Blaming the national economic downturn and projected declines in state aid, New Haven Mayor John DeStefano Jr. publicly announced Thursday a 30-month “pre-emptive strike” to ensure sound financial footing for the city.
The plan will aim to trim the city work force through attrition, freeze hiring in some city departments, and put several public works projects on hold — items DeStefano said the city must accept if initiatives like the much-touted universal pre-kindergarten program are to move forward.
“We’re not announcing layoffs in New Haven today, we’re not announcing a major tax increase, we’re not announcing that we’re another Connecticut city that’s become insolvent, and we’re not announcing a budget deficit this year,” DeStefano said during a press conference at City Hall. “And principally, we don’t have our heads in the sand.”
DeStefano said the state’s own fiscal difficulties would inevitably affect Connecticut’s cities.
After a year in which it ran a substantial budget surplus, the state is coming to terms with an estimated $350 million deficit that Republican Gov. John G. Rowland and Democratic leaders in the General Assembly must eliminate before the end of the fiscal year.
“In the next decade, we’re going to see an increasing number of municipal failures,” DeStefano said. “The state is going to take the position that the way to solve their budget problems is to transfer it onto someone else — and that’s us.”
In fiscal year 2002-2003, the city is not expected to collect any money from state revenue sharing programs like the Pequot Fund, which the state collects from Connecticut’s gambling casinos, DeStefano said. State funds comprise 54 percent of the funding for New Haven’s current budget, or $189.1 million.
New Haven’s budget has increased from $293 million in the 1993-1994 fiscal year to $347 million for 2001-2002, an average annual increase of just 2.3 percent. But during that time, New Haven added nearly 500 workers to its payroll, including 360 educational positions and 96 law enforcement officials.
The city has paid for the increased spending by improving the tax collection rate from 86 percent to its current 96 percent, resulting in an additional $10 million annually, city Economic Development Administrator Henry Fernandez said Wednesday. City taxes now cover for 40 percent of New Haven’s budget.
Collecting from delinquent taxpayers has contributed additional funds.
But city spending will rise next fiscal year even as primary revenue sources fall, and the city is collecting almost all current taxes, leaving fewer back taxes to collect in future years. Over $2 million in delinquent taxes were collected in 2001.
“You can only collect a dollar on a dollar,” DeStefano said. “You can’t get to 106 percent.”
In addition, the recession has hurt city investments and nearly halved New Haven’s income from interest, which fell to just over $1 million this fiscal year. Requests for building permits, which raised about $5.5 million in the last fiscal year, are also projected to fall over the next several years.
But the costs of several key programs, including health care coverage for city employees, are expected to rise.
“We don’t have budget problems now, but if we don’t plan for the future, we could have trouble later on,” Fernandez said.
City officials believe that planning early could prevent problems down the road.
“The problem doesn’t exist this year,” DeStefano said. “There is going to be a problem next year, or the year after, and we don’t want to lose the momentum we have. We’re not going to wait for the train wreck to begin to solve our problems.”
DeStefano met Wednesday with city labor unions and aldermen to present his 30-month plan before going public.
The city will not lay off any workers under the proposal, but several city departments will suffer staffing cuts through attrition. DeStefano said he did not know where the cuts will be made, but he made it clear that the hiring of new teachers and policemen would continue.
A new teacher, with a starting annual salary of approximately $30,000, would save the city $40,000 over a retiring veteran teacher earning $70,000 a year. Forty-two percent of New Haven’s budget is targeted for education this year.
But DeStefano said 45 current teaching vacancies make the school system an unlikely target for attrition.
Other options for saving include privatizing some city services and renegotiating employee compensation packages.
“Think of it as an apple tree,” DeStefano said. “For the last eight years, we’ve been standing on the ground, picking the apples. Now, we have to climb the ladder to get to them.”