DeStefano proposes city budget

BudgetGraph
Photo by Alon Harish.

In the city budget he proposed to the Board of AldermenTuesday morning, Mayor John DeStefano Jr. said his mission was twofold: preserve school reform and prevent tax increases.

At a press conference at City Hall Tuesday morning, DeStefano unveiled the details of his proposed budget for the upcoming fiscal year, which raises spending 0.9 percent to $475 million and does not increase taxes. While the city is spending $8 million less on city services, total spending grew by $3.8 million because of the rising cost of city employees’ pensions and health care benefits. While DeStefano’s budget makes significant cuts in city services, the fight between the city and its unions looms over cost-saving reforms to employee benefits.

THE ‘PAC-MAN’ OF THE BUDGET

In what has become a familiar refrain at mayoral press conferences, DeStefano once again called city employee benefits packages unsustainable.

“[Pensions and healthcare benefits] are the Pac-Man of the city’s budget, consuming everything in sight,” DeStefano said.

Expenditures on city employee benefits have risen $11 million in the past year alone, totaling $105 million this year. DeStefano said the 82 layoffs he announced two weeks ago lost their jobs to pay for that increase, which he said is harmful to the city and is not fair to those workers.

While the New Haven Police Department will not see any new layoffs, four park employees and many more Board of Education employees will lose their jobs. DeStefano said the Board of Education layoffs may reach 190, including the 42 he announced two weeks ago.

Cuts in city employee benefits packages can only come from the city’s contract negotiations with its unions in the coming months. Eleven of those contracts expire June 30 and will need to be renewed, affecting the city’s budget for the next fiscal year.

DOING MORE WITH LESS

In order to prevent a tax increase, DeStefano will make cuts across the city’s budget.

Every city department except the Board of Education saw its budget reduced. The mayor’s office budget will decrease 7.5 percent from last year, the City Plan department will see a 9 percent decrease, and the city’s libraries will see a 10.9 percent decrease.

The Board of Education’s budget will stay constant for the third straight year as part of the city’s effort not to dampen progress on school reform.

DeStefano said much of the savings stem from the 96 positions eliminated from the city’s budget two weeks ago, which included the 82 workers who were laid off. Still more savings will come from cuts such as reduced library hours.

A major reason DeStefano was able to keep property taxes steady was the city’s improved economic performance. The city’s tax base grew 3.2 percent last year, faster than any other city in the state, affording it an extra $6.2 million in tax revenue.

NO TAX HIKES

DeStefano said he refused to raise property taxes in his budget for two reasons. First, the city has already raised taxes in three of the last four years. Second, under Gov. Dannel Malloy’s budget, taxpayers will already be seeing a sales tax hike and several new taxes.

After the press conference, city spokesman Adam Joseph responded to a complaint by Kevin Murphy, a city union negotiator, that the lack of a property tax increase puts an unfair burden on city employees to sacrifice.

“[The call for a tax increase] just goes to show you how deep in denial union leadership is regarding the city’s ability to sustain these plans,” Joseph said. “It’s time for union leadership to step up and work with the Mayor to control benefit costs to the taxpayers and extend the life of their own retirement plans.”

While there will be no tax hikes, residents will likely see other fees increase.

Under the city’s proposed stormwater authority, property owners would have to pay a runoff removal fee proportional to the amount of impervious surface area on their property. While the budget’s revenue projections are based on the expectation that aldermen will approve the authority, passage looks doubtful after Ward 30 Alderman Darnell Goldson nearly succeeded in killing the idea at the Board’s last meeting Feb. 22.

There will also be an increase in park fees, DeStefano said.

LABOR TENSIONS UNABATED

The mayor’s budget proposals showed no sign of easing tensions between the city and its labor unions.

Two weeks ago, in response to 16 police department layoffs, Sgt. Louis Cavaliere, police union chief, led over 200 rank-and-file officers in a rally from police headquarters at 1 Union Ave. to City Hall. During the rally, Cavaliere earned notoriety in the media for calling on city residents to arm themselves with weapons to compensate for the reduced police force.

