessions in exchange for clauses in their contracts protecting members from layoffs in the coming year.
DeStefano admitted that during his eighteen years as mayor, he was a part of the creation of an unsustainable system.
“I signed every one of those union contracts, I’ve had ownership over that system, but it’s a different time now,” DeStefano said.
Ward 30 Alderman Darnell Goldson, one of the mayor’s strongest and most persistent critics on the Board of Aldermen, said he had hoped to hear more from the mayor about the cuts he plans to make.
“There was nothing new in the mayor’s speech, only the same things repackaged again in a ‘just say yes’ message,” Goldson said.
Goldson agreed with the mayor, however, that serious cuts are unavoidable.
A PLEA TO HARTFORD
But much of the city’s fiscal challenges are not within its control, DeStefano said, because the state limits the city’s revenue collection to property taxes. The mayor is fighting to change at the legislative session now underway at the General Assembly in Hartford.
Among the “common sense” items the mayor said he hopes state legislators will approve are local option taxes, taxing authority over a downtown entertainment district, traffic enforcement cameras to bill drivers who do not stop at red lights, and a share of state sales taxes to be distributed to the state’s three largest cities — New Haven, Hartford, and Bridgeport. In addition, the mayor wants to secure the right to negotiate with city employees over where they live, an issue that has sparked controversy and backlash from many unions already.
State Rep. Roland Lemar, who left his Ward 9 aldermanic seat last fall for the state legislature, said he is mostly on board with the mayor’s proposals.
“We’re waiting to hear from Malloy about the state of our budget, but I support the mayor’s call for more flexibility for cities to raise money how they see fit,” Lemar said, adding that he has questions about the proposal to give cities a share of the state sales tax revenue.
“Most of these things won’t require a red cent from the state, but it will require them to let us manage our own affairs,” DeStefano said. “We’re not accountable to a state capital 40 miles away, but to the voters right here in New Haven who have hired us to do a job.”
STILL SOME HOPE
Despite all the dire predictions and urgent requests from unions and aldermen, DeStefano’s speech offered residents some hope for the city’s future.
First, the growth of the city’s grand list — which includes all the properties on the city’s tax rolls — outpaced the rest of the state, adding about $149 million in revenue to the city this year. The biggest drivers of that growth were real estate developers, such as Winstanley Enterprises and Fusco Corporation, whose principal tenants are knowledge-based life science, financial services, educational and medical businesses.
The city’s largest taxpayer is no longer Yale, which is now third behind Fusco and Winstanley.
But the city’s relationship with Yale is an important part of New Haven’s economic growth, said Ward 29 Alderman and President of the Board of Aldermen Carl Goldfield.
DeStefano said that despite its fiscal challenges, recent events show New Haven remains a strongly linked community.
DeStefano congratulated the collaborative effort in the Dwight neighborhood that led to the announcement last week that Stop & Shop would replace Shaw’s as downtown’s major grocer.
Throughout January, 41 inches of snow over the past several snowstorms brought residents together, DeStefano said. Residents dug each other out of their driveways, aldermen responded to residents’ calls in the Emergency Operations Center, and the city’s crews put in long hours to handle the unusually massive snowfall.
“It was a good example of the kind of teamwork we will need in the year ahead,” DeStefano said.
The most important reason to be hopeful, according to DeStefano, is the city’s school reform efforts, which he said are a model for the nation to follow.
DeStefano said the ranking of schools’ performance, the evaluation of teachers and community engagement efforts such as New Haven Promise are making the city’s “School Change” campaign, launched in 2009, bear significant fruit for the city’s future wage-earners and taxpayers.
At the end of the day, DeStefano said, all of the city’s challenges should be addressed with the future of its children in mind.
“It’s important to remind ourselves that these issues are not about taking a philosophical position, they’re about our kids,” DeStefano said. “If we have a huge achievement gap, high dropout rate, and we don’t send kids to college, we’re going to fail — we may have some nice buildings downtown, but we as a community will fail.”
DeStefano will submit his budget to the Board of Aldermen Mar. 1.