DeStefano called those comments “inaccurate and irresponsible” last Thursday.

While there were no rallies Tuesday, labor leaders continued to feel as though DeStefano is trying to inflict pain on union workers without negotiating with them in good faith to find cost savings for the city.

DeStefano is playing a “blame the workers” strategy, said Larry Dorman, a spokesman for Council 4 of the American Federation of State, County and Municipal Employees, which represents five city unions. “The mayor continues to point the finger at public service workers instead of working with us to protect jobs.”

Dorman recalled a Feb. 5 meeting between DeStefano and representatives of the unions, two weeks prior to the announcement of the 82 city employee layoffs. Union leaders brought the mayor proposals for $5 million in cost savings to avoid layoffs.

But Destefano walked out of the meeting, saying the unions were not serious enough about reforming their pension and healthcare benefits.

Dorman added that property tax increases should have been on the table for this year.

“When you’re in a revenue crisis, you have to look at every option,” Dorman said.

DeStefano’s budget now goes to the Board of Aldermen, which must approve it in order for it to take effect. The new budget will take effect July 1, 2011.

Comments

  • mohovs

    Fact: Pension liabilities account for about 22% of the budget. Does anyone know what the Unions proposals were to save $5 million on the budget? Did they include any pension reducing ideas?

  • Sean_Matteson

    Mohovs, fair question. First, let me note that there are two pensions for City employees, CERF and P&F. CERF, City Employee Retirement Fund, covers non-sworn employees. P&F, or the Police and Fire retirement fund, covers NHPD and NHFD sworn members.

    AFSCME which represents a good portion of the non-sworn City workforce did offer to consider raising their employee pension contribution rates to the CERF pension from the current 6%-7% to 9%. I recognize that as good movement, but it is only one piece to making the CERF pension sustainable over the near future as members of the P&F fund already pay 9.75% contributions and their retirement fund is in just as bad of shape for both taxpayers and employees.

    As for any pension reducing ideas offered, sadly I must say no. It really boils down to a philosophical difference on one question: what is an acceptable age for an employee to draw a pension check? 49? 55? Or 60?

    Change is hard and usually only occurs incrementally over a longer period of time. Because of the market collapse in 2008 causing massive losses in pension funds all across America the reform movement has been accelerated and the result of the push to reform is being played out in the form of labor-management conflict in state houses and city halls everywhere.

    For me the issue is personal as I came to City Hall from Labor (UNITE HERE – around these parts more commonly known as the Yale Unions). The balancing act on pensions is to: 1) in the short term lower the cost of the plans on taxpayers and control the biggest cost drivers in the City budget so we can continue to deliver services; and 2) extend the fund life of the two plans which are on a track to dry up in the mid 2020’s. We need to work together to accomplish both the goals for the sake of taxpayers and the employees. But again, change is hard but we must do this now to ensure the promise of retirement in the future.

  • Frashizzle

    Public sector unions appear to me as something of a contradiction. From whom do laborers require protection? A profiteering government? Therein lies the most fundamental question of the debate over public sector unions. The recent recession has made it all too obvious that sticky wages are bad for everyone. (Keep in mind, that’s not explicitly saying that unions are bad; but sticky, unchangeable wages and benefit packages are unquestionably bad). It’s easy for a union to gain support when it’s fighting a profit-seeking organization, but when it’s facing the government… it’s effectively just fighting the rest of us for a bigger slice of the pie that is government expenditures. (Notice I’m not commenting on whether or not workers deserve a bigger slice, but again, that’s unquestionably the fundamental mission of public sector unions. Whether we try to put it in the gauze of workers rights, etc. … it comes down to government employees wanting to have more of the money that the government could be spending on others).
    With that being advanced, one can now discuss the larger issue of whether public sector unions should exist. Private sector unions are fight a corporation whose sole purpose is to profit from their labor and give it to a few owners. What is a public sector union fighting?